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 performance of waqf institutions and enhance the social support and sustainability of Islamic social finance.