THE EFFECT OF AMIL’S ISLAMIC CHARACTERISTICS ON THE QUALITY OF FINANCIAL REPORTING OF ZAKAT MANAGEMENT ORGANIZATIONS (ZMO): GOOD GOVERNANCE AS INTERVENING VARIABLE

Abrar Nawas,Tatik Mariyanti,Yuswar Zainal Basri,Zulhelmy Zulhelmy

doi:10.32890/ijib2021.6.1.2

Abrar Nawas, Tatik Mariyanti + Show 2 more

Open Access

https://doi.org/10.32890/ijib2021.6.1.2

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Abstract

The objective of this research is to analyze the effect of Amil's Islamic Characteristics on Quality of Financial Reporting and Good Governance as an Intervening Variable in Zakat Management Organizations (ZMO). The research used the Structural Equation Modeling-Partial Least Square (SEM-PLS) method with SmartPLS software to analyze data from 204 samples of commissioners and administrators of Zakat Management Organization. The results show that the character of trustworthiness, professionalism, and good governance had a positive and significant effect on the quality of Financial Reporting. In contrast, Islamic religiosity has no impact on the quality of financial reporting. The results also show that Islamic religiosity, trustworthiness, and professionalism had a positive and significant effect on good governance. Good governance played a role in mediating the influence of trustworthiness on the quality of Financial Reporting. The research findings provide managerial implications for ZMO and the government to utilize Islamic religiosity and character of trustworthiness as qualitative standards in Amil recruitment. Furthermore, it allows them to create and set Amil’s professional competency standards, including the fields of accounting and management, and provide Amil professional certification as well as establish Amil Professional Associations.

Highlights

Zakat is one of the main obligations in Islam, which functions as a scientific instrument to alleviate poverty (Zulhelmy, 2012)
This research aims to analyze the influence of Religiosity, the trustworthiness character, and Professionalism on the quality of Financial Reporting and good governance as an intervening variable
The results of this research indicate that the character variables of trustworthiness, professionalism, and good governance have a positive and significant effect on the quality of Financial Reporting

Summary

Introduction

Zakat is one of the main obligations in Islam, which functions as a scientific instrument to alleviate poverty (Zulhelmy, 2012). The factor causing a very large gap between the potential for zakat and the amount of zakat that can be collected by the ZMO is that there is still public distrust of zakat management organizations regarding accountability, transparency, and Professionalism. One of the most important information for muzakki is financial information presented in the form of financial reporting as a form of transparency and accountability in the management of zakat funds by ZMO. Quality financial reporting determines the level of trustworthiness of muzakki in an ZMO. This is revealed by Nazaina (2015), Nasim and Romdhon (2014), and Nurhayati et al (2014) that the quality of accounting information, accountability, and transparency of financial reporting affect muzakki's trust. Good Corporate Governance can be checked through the quality of its financial reports and accountability to ensure transparency (Earnest and Sofian, 2013)

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