Governance, Business and the Environment

Traditionally, discussions on corporate governance (CG) have largely focused on economic sustainability.This is not surprising as CG issues have largely arisen out of accounting irregularities uncovered atprominent organizations, such as Enron, Tyco and WorldCom, and various other well-known companies.The focus of CG now, however, is broader….besides profits, companies are also focusing on the “people”and the “planet” too. Thus, the emphasis of CG today is on both the economic and environmentalsustainability. Given this, boards cannot be lackadaisical about social and environmental issues. How cancompanies achieve this? According to the Coalition for Environmentally Responsible Economies(CERES) in its CERES Roadmap for Sustainability”, a sustainable company is one that has the necessarygovernance structures in place, extensive stakeholder engagement undertaken and the standards and scopeof public disclosure and transparency instituted. Essentially, the Roadmap contains 20 specificexpectations for corporate performance that are categorised into 4 main perspectives: governance,stakeholder engagement, disclosure and performance. Thus, companies should embed sustainabilityissues in management and board structures, goal-setting and strategic decision-making and engage inrobust dialogue with stakeholders across the whole value chain. Additionally, companies shouldregularly report on sustainability strategies and performance. Disclosure will include credible,standardized, independently verified metrics encompassing all material stakeholder concerns, and detailedgoals and plans for future action. Further, a sustainable company is one that embarks on achievingreductions in carbon emission and water use, procurement of renewable energy, improved energyefficiency and having a supply chain that meets high environmental and social standards. Moreimportantly, companies are increasingly aware that a large part of their output consists of material waste(or non-product output). In particular, material flow cost accounting (MFCA), an environmentalmanagement accounting (EMA) tool that has now become an International standard, ISO 14051, can helpcompanies address environmental issues as well as improve their bottom lines. Finally, to be proactive onenvironmental issues companies must understand and manage its environmental costs; introduce wasteminimization schemes; understand and manage lifecycle costs; measure its environmental performanceand embark on a strategic approach to environment related management. Most importantly, the toneshould be set at the top. Top management commitment is essential, preferably at the board level.Accordingly, companies should ensure that directors\u27 skill sets include risk management of social andenvironmental issues. Most importantly, companies should realize that enhanced environmentalperformance can and will lead to improvement in the economic performance of the enterprise

Financial disclosure and budgetary practices of religious organization: a study of qaryah mosques in Kuala Terengganu

This paper aims to examine the financial reporting and budgeting practices of qaryah mosques in Kuala Terengganu, a state in the east of Peninsular Malaysia. Data was collected using a mixed method (quantitative and qualitative) approach. The questionnaire was disseminated to qaryah mosques in Kuala Terengganu and 39 responded. To address the limitations of a questionnaire survey, semi-structured interviews were then conducted with a few of the respondents. The results revealed that qaryah mosques in Kuala Terengganu do have a satisfactory system in place in terms of their financial reporting practices. However, budgetary control practices appear to be lacking. This indicates accounting, as is practiced by qaryah mosques in Kuala Terengganu appears to be limited to financial accounting. Hence, the financial management in qaryah mosques needs to be improved so that the risk of embezzlement can be reduced. Abstrak: Penelitian ini bertujuan untuk menguji pelaporan dan penganggaran praktek keuangan masjid-masjid qaryah di Kuala Terengganu, Negara bagian di timur Semenanjung Malaysia. Pengumpulan data dilakukan dengan menggunakan metode pendekatan campuran (kuantitatif dan kualitatif). Kuesioner disebarkan ke masjid-masjid qaryah di Kuala Terengganu dengan jawaban yang diterima sebanyak 39. Untuk mengatasi keterbatasan survei kuesioner, kemudian dilakukan wawancara semi-terstruktur dengan beberapa responden. Hasil penelitian menunjukkan bahwa masjid-masjid qaryah di Kuala Terengganu memiliki sistem yang memuaskan dalam hal praktek pelaporan keuangannya, namun, nampaknya kurang dalam praktik kontrol anggaran. Hal ini menunjukkan bahwa akuntansi, seperti yang dilakukan oleh masjid-masjid qaryah di Kuala Terengganu tampaknya hanya terbatas pada akuntansi keuangan. Oleh karena itu, manajemen keuangan di masjid-masjid qaryah perlu ditingkatkan sehingga risiko penggelapan dana dapat dikurangi. Keywords: accountability; budgets; financial reporting; qaryah mosques; religious organization

