Financial Management Practices in Malaysian Islamic Social Enterprise (ISE)

Abstract

This study examined the role of financial management practices consisting of financial disclosure, internal control, financial planning and budgeting and financial performance management in Islamic Social Enterprises (ISEs) in Malaysia. A survey method was used and 102 financial officers in Malaysian ISEs had responded. T-test analysis was used to examine the significant differences based on Malaysian ISEs attributes including years of operation, organisational size and income generation level. This study found that Malaysian ISEs had moderate financial management practices led by internal control (77.46%), followed by financial disclosure (75.93%), financial planning and budgeting (68.87%) and the least was financial performance management (62.06%). Specifically, this study found that Malaysian ISEs with more years of operation, bigger in size and self-sustained in income generation had high financial management practices. Empirical findings from this study will benefit ISEs management, authority and regulator for monitoring and governing purposes. The study contributes by becoming among the early attempts studying financial management practice aspects of Malaysian ISEs.

The impact of financial management practices on accountability of Islamic social enterprise (ISE)

“…Based on the recent study on financial management in ISE, it is found that financial management, Islamic work ethic and financial governance significantly affect ISE's accountability (Kamaruddin et al, 2021). Similarly, another study related by Kamaruddin et al (2022) discovers current financial management components' practices in Malaysian ISEs. However, both findings are quite general, and no detailed study has been made to investigate these financial management practices and its impact with accountability.…”