Developing Best Measurement and Reporting of Waqf Institutions: Socio-Economics and Governance Impact (Indonesia Case)

This study aims to analyse the current practices of disclosure of financial and non-financial reports of waqf institutions in Indonesia; to identify the performance indicators concerning social economic and governance impact of waqf ; to suggest the best reporting framework for waqf institutions in Indonesia. A qualitative method was employed to measure the content analysis of annual report. Data are collected by downloading annual reports of waqf institutions from their website. Twenty waqf boards of 201 registered waqf institutions as the sample of participants. The disclosure of performance reports were measured by counting 57 disclosure items. The results indicate that in Indonesia do not have a guidance or list for reporting their activities; methods on how to assess waqf board performance and the impact of waqf on social-economic and governance. They did not comply with 57 disclosure items, and none of waqf board reported the impact of waqf on social-economic and less governance. The proposed guidance and measurement will give managerial implications and useful for waqf boards to make good reports, and assess the impact of waqf on social, economic, and improving its governance.


A. Introduction
Nowadays, social responsibility is a crucial activity in organizations where every single organization should give positive impacts on environment, social, and economics. In many countries, social responsibility is regulated as a mandatory for every single company, not only profit oriented companies, but also non-profit organizations. However, in Islamic perspective, social responsibility is carried out with aim to create virtue through activities that may not contain elements of usury. The activity has been ordered by Allah in the form of zakat, donation, alms and waqf.
The application of social activities in Islamic organization or boards is very useful for decreasing poverty by utilizing such as zakat and waqf, mainly to create a social impact on wealth for everyone. A tremendous growth of Islamic donation boards should be measured comprehensively, not solely by the accumulation of wealth, rather by the social impact. The donation can be used to create a system of production and trade, which creates a social impact in various sectors like education, infrastructure and health. However, at present management of waqf in Indonesia is still concerning. As a result of poor management, many waqf assets have been lost. "One of the reasons is that Muslims in general only give lands and school buildings as waqf, because wakif do not think about operational costs of the school and their endowments (waqf managers) are less professional," said Secretary of the Sharia Economic Community Expert Council, Uswatun Hasanah in Jakarta. Therefore, this study will analyse the usefulness of waqf assets and impact of waqf and how they report to stakeholders. The scope of this study involves a number of different waqf institution's types in Indonesia.
Waqf has highly potential to play charity roles that benefit for Muslim and the local community. Apart from that, the waqf contributors are demanding to know the break down figures and Dwi Nita Aryani, Bunyamin, Hanif Mauludin, Rosnia Masruki, and Mustafa Mohd Hanefah explanations about the distribution funds. 1 As such, those responses are consistent with the notion of public accountability, which posits that waqf institutions are accountable to the funders 2 , otherwise, this forces them to make inquiries, complaints and voice their dissatisfactions about waqf institutions 3 . The routine circulation of bulletins and newsletters nowadays, is not sufficient for those who are more aware of the roles of waqf institutions and their accountability. Thus, this study vies that a comprehensive performance measurement such as efficiency, effectiveness and productivity of waqf management should be included in today's annual report to explain to those curious members of the public. It is important to examine and come out with the best reporting practices for waqf in Indonesia in order to answer such public accountability as well as indirectly will increase the public trust toward waqf institutions. The Indonesian Waqf Board (BWI) is an independent state institution formed under Law Number 41 of 2004 concerning Waqf. This body was formed in the context of developing and promoting representation of waqf boards in Indonesia. BWI enhance nazhir's knowledge in order waqf assets can be better managed and more productive hence they can provide greater benefits to the community, both in the form of social services, economic empowerment, and public infrastructure development. BWI is domiciled in the nation's capital and can establish representatives in provinces, districts and / or cities as needed.