Financial sustainability of state waqf institutions (SWIs) in Malaysia

Purpose: This paper aims to measure the financial sustainability and vulnerability of state-managed waqf institutions in Malaysia. Design/methodology/approach: The study mainly applied the commonly used Tuckman and Chang’s (1991) model to measure the financial health of non-profits. Content and ratio analysis of the 2014 audited reports of seven institutions were used to determine their equity balance, revenue concentration, administrative costs and operating margin ratios. Findings: The results indicate that only one waqf institution was financially sustainable in all the four components. Research limitations/implications: Because the data used are not the latest and focussed only on a single year, the findings may not be necessarily true, currently. Second, the study focussed only on Malaysia. Thus, the results may not be generalisable to other waqfs in other countries or to privately managed waqf institutions. Accordingly, future research should address these limitations. Practical implications: The findings provide useful insights into the financial sustainability of waqf institutions and highlight the need for policymakers in Malaysia and other Muslim countries to give due attention to the holistic accountability of waqf institutions to ensure waqf’s systematic revival. Originality/value: The paper, being the first to investigate the financial sustainability and vulnerability of state waqf institutions in Malaysia, serves as a reference for future researchers. © 2019, Emerald Publishing Limited

PROCEDIMENTOS DE CONTROLE INTERNO NAS MESQUITAS EM MALÁSIA

Embezzlement of funds from religious organizations, particularly in Western church institutions, is increasingly becoming more common. Such scandals have raised concerns on the internal control systems of these organizations. Although there has been no report of financial scandals in mosques, there is increasing concern as to whether these organizations experience the same deficiencies as other religious institutions. Accordingly, our study examines the internal control procedures relating to the receipt of income and the disbursement of funds in state mosques in West Malaysia. A questionnaire survey and faceto-face interviews were used to collect the data. The results of the study indicate that state mosques in West Malaysia have a strong internal control system pertaining to the receipt of income and disbursement of funds. The study also reveals that basic control activities such as the segregation of duties, recording of financial transactions and authorization of particular activities are satisfactorily practiced by the mosques. Although this is an exploratory study, the results may provide a benchmark for further studies examining internal control practices in religious organizations. Keywords: Internal control. Accountability. Mosques. Church. Malaysia.O desfalque dos fundos das organizações religiosas, especialmente em igrejas ocidentais da igreja, está tornando-se cada vez mais comum. Tais escândalos resultaram em preocupações sobre os sistemas de controle internos dessas organizações. Embora não haja nenhum relatório de escândalos financeiros nas mesquitas, está aumentando o interesse em investigar se estas organizações têm as mesmas deficiências que as outras instituições religiosas. Assim o estudo objetiva examinar os procedimentos de controle interno que se relacionam ao recebimento da renda e à distribuição dos fundos nas mesquitas estaduais na Malásia ocidental. Um questionário foi submetido junto com entrevistas para coletar os dados. Os resultados do estudo indicam que as mesquitas estaduais de Malásia ocidental têm um sistema de controle interno forte para o recebimento da renda e a distribuição dos fundos. O estudo revela também que as atividades do controle básico, tais como a divisão das tarefas, o cadastramento de transações financeiras e a autorização de atividades particulares são realizadas satisfatoriamente pelas mesquitas. Embora seja um estudo exploratório, os resultados da pesquisa podem servir como parâmetro para outros estudos que venham examinar práticas de controle interno em organizações religiosas. Palavras chaves: Controle interno. Contabilidade. Mesquitas. Igreja. Malásia

Financial Disclosure and Budgetary Practices of Religious Organization: A Study of Qaryah Mosques in Kuala Terengganu

This paper aims to examine the financial reporting and budgeting practices of qaryah mosques in Kuala Terengganu, a state in the east of Peninsular Malaysia. Data was collected using a mixed method (quantitative and qualitative) approach. The questionnaire was disseminated to qaryah mosques in Kuala Terengganu and 39 responded. To address the limitations of a questionnaire survey, semi-structured interviews were then conducted with a few of the respondents. The results revealed that qaryah mosques in Kuala Terengganu do have a satisfactory system in place in terms of their financial reporting practices. However, budgetary control practices appear to be lacking. This indicates accounting, as is practiced by qaryah mosques in Kuala Terengganu appears to be limited to financial accounting. Hence, the financial management in qaryah mosques needs to be improved so that the risk of embezzlement can be reduced

