International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Assessing Financial Reporting on adopting Business Zakat Guidelines on Malaysian Government Linked Companies
Abdullah Ibrahim, Abdul Aziz Abdullah, Mohd Rizuan Bin Abdul Kadir, Syed Mohd Ghazali Wafa Syed AdwamWafa

Zakat is one of the pillars in Islam, a mandatory obligation to the Muslims. The payment of zakat is an expression of thankfulness to the Almighty God (Allah) and recognition of His rewards. Zakat is no longer perceived by many that is merely limited to the domain of religious or syariah studies and discourses, but has been widened to include the issue of social economics. Therefore, a proper treatment of zakat is needed. In Malaysia, an accounting treatment relating to the payment of zakat on business, TR-i1 had been issued by Malaysia Accounting Standard Board (MASB) to facilitate the computation of zakat on business. However, since zakat management is under the jurisdiction of State Islamic Religious Council (SIRC), the Technical Release 1 (TR-i1) issued just becomes a guideline which does not have the same weight as a standard. The objective of the paper is to investigate the level of compliance to the guidelines as being practiced by the listed Government Link Companies (GLCs). The study will focus on the methodology used for zakat computation and the disclosure being made in the annual report. All the 33 listed GLC companies were used for the study. From the result, it was found that the guidelines were not being followed. A practiced by GLC’s was totally different from what has been mentioned in the TR-i1.

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