Meanwhile, in 2016, Bank of Indonesia published an Economic and Sharia Finance series module with title "Wakaf : Pengaturan dan Tata Kelola" (Waqf; Regulations and Governance), and mentions that the management must produce an accountability report that includes financial statements, endowment activities and governance. The BASEL core principles also explains that waqf foundation must disclose and transparent in its management. In the Law number 41 year 2004 concerning Waqf, in the article number 61 asserted that accountability for the implementation of the duties of the Indonesian Waqf Board is carried out through annual reports that are audited by an independent audit institution and submitted to the Minister. Moreover, the annual report should be announced to the public. On November 7th 2018, DSAS-IAI ratified PSAK 112: Wakaf Accounting. The PSAK 112 will be applied effectively on January 1, 2021 with options for early adoption. The complete financial statements of waqf entities include statements of financial position, detailed reports of waqf assets, activity reports, cash flow statements, and notes to financial statements. In the following year 2021, waqf institutions have to make a standardized financial report.
The main task of a manager Waqf (Mutawalli) is to preserve and develop the assets of a Waqf donated, and collect Waqf income and distribute income. Furthermore, in managing Waqf assets, Mutawalli must provide reports to Waqif (donors), Waqf management, beneficiaries and the public to maintain institutional accountability and transparency. However, who had studied on two waqf boards in Indonesia did not explain what kind of information should be provided by Mutawalli and to whom the report priority should be given. 4 It reported that information which is should be presented by Mutawalli where this actually can be used to assess the performance of Waqf institutions, nonprofits organisations, and kind of a financial approach are not enough provided. 5 It suggested that there is room to improve business management and Dwi Nita Aryani, Bunyamin, Hanif Mauludin, Rosnia Masruki, and Mustafa Mohd Hanefah operations of Waqf institution by adopting a modern approach that can improve the performance of the institution to provide better and more efficient services to the community. 6 Waqf institutions perceived that they were accountable merely to their own board of directors. The other stakeholders perceived waqf institutions to be accountable to their donors for probity. 7 Information related to performance is useful in satisfying the expectations of stakeholders, and as a result, this study recommends partial information of financial performance measurement, which is the most customary, by the stakeholders. It is suggested that waqf institutions and other related bodies at national and international levels should adopt best practice of reporting performance.
It is necessary to target more waqf boards to boost the waqf property for better endowment. However, nowadays the corporate waqf contributors are very demanding with regard to information on the efficiency. Previous studies suggested that performance achievements are the most required but the least disclosed in waqf institutions in Indonesia. In this case, quantification of performance measurement is essential. Financial performance ratios could be used while the objectiveness of ratio calculations appears to facilitate the report preparation, thereby help to address the difficulty in measuring performance in waqf institutions in Indonesia. Interpretation of the ratio should be considered to facilitate understanding and be more meaningful to readers of different backgrounds. Finally, regulators could enhance their role by organising forums as a platform to share ideas between waqf institutions, state government and federal government to meet the needs of each set of constituents. This is crucial since the differences of each state regulations can possibly be reduced through following Shariah as focal accountability. Moreover, integration of religious and accounting academics can be harmonized to meet various needs.
We can learn a good pattern from The Majlis Ugama Islam Singapura (MUIS) which publish a comprehensively annual report every year to show the effectiveness and transparency of waqf assets management. Nevertheless, waqf institution in Malaysia still lack on financial and non-financial information such as waqf activities and socio economic impact. 8 Along with that, this study will observe how waqf institution in Indonesia report their activities, performance and how the impact of waqf on socioeconomic and governance. The outcome from this research would be used to suggest the best practice of performance measurement and reporting for waqf institutions in Indonesia.
Disclosure is how the managers communicate to shareholders and other users pertaining the performance of organisation and their activities in more transparent. 9 Even though, waqf boards as a charity institution, they should disclose their activities of what they have done, and report financial and non-financial performance. Waqf board must be trusted, due to managing waqf assets is kind of amanah (mandate) from wakif. Furthermore, waqf board also has a responsibility to Allah SWT. In addition, financial performance measures beyond the financial statement should be disclosed in annual reports. 10 Therefore, disclosure and transparent in reporting will minimize asymentric information between stakeholders and manager 11 , or between waqif and mutawalli.