Testing a theory of Islamic corporate reporting : the case of Malaysia

This study examines the validity of a theory of lslamic Corporate Reporting proposed by Baydoun and Willett (1994). Specifically, the theory suggests that Islamic communities would be better served by a corporate reporting model which includes a current value financial position statement and a value added statement. Baydoun and Willett's normative model was developed based on what Muslims ought to desire (the desirable). To determine if the desirable aligns with what Muslims actually desire (the desired), the theory was empirically tested in this thesis by reference to Muslim and non-Muslim users in Malaysia and New Zealand. Data was collected through a questionnaire survey and a quasi-experiment. Survey respondents comprised of accountants, bank lending officers, financial analysts and zakat officers. Subjects for the quasi-experiment comprised final year accounting students of four universities, three in Malaysia and one in New Zealand. Primarily, the study examines perception differences between Muslims and non-Muslims relating to the usefuh1ess of the current value balance sheet and the value added statement. The thesis also investigates the difference in perceived usefulness between two types of financial statements: differences between the current value balance sheet and the historical cost balance sheet, and differences between the value added statement and the income statement by Muslims and non-Muslims separately. Overall the hypothesis that Muslims and non-Muslims would differ in their perceptions of the usefulness of the current value balance sheet and the value added statement have not been supported by the results of this study. Similarly, there was very little evidence to show that Muslims would prefer the value added statement over the profit and loss account or the current value financial position statement over the historical cost balance sheet. The results regarding non-Muslims were similar. Thus, superficially, there appears to be little to support the contention that the cultural context of human activities (of which religion is a significant part) is relevant to financial reporting. However, such empirical findings have to be interpreted with care. To ask questions concerning the proper form of accounting in an Islamic society, which is ultimately an ethical matter, it is necessary to invoke a purposive dimension in the search for answers. The way things are does not necessarily imply the way things should be. It may be, for example, that the technology of accounting which has been imported into Islamic communities is destructive of their values in some instances. This issue (i.e. the reasons why accounting is what it is in Islamic societies today and not based on what it apparently should be) is developed in significance as the research progresses. It becomes a central theme in the later stages of the thesis

Financial Disclosure and Budgetary Practices of Religious Organization: A Study of Qaryah Mosques in Kuala Terengganu

This paper aims to examine the financial reporting and budgeting practices of qaryah mosques in Kuala Terengganu, a state in the east of Peninsular Malaysia. Data was collected using a mixed method (quantitative and qualitative) approach. The questionnaire was disseminated to qaryah mosques in Kuala Terengganu and 39 responded. To address the limitations of a questionnaire survey, semi-structured interviews were then conducted with a few of the respondents. The results revealed that qaryah mosques in Kuala Terengganu do have a satisfactory system in place in terms of their financial reporting practices. However, budgetary control practices appear to be lacking. This indicates accounting, as is practiced by qaryah mosques in Kuala Terengganu appears to be limited to financial accounting. Hence, the financial management in qaryah mosques needs to be improved so that the risk of embezzlement can be reduced

Environmental management accounting: an empirical investigation of manufacturing companies in Malaysia

Environmental management practices and the implementation of environmental management systems (EMS) have spurred interest in the adoption of environmental management accounting (EMA). EMA integrates environmental information with economic information. Through EMA, the accounting systems will explicitly identify, generate, analyze and use financial and non-financial environmental related information. This paper offers a review of the literature regarding EMA adoption followed by a survey report. The study also explores the associations between EMA, environmental performance and economic performance. To test the proposed relationships, a survey questionnaire was administered to accountants and environmental managers of manufacturing companies in Malaysia. The results of correlation analyses support the hypothesized relationships

Shariah auditing in Islamic financial institutions: exploring the gap between the "desirable" and the "actual"

Persistently high expectations from the operations of Islamic financial institutions (IFIs) appears to give way for a gap to exist between “what ought to be” shariah auditing and the current practice of shariah audit in IFIs in Malaysia. Sulaiman (2005) mentioned that “what ought to be desired (the desirable)” may not coincide with “what is actually desired (the desired)” and in consequent “what is actually desired” may not be the same as “the actual” practice. This paper aims to explore empirically the gap between “the desired” and “the actual” practice of shariah auditing in IFIs in Malaysia. It is found that there exists a gap between the two concepts in terms of certain issues discussed in this study. Even though this paper cannot hope to bridge the gap that exists, it nevertheless shows that shariah audit function has not seriously taken an impact in IFIs in Malaysia despite its potential as a monitoring tool for shariah complianc