Hafiz Huzaifa Anwar (61723)

SFAD
Waseela Foundation Assignment

Submitted to:

Sir Arsalan Hashmi

Q1. What is the existing accounting system at Waseela for the collection of
donations and spending money from the donation pool?
The case examines the difficulties that Waseela Foundation has in its accounting system, notably in
tracking the receipt and use of zakat donations. The current accounting method is straightforward and
collects all forms of donations into a single account. Expenses are paid indiscriminately from that pool.
Some zakat donors, who have differing conceptions of how zakat donations should be used, find this
unacceptable. Mr Mustafa was tasked with developing the accounting system so that donors could rest
assured that their zakat was being managed and disbursed according to their wishes. Non-profit
accounting necessitates a complex system of recording and reporting that can distinguish between
different types of donations and how they are used.

Q2. How would zakat donors evaluate the current accounting practices at Waseela?
What would they like to see in the system to satisfy them?
Mr Mustafa was tasked with developing the accounting system so that donors could rest assured that their
zakat was being managed and disbursed according to their wishes. Non-profit accounting necessitates a
complex system of recording and reporting that can distinguish between different types of donations and
how they are used. This is critical since certain gifts must be used for certain purposes. As a result, unlike
for-profit businesses, non-profits must keep diverse sources of funding separate for accounting and
reporting purposes. Zakat presents unique accounting issues due to differing interpretations of different
schools of thought about zakat expenditure options. As a result, the case presents students with a fantastic
opportunity to learn about the complexities of fund accounting.
Q3. What changes should the foundation make in the accounting and reporting
system to properly account for zakat donations?
Zakat accounting consists mostly of financial accounts that cover the tasks of recording, processing, and
reporting, and accountability is the lenders' zakat obligation on property held for vulnerable people in
need of aid, although charity also plays a role. A crucial role as part of a company's policy to ensure that
the financial statements are accurate. Accounting regulations must not be followed when preparing zakat.
As a result, accounting Zakat should play a role in the creation of shari'a accounting concepts. In a
Charity and commercial organizations has become part of the organization's reality. This implies that
profit-oriented or profit-driven corporate entities must modify their orientation. Being a stockholder-
oriented firm (which is not proper for a sharia-based company), business group focused on zakat,
environmental protection, and stakeholders-oriented

Q4 Once a proper system of accounting is put in place and zakat starts pouring in, will it help the
foundation in setting up the hospital? What further challenges can arise? How can the management
address those challenges?

Yes it will help as the foundation's biggest project was the establishment of a hospital in 2008. It was a
small hospital in Kamoke, a small town near Lahore that was run on rented premises. The annual lease
rental (which included the cost of the buildings, equipment, and power) was PKR 50,000. The hospital's
services to the underprivileged were almost entirely free. To provide the patients a sense of self-respect, a
minimal fee (2–5% of market price) was paid. The drug was likewise provided without charge. The
number of activities had risen steadily over time.

Q5 How can this learning be generalized and applied to other situations?

Zakat was a religious requirement that promised rewards to those who paid it and threatened punishment
to those who did not. As a result, Zakat payers were wary of entrusting their zakat donations to any third
party they did not know. They wanted their zakat to be spent according to their interpretation of Islamic
law, so they may get the divine reward. We also learn that no accounting system needed as such the trust
is needed because once you trusted the organization you are going to pay otherwise there are so many
options.