Waqf (Islamic charitable endowment) has been an important element in the economic well being of the Muslims. Therefore, it is imperative that the accountability and transparency of the waqf managers or trustees be emphasized. In Malaysia, the State Islamic Religious Council (SIRC) is deemed as the sole trustee of waqf under the Malaysian Federal Constitution because religion is a state's matter.
Various studies have found that there are still an ongoing issue of accountability and transparency of the waqf trustees (Abdul Rahim et al. 1999; Siti Rokyah, 2004). In a recent study by Shahul and Hisham (2006), they argue that proper waqf accounting standard should be in place to address these issues. As a matter of fact, the Waqf Department of the Prime Minister's Department has already commissioned a committee to review the waqf accountability and transparency issues by studying and developing a standard for the waqf accounting. At the moment, all SIRCs practise their own accounting as the SIRCs are under the state's jurisdiction and furthermore the practices are not standardized.
Why Waqf Accounting Standard (WAS)
This article would like to incite response from the accounting practitioners and the public as the stakeholders (waqf is considered as a public goods) on the need for a WAS. As mentioned earlier, WAS could be a tool to partly resolved the issues faced by the waqf trustees to record waqf financial transactions objectively and efficiently. Currently, each SIRCs has their own accounting standard. Therefore there is no uniformity or standard of practices like what is practiced in the UK where they have a Standard of Recommended Practices (SORP) on Charity Accounting. The SORP provides guidelines and help charities in the UK prepare their financial statements for the annual report.
Why there is a need for a standard? A standard is defined as “an agreed, repeatable way of doing something. It is a published document that contains a technical specification or other precise criteria designed to be used consistently as a rule, guideline, or definition. Standards help to make life simpler and to increase the reliability and the effectiveness of many goods and services we use. They are intended to be aspirational - a summary of good and best practice rather than general practice” (source 2007).
One of the most obvious advantages of standard is its ability to be developed and maintained best practices. Apparently, this is what is needed in the waqf accounting.
WAS, could function as what the Charity Accounting did. It is argued that Charity should not use International Accounting Standards as its Generally Accepted Accounting Practices (GAAP) partly due to the nature of for-profit organizations. Furthermore, charity (non-profit) does not have profit, only excess of incomes or expenditures. This represents a totally different perspective for charity (Wells, 2006). WAS should be a guide for all SIRCs on the preparation of the waqf financial statements. So far, many SIRCs consolidate the waqf accounts into the SIRCs (Baitulmal) accounts, which are not proper as waqf should be put under a separate entity under the Shari'ah and should be govern accordingly (Shahul and Hisham, 2006). The disclosures of the waqf financial statement should cover the quantitative as well as the qualitative aspects of the waqf transactions. It is essential that both types of data be made available in the Islamic accounting environments as one of the objectives of WAS is to provide all necessary information to the stakeholders especially the waqif (person who endowed the property for waqf), beneficiaries and the public. Thus, it is argued that WAS will enhance the accountability and transparency of the waqf trustees. It will also promote uniformity and the performance of the waqf is comparable.
Rationale of WAS
The Charity Accounting in SORP for the charities in the UK is governed by the Charities Commission and acts as a GAAP for all charities in the UK irrespective of their sizes and amount of incomes generated. The objectives of SORP include providing guidelines for all charities on how to account for their assets and liabilities, income and expenditure and the preparation of the charity financial statements and annual report. The stakeholders are able to examine the charity accounts upon request and may complain to the Charity Commission if they found or suspects any irregularities or misconducts on the charities handling (Shahul and Hisham, 2006). This subsequently enhances the charities accountability and transparency for the public goods that they are managing. For the Malaysian context, the Waqf Department should be able to emulate the role of the Charities Commission.
The author strongly support the existence of WAS as it could provide a useful guidelines for the SIRCs, as they do not have adequate qualified personnel to handle the financial reporting aspects. It should also help the authorities and stakeholders to evaluate the performance of the trustees in dealing with the public goods.
