Financial Impact on the Accountability of Malaysian State Islamic Religious Councils (SIRC)

Authors

  • Rosnia Masruki Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, 71800 Bandar Baru Nilai, Malaysia
  • Khaled Hussainey Faculty of Business and Law, Portsmouth Business School, Richmond Building Portland Street, Portsmouth, United Kingdom
  • Doaa Aly School of Business, University of Gloucestershire, The Park, Cheltenham, GL50 2RH, United Kingdom

DOI:

https://doi.org/10.33102/jmifr.v15i2.175

Keywords:

Financial, Impact, Accountability, Disclosure, State Islamic Religious Councils

Abstract

This paper aims to identify whether Malaysian State Islamic Religious Councils (SIRC) financial characteristics have a significant impact on the accountability of Malaysian State Islamic Religious Councils (SIRC). A content analysis approach was used to examine the extent and quality of disclosure in the annual reports of SIRC, indicating accountability of SIRCs. This paper used the self-developed disclosure index that applies specifically for SIRC. Multiple regression was used to examine the financial determinants of the extent and quality of disclosure. The result of the regression models revealed that the extent and quality of SIRC disclosure is influenced by organisational characteristic, namely size. This study suggests that disclosure in the annual report, in particular the non-financial performance, increases with the amount of zakat collection, thereby demonstrating SIRC’s responsibility. Next, the control variable of accessibility is found to be significantly related to financial statements. Obliged to produce financial statements, SIRC are more likely to disclose more information in the financial statements. This research finding has important implications for regulators, policy makers and top officials in SIRC, by monitoring the quality of disclosure, supporting the notion of public accountability, which appreciates the public’s right to get inform about SIRC. Despite the voluntary disclosure of a non-financial report, SIRC should consider producing a comprehensive annual report for the discharge of their accountability and thus, encourage more funding. They should be more transparent to enhance accessibility, concerning the extent and quality of the disclosure.

Downloads

Download data is not yet available.

Author Biographies

Rosnia Masruki, Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, 71800 Bandar Baru Nilai, Malaysia

 

 

Khaled Hussainey, Faculty of Business and Law, Portsmouth Business School, Richmond Building Portland Street, Portsmouth, United Kingdom

 

 

Doaa Aly, School of Business, University of Gloucestershire, The Park, Cheltenham, GL50 2RH, United Kingdom

 

 

References

Abdul-Rahman, A. R. & Goddard, A. (1998). An interpretive inquiry of accounting practices in religious organisations. Financial Accountability and Management, 14(3), 183–201. DOI: https://doi.org/10.1111/1468-0408.00060

Archambault, J. J. & Archambault, M. E. (2003). A multinational test of determinants of corporate disclosure. The International Journal of Accounting, 38(2), 173–194. DOI: https://doi.org/10.1016/S0020-7063(03)00021-9

Alotaibi, K. & Hussainey, K. (2016). Quantity versus quality: The value relevance of CSR disclosure of Saudi Companies. Corporate Ownership & Control Journal, 13(2), 167–179. DOI: https://doi.org/10.22495/cocv13i2p15

Aly, D., Simon, J. & Hussainey, K. (2010). Determinants of corporate internet reporting: evidence from Egypt. Managerial Auditing Journal, 25(2), 182–202. DOI: https://doi.org/10.1108/02686901011008972

Amran, A. & Susela Devi, S. (2008). The impact of government and foreign affiliate influence on corporate social reporting. Managerial Auditing Journal, 23(4), 386–404. DOI: https://doi.org/10.1108/02686900810864327

Arshad, R., Bakar, N. A., Sakri, F. H. & Omar, N. (2013). Organizational characteristics and disclosure practices of Non-profit Organizations in Malaysia. Asian Social Science, 9(1), 209–217. DOI: https://doi.org/10.5539/ass.v9n1p209

Atan, R., Zainon, S., Nam, R. Y. T. & Aliman, S. (2012). Analyzing disclosure practice of religious nonprofit organizations using partial disclosure index. World Academy of Science, Engineering and Technology, 68, 1389–1395.

Atan, R., Zainon, S. & Wah, Y. B. (2013). Empirical evidence of governance and disclosure in charity organizations. Journal of Basic and Applied Scientific Research, 3(1), 533–542.

Bakar, N. B. A., Saleh, Z. & Mohamad, M. H. S. (2011). Enhancing Malaysian public sector transparency and accountability : Lessons and issues. European Journal of Economics, Finance and Administrative Sciences, (31), 133-145.