Most of waqf institutions were less disclosure, inadequate and incomplete waqf performance information on annual report, hence they proposed a non-financial performance measurement for waqf institution which more useful to fulfill the need of stakeholders. 12 They also mentioned that in managing waqf, waqf board should consider input, output and outcome of the usefulness of waqf. 13 In addition, the papers asserted that there are fifty-seven (57) disclosure items were applied in examining waqf institutions transparency in Malaysia 14 which dividing into five categories 15 , namely, corporate (7 items), strategic (5 items), financial performance (9 items), non-financial performance (8 items) and financial statement disclosure (28 items) as follows in table 1. The research approach used is qualitative descriptive research. The content analysis is carried out to identify the current practices of reporting in selected waqf institutions in Indonesia, both financial and non-financial reporting. Further investigation will be made to get in-depth explanation about the reporting practices, in particular on the performance reporting.
The population of this research is 201 registered waqf institutions in Indonesia. The sample is twenty waqf institutions (10%) of 201 registered waqf institutions which have website that selected by purposive sampling. The disclosure of their performance reports were measured by counting the items that reported in the website of 57 disclosure items. If they have lack of performance measurement, reasons of lack of disclosure and the absence of such measurement will be investigated. Based on the observation, the study will suggest the best reporting framework for waqf institutions in Indonesia.
This study refer that there are 57 questions in the disclosure items that should be reported in every waqf institution website as shown in table 1. To collect data and to analyze the disclosure of waqf report, we observed each waqf institution's website properly and then we count the reported items. As much as items they report, the better disclosure they have. In order to complete the information, we will interview some mutawallis.
B. Discussion

Reports Disclosure of Waqf Institutions
Accountability of non-profit or charity organization is crucial in order to convincing stakeholders to show how manager or mutawalli can be trusted in managing the resources. Beside quantitative assessment, qualitative reporting is also needed in their reports due to charity non-profit institutions engage with many stakeholders. Furthermore, waqf management is also a kind of responsibility to Allah SWT. This means that in the management and utilization of waqf assets must comply with sharia rules. Therefore this research is in line with agency theory, that mutawalli or nadzir should reports distribution of waqf and board performance to stakeholders in order to make sure that they have managed waqf effectively and can be trusted.
The results exhibit that website released by waqf institutions in Indonesia have very limited information and less of disclosure. Most of the waqf boards only reported assets or funds that have been collected, type of waqf model, how to donate, planning, their activities and news, less of financial reports. The information reported may not enough to satisfy public accountability. Therefore, waqf board performance cannot be counted as well as could not help to explicate the impact of waqf on socio-economic aspects. This condition is consistent with research by Masruki and Z.Shafii also Sulaiman and Zakari's research who asserted that inconsistency and incomplete information have made researchers could not collect data and measure waqf performance.
It's mentioned that it is important for the State of Islamic Religious Councils (SIRCs) to demonstrate their performance and exercise transparency in order to discharge accountability to the stakeholders. 17 The waqf institutions need to transpire their performance as whether they have successfully achieved waqf missions and objectives as required by stakeholders. Accountability, management and performance of Waqf institutions can be easily evaluated through performance analysis. However, the parameters are different from the parameters for measuring business institutions. Measurement of the performance of business organizations is generally measured by profit, while the measurement of Waqf institutions performance is more complex consist of input, output and impact. It also suggested that input is resources that can be used for operating activities, producing stuff or delivering services. 18 Meanwhile output is goods or services produced by organization. Waqf manager must maintain that waqf property remains intact but endeavored to be developed in order to provide maximum results to stakeholders who want it.
