The financial control practices of zakat institutions in state Islamic religious council in Malaysia

Abstract

In the last two decades, financial scandals and mismanagement of religious organizations resources have overwhelmed on the western arena. Complaints from the churches have increased and the reputation of the religious centres has decreased. This has attracted the attention of many researchers to explore the reality in the world of religious organization systems. Even though, no such financial misappropriations have been reported in the Islamic religious nonprofit organizations, it has been raised the question of whether Islamic religious organizations are experiencing similar circumstance (Maliah, 2007). This study is an exploratory in nature which aims to explore the financial control practices of Malaysian zakat institutions. There are four financial control procedures emphasized in the study: control environment, control over receipts, control over disbursements and reporting control. A questionnaire survey was conducted to collect data. The questionnaires were sent to the financial staff and the manager and/or deputy managers of the 14 zakāt institutions in Malaysia. Of the fourteen zakāt institutions, ten (10) zakāt institutions cooperated with 41 respondents. The results of study show that financial control practices of zakāt institutions in Malaysia is generally good. Control over disbursement procedures and reporting system have scored the highest level of practice compared to the other two control procedures, control environment and control over receipts. Although the strengths of control procedures are in different levels, an overall assessment shows that Malaysian Zakāt Institutions have good financial control practices.