A Zakat Accounting Standard (ZAS) for Malaysian Companies

Abstract

This paper focuses on the need to harmonize the practice of zakat on companies throughout Malaysia by implementing a zakat accounting standard (ZAS). The objectives of this paper are fourfold: (1) to highlight the current practice of zakat on companies in Malaysia; (2) discuss the usefulness of AAOIFI FAS 9, MASB FRS i-1, and MASB TR i-1 as guidelines for developing a ZAS; (3) suggest a collaboration by various parties designed to pool initiatives, knowledge, and skills to develop a useful and favorable ZAS; and (4) to demonstrate that without proper education and a strong political will, there is a little hope of making any ZAS a reality.

Effective Zakat Distribution: Highlighting Few Issues and Gaps in Kedah, Malaysia

“…Similarly, a point have been noted in few research papers regarding the issue of authentic caring (Idris & Muhammad, 2013), adequate training (Clark, 2001;Hassan, 2010;Hassan et al, 2012;Yusoff et al, 2012), appropriate guidelines (Adnan et al, 2009;Bakar, 2007;Mohammad et al, 2015;Othman et al, 2011;Raquib, 2011), understanding the customer needs (Adnan et al, 2013;Halim et.al., 2012;Wahab and Rahman, 2011;Zakaria, 2014), as these factors may assist the incharge persons to take pragmatic decision and ensure better service control (Adnan et al, 2013;Lubis et al, 2011;Nadzri et al, 2012;Wahab and Rahman, 2011). So the question can be raised that are these issues raised above accurately signify the impeding factors in the Kedah Zakah distributive system, keeping in view that the Kedah Zakah functions under a stricter dominion, and also a point to ponder whether such non-autonomous organisations will benefit from aforesaid studies and explorations.…”

“…Improving the knowledge base has been said as extremely important factor in NPO, and also most likely in the area of Zakah disbursement and management (Ab Rahman et al, 2012;Bakar, 2007;Kaplan, 2001;Kaplan et al, 2000;Yusoff, 2011). In addressing the afflictions of just determining the financial factors in a conventional setup, the inventors of Balanced Scorecard (BSC by Kaplan and Norton, 1992), not only brought other non-financial factors to measurement, but also made that the learning and growth perspective (along with four perspectives stated below, in figure 1) as the driving force of any organisation.…”

“…Numerous researchers have raised the issues in the areas of effective distribution, from the point of intention (Abioye et al, 2013;Ahmad et al, 2014), reaching out (Mahamod, 2011), competency (Abioye et al, 2011;Ismail & Zain, 2015), efficiency (Wahab and Rahman, 2011), issues related to capacity building (Ab Rahman et al, 2012;, training (Ab Rahman et al, 2012;Wahab and Rahman, 2011), appropriate guidelines (Bakar, 2007;Ab Rahman et al, 2012), understanding the customer needs, perceptions, and pragmatic decisions while assisting the asnafs and so on (Lubis et al, 2011;Wahab and Rahman, 2011).…”

“…The researchers have also identified that to have an effective monitoring in place, workable and effective guidelines are important (Adnan et.al., 2009;Bakar, 2007). Although monitoring has been identified as a factor influencing Zakah distribution (Hassan et al, 2012), but there is still bit of gap observed to substantiate the degree of supervision, monitoring or influence.…”

Modeling of Zakat in the capital structure theory

“…Thus, the zakatable amount is all assets minus the fixed assets, intangibles, current July 2006. The accounting pronouncement focuses on facilitating the zakat calculation for businesses that can be utilized by companies from various industries.Though TR i-1 stressed zakat calculation because most of business-related zakat issues fall under the SIRC's jurisdiction (and thus are considered beyond the purview of MASB), TR i-1 only handles financial reporting issues regarding the zakat of a corporation[2]. Other deductions on the zakat of corporation made by an entity (including issues such as zakat chargeability, calculation, determination of the zakat base and eligibility of assets and liabilities) should be subject to the conclusions achieved in cooperation with the respective zakat center.…”