Business & Management Quarterly Review, 3(3), 9-15, 2012

ISSN 2180-2777

on activities done by the councils. No current data on waqf properties, development of the properties and
distribution for the public. Yaacob (2008) argued that current waqf accounting practice is not in line with the
aspirations of accounting. Compared to ordinary organizations, councils‟ stakeholders and public are more
attracted to activities being done by the councils especially in developing waqf properties and distribution to
the beneficiaries. Since the waqf intention emphasises beneficiaries, non-financial information is vital,
especially to discuss the activities involved.

THE NEED FOR WAQF REPORTING FRAMEWORK

According to Sulaiman (1998), any reporting is based on responsibility to stakeholders. Basic Islamic
accounting emphasises reporting financial transactions and other matters is connected with business
knowledge, and that it must be accurate and fair, to encourage trust. Thus, the councils should disclose
appropriate financial statements for presenting a picture of the waqf activities that have being conducted. As
existing accounting disclosure is also not fully transparent for the public (Md. Zain, 2002; Mohamed et al.,
2006). Ihsan and Ibrahim (2006) found that most prior studies have concentrated on disclosure of financial
rather than non-financial information, which is not adequate for transparency. As a result an efficient
framework is needed in order for the councils to be more transparent in their reporting. The framework
should take into consideration waqf objectives, which emphasise beneficiaries, non-financial information is
vital, especially on the activities involved. Until now, there is no model on waqf reporting. Current disclosure
documents have become “glossy” and overly focused on public relations, thus detracting from the primary
purpose of reporting. The framework will include the main activities concern distributing benefits to the
needy, thus both non-financial and financial information as important elements in the waqf final accounts
(Daud and Abdul Rahman, 2008). By using this framework, users, especially beneficiaries can have
information on how the councils invest and how the councils can meet the intentions of waqif. This can only
be met by providing qualitative information.
Then the public know the aims of the council and how it is succeeding. If the council is not transparent
and does not demonstrably satisfy the stakeholders, there will be no trust in the relationship even if society
supports the council‟s objectives. With the framework this problem can be avoided. The framework has been
established accordance to the Islamic perspective, which means disclosing information that aids economic as
well as religious decision-making. The information has the qualities of being relevant, objective and material.
The type of information needed by these stakeholders is information regarding activities conducted for poor
people, and facilities offered such as mosques, religious schools and houses for rental can produced.

METHODOLOGY
In order to come out with new definition of waqf reporting, this paper explores prior literature and theories
regarding financial disclosure. The research process includes review of previous literatures emphasis of
papers that gives ideas on better disclosures. Having identified the reporting styles in each study, the study
has come out with a new way of waqf reporting. Accountants and assistant accountants‟ perceptions on
reporting were also investigated. This method was used in order to gain better perspective of waqf reporting.

RECOMMENDED IDEAL WAQF REPORTING FRAMEWORK

Preparing reporting from waqf framework shall can meet the information needs of public without limiting
the reporting to the information needs of any specific user group; since initially waqf‟‟s main purpose is to
help the needy. The process of waqf framework from an Islamic perspective has extended information in the
waqf statement and its notes of activities, and may extend to areas outside of waqf statement, for example:

a) Reporting by directors reporting by the chairman, discussion and analysis by management and similar
items that may be included in a waqf annual report.
b) Social reporting,
c) Other items of non-financial of waqf reporting.

One of the advantages using waqf framework is that it is easier for the public to make such decisions;
waqf reporting would need to encompass more than just the preparation and presentation of existing
reporting. Waqf reporting framework may extend into areas beyond normal financial reporting, such as other

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ISSN 2180-2777

areas of annual reporting, and may contain elements of social and waqf investment properties reporting.
These are matters not usually dealt with by council accounts‟ prepares (Md.Zain, 2006; Mohamed et al.,
2006, Ihsan and Mohamed, 2007, Mustafa, 2007; Daud and Abd. Rahman, 2008 and 2011). The expensive
display of non-qualitative information by the council has lead to a suggestion that report should more
appropriately accordance to syariah, rather than a merely ordinary report.

The Waqf Reporting Framework comprises and uses these three main basics. The details are:

i. Priori Model by Hynman‟s (1990)

ii. Fundamental of Waqf Characteristics
iii. Pictorial Presentation by Beattie V. and Jones M. (1994)
Figure 1 shows “A Priori Model” from Hymann (1900) where this model contain a list of
disclosure that is suitable to be used in developing waqf reporting framework to demonstrate high level
of transparency in disclosure. The diagram shows that the wqaf reporting framework focus the disclose
on; (i) Statement of Objectives; (ii) Statement of Goals; (iii) Administration Cost (%) Information; (iv)
Problem Area Information; (v) Simplified Operating Statement, (vi) Measure(s) of Output, (vii)
Simplified Balance Sheet, (viii) Measure(s) of Efficiency, (x) Statement of Future Objectives and; (xi)
Budget Information. By reporting based from items from Priori Model, it is hope that Islamic council
can give public better picture regarding waqf matters. The relationship between waqif (donor) and
Islamic council is a subset of waqf reporting in terms of management and accountability. By carrying
out the waqif (donor)‟s fully intended request, is how one should see Islamic councils‟ duty to Allah
SWT.

Figure 1: Waqf Reporting Framework

Statement of
Objectives
Statement
of Goals Administration
Cost %
Information

Problems
Area
Information Simplified
A PRIORI Operating
MODEL Statement
Hynman‟s
(1990)
Measure(s) of
Output Simplified
Balance Sheet

Measure (s) of
Efficiency Statement of
Budget Future
Information Objectives

Islamic scholars have come up with various definitions of waqf. Yet, there are differences in definitions
among jurists, but the fact that all definitions have similarities in principle. There are three main principles
in the concept of waqf. First, waqf is the possession of Allah Al-Mighty, secondly, the nature of waqf is

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eternal (perpetual), the disappearance of waqif rights and benefits to humans (Othman, 1998). According to
the Shafi'i sect donating perpetual property is a continuous activity and the property can be used forever,
while the ownership rights will be disconnected. The use of the property is to draw closer to Allah (Al-
Syirbini, 1994; Al-Syirazi, 1995: Al-Nawawi, 2000). Waqif should not take any advantage of the revenue
because it belongs to Allah SWT and had forfeited its right (Al-Mawardi, 1999). If he still taking the benefit
meaning as if he took back the donated property, unless the waqif had entrusted the property and used by
him or to anyone else (Al-Qurtubi, 1994, Al-Zayla'i, 1996). Thus, to adapt these three main principles, Figure
2 shows the information in the reporting should take into account these core elements in waqf reporting to
enhance internal management planning and decision making on waqf properties. These elements emphasis
on: (i) Protection; (ii) Maintenance; (iii) Investment; (iv) Reserving, and; (v) Income Distribution.

Figure 2: Fundamental of Waqf Characteristics

Protection Investment

ASSET
Maintanence Reserving
MANAGEMENT

Income Distribution

Figure 3 is regarding presentation approach, where this methodology comes from previous researchers
i.e. Beattie V. and Jones M. (1994). In their study, pictorial presentation is essential to give better
understanding as well as attract readers. Thus, in this waqf reporting framework, bar and pie chart are
demonstrated to give better understanding on the progress and developments of the assets. All these three
main elements if consider in reporting can give better picture on waqf especially in developing waqf
properties as well as helping Islamic councils in making decisions.

Figure 3: Presentation of Waqf Reporting

PICTORIAL
PRESENTATIONAL
Beattie V & Jones M. (1994)

Graphs – bar/column, pie

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