Bakar, N. B. A. & Saleh, Z. (2011a). Disclosure of accountability information in public sector: The case of Malaysian Federal Statutory Bodies. Paper pesented at the 13th Biennial CIGAR Conference: Bridging public sector and non-profit sector accounting, Ghent.

Bakar, N. B. A. & Saleh, Z. (2011b). Incentives for disclosure of accounting information in public sector : A literature survey. International Research Journal of Finance and Economics, 75(1), 24-38.

Barros, C. P. & Nunes, F. (2007). Governance and CEO pay and performance in non-profit organizations. International Journal of Social Economics, 34(11), 811–827. DOI: https://doi.org/10.1108/03068290710826404

Baydoun, N. & Willett, R. (2000). Islamic corporate reports. Abacus, 36(1), 71–90. DOI: https://doi.org/10.1111/1467-6281.00054

Brammer, S. & Millington, A. (2004). The development of corporate charitable contributions in the UK : A stakeholder analysis. Journal of Management Studies, 41(8), 1411–1434. DOI: https://doi.org/10.1111/j.1467-6486.2004.00480.x

Brammer, S. & Pavelin, S. (2004). Voluntary social disclosures by large UK companies. Business Ethics: A European Review, 13(July), 86–99. DOI: https://doi.org/10.1111/j.1467-8608.2004.00356.x

Broadbent, J. & Guthrie, J. (2008). Public sector to public services: 20 years of “contextual” accounting research. Accounting. Auditing & Accountability Journal, 21(2), 129-169. DOI: https://doi.org/10.1108/09513570810854383

Bushman, R. M., Piotroski, J. D. & Smith, A. J. (2004). What determines corporate transparency? Journal of Accounting Resea, 42(2), 207–252. DOI: https://doi.org/10.1111/j.1475-679X.2004.00136.x

Callen, J. L., Klein, A. & Tinkelman, D. (2003). Board composition, committees, and organizational efficiency: The case of nonprofits. Nonprofit and Voluntary Sector Quarterly, 32(4), 493–520. DOI: https://doi.org/10.1177/0899764003257462

Chakroun, R. & Hussainey, K. (2014). Disclosure quality in Tunisian annual reports. Corporate Ownership and Control, 11(4), 58–75. DOI: https://doi.org/10.22495/cocv11i4p5

Chiu, T.-K. & Wang, Y.-H. (2015). Determinants of social disclosure quality in Taiwan : An application of stakeholder theory. Journal Business Ethics,129(2), 379–398. DOI: https://doi.org/10.1007/s10551-014-2160-5

Connolly, C. & Hyndman, N. (2003). Performance reporting by UK charities: Approaches, difficulties and current practice. Edinburgh, UK.

Connolly, C. & Hyndman, N. (2004). Performance reporting: a comparative study of British and Irish charities. The British Accounting Review, 36(2), 127–154. DOI: https://doi.org/10.1016/j.bar.2003.10.004

Connolly, C. & Hyndman, N. (2013). Towards charity accountability. Public Management Review, (August 2013), 1–24.

Cooke, T. E. (1998). Regression analysis in Accounting disclosure studies. Accounting and Business Research, 28(3), 209–224. DOI: https://doi.org/10.1080/00014788.1998.9728910

Coy, D. & Dixon, K. (2004). The public accountability index: Crafting a parametric disclosure index for annual reports. The British Accounting Review, 36(1), 79–106. DOI: https://doi.org/10.1016/j.bar.2003.10.003

Coy, D., Fischer, M. & Gordon, T. (2001). Public accountability: A new paradigm for college and university annual reports. Critical Perspectives on Accounting, 12(1), 1–31. DOI: https://doi.org/10.1006/cpac.2000.0416

Debreceny, R., Gray, G. L. & Rahman, A. (2002). The determinants of Internet financial reporting. Journal of Accounting and Public Policy, 21(4–5), 371–394. DOI: https://doi.org/10.1016/S0278-4254(02)00067-4

Dhanani, A. & Connolly, C. (2012). Discharging not-for-profit accountability: UK charities and public discourse. Accounting, Auditing & Accountability Journal, 25(7), 1140–1169. DOI: https://doi.org/10.1108/09513571211263220

Gandía, J. L. & Archidona, M. C. (2008). Determinants of web site information by Spanish city councils. Online Information Review, 32(1), 35–57. DOI: https://doi.org/10.1108/14684520810865976