Financial ratios are very important to evaluate the condition of organization financial; however ratio is not the only indicator of the successful of a nonprofit institution. Non-profit organisations should be evaluated more comprehensively, especially related to efficiency and effectiveness. Waqf institutions cannot be evaluated merely based on financial performance, but socioeconomics impacts should be considered. Besides measuring their performance, we also consider how the waqf institution discloses their financial report, how to measure the productivity of their asset, and the effectiveness of their activities when using their fund and asset. The scope of performance report should include how to disclose their effectiveness, efficiency and productivity, beside the input and output reports After we observed 20 websites of waqf institutions in Indonesia, the result exhibits that most of them did not comply with 57 disclosure items. This exposes in absence of annual report and performance measurement indicator on Indonesia waqf boards. The average of items is 13.70 or only 24% of items are disclosed or reported in their website. The highest score is 42 items (74%), meanwhile the lowest score is only disclosed 4 items (7%). All the waqf institutions have shown their establishments, organization structure, news, pictures of activities, and how much waqf they have received. However, most of them did not report balance sheet, financial report or annual reports. Table 2 adduces all the waqf institutions have informed their establishment, purpose and objective. The average number of waqf board reported corporate information is quite high i.e 16 (78.57%). In the strategic part, a half of them have reported achievement, fact and figures, but no one of waqf boards received grant from governance. Only small number of waqf institutions (13,33%) reported their financial performance. In the nonfinancial performance, almost waqf boards described input and output of the waqf activities however most of them did not measure the outcome. In addition, they also did not measure ratios, effectiveness, efficiency and productivity of the usefulness of waqf. Only 9.11% of waqf boards reported their financial statements. These conditions represent that waqf boards in Indonesia have not comprehensively reported their performance, impact on socio economic and governance. This might be caused by lack of guidance of reporting or format to make complete and comprehensive report and informative for stakeholders. The lack of reporting by waqf institutions is because they do not use the information of waqf utilisation as data input and to compile it into a good report. This is in line with a result of interview to nadzirs which exhibited that nadzirs had never made a report of the land waqf management to BWI because they did not know the form of the report and how to report it. Furthermore, the training and fostering by BWI have not been comprehensive and effectively held. Research also mentioned that lack of human resources and unskilled manager (mutawalli) may support the factors underlines shortage of waqf reporting.
The absence of performance report can be understood and plausible due to previously Indonesia waqf institutions did not have a regulation and standard to create a financial performance report, even there is no a measurement for assessing the effectiveness of waqf management. This is also supported by a research which found that lack of socialization by Indonesias waqf board to nazhirs regarding to the implementation of accounting standard that issued by Sharia Accounting Standards Board and Institute of Indonesian Chartered Accountants. However, starting 2018 Sharia Accounting Standard Board and Indonesia Accounting Board have released the PSAK 112 concerning accounting for Waqf, and this will be effectively employed start in 2021. In general, PSAK 112 regulates the accounting treatment of waqf transactions carried out both by Nazir and Wakif in the form of organizations and legal entities. The PSAK 112 can also be applied by individuals of Nazir. Nazir's should complete financial statements report include namely: a. Statement of financial position at the end of the period b. Detailed report of waqf assets at the end of the period c. Activity report for the period d. Statements of cash flows for the period e. Notes of financial statements.

The Impact of Waqf on Socio-Economic and Governance
For measuring the non-financial performance of waqf institutions, this study observed input, output, impact of waqf on socio-economic, efficiency, effectiveness, productivity and customer satisfaction as shown in Table 2. However, we found the Dwi Nita Aryani, Bunyamin, Hanif Mauludin, Rosnia Masruki, and Mustafa Mohd Hanefah absence of socio-economic impact report of waqf in their websites. The productivity and effectiveness of the usefulness of waqf have not been measured and reported. Most of the waqf institution (80%) has reported only the input and output (70%) of waqf, however none of them reported efficiency and effectiveness of waqf utilization as well as customer satisfaction and productivity. This evidence exhibits that governance in managing and reporting of waqf need to be considered and developed.
