Earlier in April, the Institute of Islamic Understanding Malaysia had organised a seminar on “Promoting Waqf as a Mainstream Tool in the National Economic Policy”. Several issues were discussed on the potential of waqf in supporting the social and economic development of the nation. One such issue perceived to impede its ability to unleash its fullest potential is the prevalent scepticism about the capability and the professionalism of the waqf management in managing its assets.
Such a scepticism may have been prompted by several factors. In the present economic situation where land is highly in demand, it is an irony that thousands of hectares of waqf land remain idle. The 2010 statistics issued by the Department of Waqf, Zakat and Haj showed that there were 11, 511 hectares of waqf land worth RM116, 441,667 in Malaysia, but only 0.72% of it was developed.
Another factor attributed to the fact that Muslims are now inclined to endow cash instead of immovable assets (such as land) to waqf institutions. As the corpus of waqf exists in the form of cash, it is vulnerable to mismanagement and corruption.
Undoubtedly, waqf institutions–especially those under the purview of state religious councils—that are as professionally managed as well-governed corporations can significantly contribute towards improving welfare standards and quality of life of many in a particular location or state.
Indeed, the Ottoman cash waqf bore many a testimony of successes. During the Ottoman Empire back then, waqf especially cash, became extremely popular all over the empire and massively contributed towards the reduction of government expenditures—such that all essential public services were made available through public donations. Indeed, such a practice would not prevail had the funds been poorly managed by the mutawallis (waqf trustees).
Although evidence to prove such a hypothesis was insufficient, data from Ottoman archival sources had shown that a typical 18th century Ottoman Cash Waqf Inspection Register contained 14 items, which among others, recorded the names of waqfs and the purposes for which they were established; the names of the mahelle or district in which the endowment was registered; the name of the trustee, original capital of the waqf; later additions to the capital of the waqf either by individuals or by other awqaf; the balance of the new capital thus formed, and the returns obtained from the investment of the endowed capital by year end. Such were the standard registers used across the Ottoman Empire to record details about cash waqf information.
Thus, based on such evidences, there existed elements of good governance in the Ottoman cash waqf institutions. For example, the Cash Waqf Inspection Register, as its name implies, denotes that cash waqf institutions were subjected to audits by the authorities. They were responsible in introducing the standard register whereby all cash waqf institutions adopted the same format of reporting so as to ease their burden. Thus, the Ottomans had already understood the need for standard reporting practices for cash waqf institutions across the empire.
In spite of its relative ease and simplicity, the Ottomans employed a standard accounting method over a period of 300 years. Such a practice though is not observed in Malaysia as all waqf institutions have their own accounting practices and disclosures.
The absence of such a standard for waqf as revealed by Abdul Rahim (2009) and Siti Rokyah (2005) may incur reservations among its stakeholders in judging the accountability of waqf institutions. Therefore, efforts to initiate a waqf accounting standard and its implementation should be geared up to optimise the benefits derived from the instrument.
Dafterdar (2009) recognises that failure to implement the practice will definitely limit the accountability of the waqf institutions to waqifs (donors), beneficiaries and other stakeholders as unregulated reporting will lead to problems of comparability and reliability. Indeed, applying Islamic accounting will avoid any irresponsible attempts to manipulate accounting figures to cover up financial issues and subsequently mislead the existing waqf stakeholders and potential donors. Besides that, it will definitely give extra mileage to the waqf institutions.
The British Standards Institution describes ‘standard’ as “a published specification that establishes a common language, and contains technical specification or other precise criteria and is designed to be used consistently, as a rule, a guideline or a definition”. Therefore, by having a standard accounting practice, it will create uniformity in financial reporting and disclosure produced by waqf institutions. Eventually, when the report is presented to the public, it may give some motivation to potential donors to support or even contribute their wealth to waqf institutions.
Prof. Murat Cizakca in his various studies on cash waqf implementation reveals that the instrument had not only benefited the people of Turkey during the Ottoman Empire’s golden era, but also in other parts of the world ranging from North Africa to South Asia and the Malay Archipelago throughout the centuries. Hence, by no means is it an exaggeration to claim that waqf has provided the foundation for much of what is considered “Islamic Civilization” (Hennigan, 2004).
Notedly, the decline of the Turks’ cash waqf institutions as identified by Cizakca was attributable to administrative problems. His findings on the decline should shed some light on how modern waqf institutions should be managed. The fundamental lesson from the decline elucidates the need to have good governance practice as well as the implementation of standard accounting practice for waqf institutions. Both components are vital because waqf institutions /mutawallis are not only accountable to beneficiary groups and all stakeholders, but, more importantly, to Allah in the Hereafter.