Ghazali, N. A. M. & Weetman, P. (2006). Perpetuating traditional influences: Voluntary disclosure in Malaysia following the economic crisis. Journal of International Accounting, Auditing and Taxation, 15, 226–248. DOI: https://doi.org/10.1016/j.intaccaudtax.2006.08.001

Gordon, T., Fischer, M., Malone, D. & Tower, G. (2002). A comparative empirical examination of extent of disclosure by private and public colleges and universities in the United States. Journal of Accounting and Public Policy, 21(3), 235–275. DOI: https://doi.org/10.1016/S0278-4254(02)00051-0

Grosso, A. L. & Van Ryzin, G. G. (2012). How citizens view government performance reporting. Public Performance & Management Review, 35(2), 235–250. DOI: https://doi.org/10.2753/PMR1530-9576350201

Gujarati, D. N. & Porter, D. (2009). Basic Econometrics. Mc-Graw Hill.

Haniffa, R. M. & Cooke, T. E. (2002). Culture, corporate governance and disclosure in Malaysian corporations. Abacus, 38(3), 317–349. DOI: https://doi.org/10.1111/1467-6281.00112

Haniffa, R. M. & Cooke, T. E. (2005). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430. DOI: https://doi.org/10.1016/j.jaccpubpol.2005.06.001

Heijden, H. Van Der. (2013). Small is beautiful? Financial efficiency of small fundraising charities. The British Accounting Review, 45(1), 50–57. DOI: https://doi.org/10.1016/j.bar.2012.12.004

Hussainey, K. & Al-Najjar, B. (2011). Future-oriented narrative reporting: determinants and use. Journal of Applied Accounting Research, 12(2), 123–138. DOI: https://doi.org/10.1108/09675421111160691

Hussainey, K., & Al-Nodel, A. (2008). Corporate governance online reporting by Saudi listed companies. Research in Accounting in Emerging Economics, 8, 39–64. DOI: https://doi.org/10.1016/S1479-3563(08)08002-X

Hussainey, K., Elsayed, M. & Razik, M. A. (2011). Factors affecting corporate social responsibility disclosure in Egypt. Corporate Ownership & Control, 8(4), 315–388. DOI: https://doi.org/10.22495/cocv8i4c4art5

Hyndman, N. & McDonnell, P. (2009). Governance and charities: An exploration of key themes and the development of a research agenda. Financial Accountability and Management, 25(1), 5–32. DOI: https://doi.org/10.1111/j.1468-0408.2008.00463.x

Jaffar, R., Riduan, M. & Abdul, C. (2007). Determinant factors affecting quality of reporting in annual report of Malaysian companies. Malaysian Accounting Review, 6(2), 19–43.

Karaa, A. (2013). Corporate governance and disclosure quality : Taxonomy of Tunisian listed firms using the decision tree method based approach. Journal of Applied Economics and Business Research, 3(2), 95–117. DOI: https://doi.org/10.5195/emaj.2013.33

Lampkin, L. & Raghavan, K. (2008). Organisational characteristics, financial performance measures and funding soures of faith based organisations. Journal of Health and Human Services Administration, 31(3), 332–355. DOI: https://doi.org/10.1177/107937390803100301

Laswad, F., Fisher, R. & Oyelere, P. (2005). Determinants of voluntary Internet financial reporting by local government authorities. Journal of Accounting and Public Policy, 24(2), 101–121. DOI: https://doi.org/10.1016/j.jaccpubpol.2004.12.006

Lindkvist, L. & Llewellyn, S. (2003). Accountability, responsibility and organization. Scandinavian Journal of Management, 19(2), 251–273. DOI: https://doi.org/10.1016/S0956-5221(02)00027-1

Mahamod, L. H. (2011). Alleviation of rural poverty in Malaysia: the role of zakat, a case study. University of Edinburgh.

Mahamood, S. M. (2000). The administration of waqf, pious endowment in Islam: A critical study of the role of the State Islamic Religious Councils as the sole trustess of awqaf assets and the implementation of istibdal in Malaysia with special reference to the Federal Territory . University of Birmingham.

