Zurri Waqf: Implementation and Accounting Procedures in Malaysia

Abstract

The challenge of managing dormant wealth in Malaysia traces back to the era of Prophet Muhammad SAW, where zurri waqf emerged as a mechanism to allocate assets to heirs excluded from inheritance laws. This study endeavours to evaluate the implementation of zurri waqf in Malaysia, scrutinize its accounting protocols, and advocate for accounting standards harmonized with zurri waqf principles. Conducted through qualitative means, this research involved interviews and content analysis with 18 participants representing waqf management units, Shariah scholars, and academic experts. It revealed that zurri waqf management in Malaysia is consolidated within four State Islamic Religious Councils (SIRC) exclusively, encompassing Kelantan, Terengganu, Penang, and Kedah. While these entities adhere to prevailing accounting standards, comprehensive disclosure of zurri waqf data in financial statements remains inadequate due to the absence of standardized accounting methodologies. The proposed accounting standards encompass recognition, measurement, and disclosure tailored to the unique characteristics of zurri waqf. Furthermore, the study identifies a correlation between zurri waqf implementation and social exchange theory, positing mutual benefits for trustees. Theoretical frameworks such as positive accounting theory and decision usefulness theory serve to rationalize the disclosure of pertinent information in zurri waqf reporting. The implications underscore the necessity for enhanced management practices and asset stewardship to optimize zurri waqf's efficacy as a wealth management instrument while upholding equity. Moreover, the advocated accounting standards aspire to augment financial reporting practices, thereby fortifying the accountability of Islamic institutions within the broader third-sector landscape.