Waqf Reporting: A Modified Integrated Reporting for Sustainable Islamic Social Finance

Abstract

The increasing growth of waqf activities in recent years makes it timely to study the accounting and reporting practices for this important economic sector. Waqf institutions are generally voluntarily established with emphasis on acquiring waqf assets and cash contributions to fund activities. Generally, less attention is given to the accounting and reporting aspects. Today, the global accounting practice is moving towards reporting of multiple capitals to create value for sustainable business. Introduced in 2013 and known as integrated reporting, this approach is relatively new to most part of the world including Malaysia. The approach integrates six types of capitals categorized as human, intellectual, social, manufactured, natural and financial, linked to business model and strategy in value creation. It expands the traditional reporting which stresses on past financial performance, to future, strategy-based focus. This research reviews the literature on waqf accounting and reporting practices and discusses the drawbacks of the conventional accounting system for Islamic social finance. The study then highlights the new integrated reporting and discusses its applicability in waqf reporting which is based on the Islamic reporting and accountability. The proposed Integrated Waqf Reporting System (IWRS) adopts a long-term perspective, linking organizational performance to business model and strategy and, providing information on Social, Intellectual, Relational, Awqaf and Human (SIRAH) capitals. The IWRS highlights the principle of stakeholders-inclusiveness and assist the public and potential donors in determining the long-term

Challenges and prospects in waqf reporting practices in Malaysia

“…Besides, these waqf stakeholders will be able to understand procedural matters, religious benefits and economic impact of the waqf activities (Ab Fatah et al , 2017). The public also needs to be informed of the value of the waqf assets through proper accounting and reporting (Mansor et al , 2017).…”

“…Third, it stresses only financial information and lacks a comprehensive view of the potential value of assets. The reporting also excludes information on socio-economic transactions and environmental effects (Mansor et al , 2017).…”

“…Moreover, the lack of the quality and level of waqf reporting practices also gives a bad perception towards the management of waqf funds, as weak waqf reporting practices presume from the ineffectiveness of governance by waqf institutions itself (Daud, 2019). Lastly, stakeholders and waqif will not be able to make decisions to contribute to waqf institutions due to weak reporting practices (Mansor et al , 2017). Therefore, this paper investigates the factors concerning weak waqf reporting practices and why good waqf reporting practices are important for stakeholders.…”

Factors necessary for effective corporate waqf management for Malaysian public healthcare

“…Currently, the waqf reporting practice is based on the conventional accounting system. This has the weakness of limiting the reporting coverage to annual financial information only (Masruki and Shafii, 2013; Mansor et al , 2018). Governance in waqf is important as it promotes transparency and accountability, and these are crucial for a sector that relies on the confidence and trust of its stakeholders (Shafii et al , 2015).…”

The Effect of Information Disclosure on Donor Commitment: The Case of Waqf Institution

“…This was echoed by Masruki and Shafii (2013) who pointed out that the non-existence of reporting standards and waqf accounting is the main reason for this. At present, there are no specific standards for waqf reporting governing non-profit organisations (Mansor et al, 2017). Thus, the quality and comparability of information disclosed by waqf institutions may be compromised due to disparities in reporting practices.…”