Marcuccio, M. & Steccolini, I. (2009). Patterns of voluntary extended performance reporting in Italian local authorities. International Journal of Public Sector Management, 22(2), 146–167. DOI: https://doi.org/10.1108/09513550910934547

Masruki, R., Khaled Hussainey & Aly, D. (2018). Developing accountability disclosure index for Malaysian State Islamic Religious Councils (SIRCs): Quantity and quality. Journal of Management and Accounting, 17(1), 1-17. DOI: https://doi.org/10.24191/mar.v17i1.757

Matsunaga, Y., Yamauchi, N. & Okuyama, N. (2010). What determines the size of the nonprofit sector?: A cross-country analysis of the government failure theory. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 21(2), 180–201. DOI: https://doi.org/10.1007/s11266-010-9125-9

Miniaoui, H. & Oyelere, P. (2013). Determinants of internet financial reporting practices: Evidence from the UAE. Review of Pacific Basin Financial Markets and Policies, 16(4), 1–25. DOI: https://doi.org/10.1142/S0219091513500264

Mucciarone, M. A. & Neilson, J. (2011). Performance reporting in the Malaysian government. Asian Academy of Management Journal of Accounting and Finance, 7(2), 35–77.

Muda, M., Marzuki, A. & Shaharuddin, A. (2006). Factors infleuncing individual participation in zakat contribution: Exploratory investigation. Paper presented in the Seminar for Islamic Banking and Finance.

Naser, K. & Nuseibeh, R. (2003). Quality of financial reporting: Evidence from the listed Saudi nonfinancial companies. The International Journal of Accounting, 38(1), 41–69. DOI: https://doi.org/10.1016/S0020-7063(03)00002-5

Ntim, C. G., Soobaroyen, T. & Broad, M. J. (2016). Governance structures, voluntary disclosures and public accountability: The case of UK Higher Education Institutions. Accounting, Auditing and Accountability Journal, 44. DOI: https://doi.org/10.1108/AAAJ-10-2014-1842

Odainkey, H. N. & Simpson, S. N. Y. (2013). Ensuring accountability in state-owned enterprises : Examining the role of annual reports from a middle income country’s perspective. The Journal of Institute of Public Enterprise, 36(1&2), 1–20.

Owusu-Ansah, S. (1998). The impact of corporate attributes on the extent of mandatory disclosure and reporting by listed companies in Zimbabwe. International Journal of Accounting, 33(5), 605–531. DOI: https://doi.org/10.1016/S0020-7063(98)90015-2

Owusu-ansah, S. & Yeoh, J. (2005). The effect of legislation on corporate disclosure practices. ABACUS, 41(1), 92–109. DOI: https://doi.org/10.1111/j.1467-6281.2005.00171.x

Ryan, C., Stanley, T. & Nelson, M. (2002). Accountability disclosures by Queensland Local Government Councils: 1997-1999. Financial Accountability & Management, 18(3), 261–289. DOI: https://doi.org/10.1111/1468-0408.00153

Siraj, S. A. (2012). An empirical investigation into the accounting, accountability and effectiveness of waqaf management in the State Islamic Religious Councils (SIRCs) in Malaysia. Cardiff University.

Styles, A. K. & Tennyson, M. (2007). The accessibility of financial reporting of US municipalities on the internet. Journal of Public Budgeting, Accounting and Financial Management, 19(1), 56–92. DOI: https://doi.org/10.1108/JPBAFM-19-01-2007-B003

Sulaiman, M., Adnan, M. A. & Nor, P. N. S. M. M. (2009). Trust me ! a case study of the International Islamic University Malaysia’s waqf fund. Review of Islamic Economics, 13(1), 69–88.

Wahab, N. A. & Rahman, A. R. A. (2011). Efficiency of zakat institutions and its determinants. Paper presented at the 8th International Conference on Islamic Economics and Finance.

Wallace, R. S. O., Naser, K. & Mora, A. (1994). the relationship between the comprehensiveness of corporate annual reports and firm characteristics in Spain. Accounting and Business Research, 25(97), 41–53. DOI: https://doi.org/10.1080/00014788.1994.9729927

Zainon, S., Atan, R., Wah, Y. B. & Nam, R. Y. T. (2011). Institutional donors’ expectation of information from the non-profit organizations (NPOs) reporting: A pilot survey. International NGO Journal, 6(8), 170–180.

Published

2018-12-31

How to Cite

Masruki, R., Hussainey, K., & Aly, D. (2018). Financial Impact on the Accountability of Malaysian State Islamic Religious Councils (SIRC). The Journal of Muamalat and Islamic Finance Research, 15(2), 21–38. https://doi.org/10.33102/jmifr.v15i2.175

Issue

Section

Regular Issues

Similar Articles

1 2 3 4 5 6 7 8 9 10 > >> 

You may also start an advanced similarity search for this article.