Based on interviews towards several waqf management bodies exhibited that they agreed that Indonesia has a big potential of waqf collection since the number of waqf assets in Indonesia is large. Nevertheless, the development of waqf management is still far from expectations. They also said that there are still a lot of non-productive waqf lands where majority of waqf asset and waqf cash utilization are merely concern on religious purposes such as building mosques, religious schools, Islamic boarding schools, orphanage homes and tombs. The most forms of waqf are land or rice fields, and have not yet innovated into other productive forms. In addition, they have not analysed and reported the impact of waqf utilization on socio economics.
There is a kind of understanding that is strongly believed and hereditary that waqf is identical to the designation and is run on the basis of trust. In addition, the competency of nadhir, waqf asset management, cultural aspects, and habits are the obstacles in the development of waqf asset management. This result is in line with explanation that mutawalli did not productively manage waqf assets and did not utilize those assets in order to create income to help the needy. 19 Most of wafq properties are only used for mosques or Islamic schools. Based on observations in the waqf boards' website, we did not find any reports regarding to the ratio or measurement of effectiveness of waqf utilization. This also indicates less of governance in managing of waqf.
The mutawalli should be more creative to utilize and manage waqf assets in order to get income without contravening sharia rules. In addition, the weaknesses of waqf board are short of management, untrained waqf managers and lack of reporting. 20 Therefore, some trainings for mutawallis are needed such as management of waqf (asset and cash), financial management, financial reporting, evaluating of effectiveness and productivity, as well as how to measure the impact of waqf on socio economic and governance. Furthermore, it's been mentioned that learning from Charity Commission in the UK then they suggest to the management of waqf as charity organisations to carry out internal financial control, disclosure and reporting, fund management, governance. 21 . Along with that, in doing governance of waqf management, mutawallis or nadzir should have a commitment in adhering the standard of reporting, transparent, accountability, understand sharia rules, having a capability in waqf management, and creative. 22 This is in line with agency theory, albeit waqf board is non-profit organization, they should be trusted hence they are suggested to report their activities in more transparent for stakeholders, and this can minimize asymmetric information. Moreover, the waqf board also keep the amanah from wakif and responsible to Allah SWT. 20  22 Lubis, S. (2010). Potensi Wakaf Untuk Kemandirian Umat dalam. Jakarta: Sinar Grafika.

C. Conclusion
Based on the observations, the waqf institution websites have not compasses the 57 items of financial and non-financial disclosures. They have released corporate information and strategy in more detail. Only 13,33% of waqf institution reported their financial performance, and only 9,11% presented financial statements.
The waqf institutions have adduced non-financial items merely input and output, however impact of waqf on socioeconomics have not been reviewed, measured and reported. Other measurements of non-financial indicators consist of efficiency, effectiveness, and productivity of the usefulness of waqf, as well as customer satisfaction have not been measured and disclosed.
Even though waqf institution is charity organisation, complying with governance such as adhering the standard of reporting, transparent, accountability is needed. Implementation of governance is key point for non-profit or charity board in order to convincing stakeholders to show how manager or mutawalli can be trusted in managing the resources. Moreover it is kind of amanah and responsibility to Allah SWT.
Many factors caused the absence and lack of financial and non-financial reporting in waqf institutions. Not only human resources and unskilled mutawalli, but also less of socialization of financial report implementation, training and nurturing are to be reasons of the short of good and comprehensive reporting.
The absence of regulations and standards of financial and non-financial reports including outcome measurement have not been arranged, hence stakeholders cannot evaluate the impact of waqf on socio-economics. Beyond of those reasons, commitment, creativity, sincerity and intention of mutawalli and nadzir in managing waqf will be the basis of good governance implementation and give beneficial impact for public.

Suggestion
The result illustrates waqf reporting practices in waqf institutions in Indonesia need to be developed and enhanced. The waqf institutions should improve their performance reports in order to make the annual report more transparent and satisfy their stakeholders. Moreover, the effectiveness, efficiency and productivity of the activities of waqf board and the usefulness of waqf itself can be measured. Some ratios suggested can be employed for assessing the effectiveness, efficiency and productivity of waqf. For the better improvement of waqf report and carry out of PSAK 112, we could refer a measurement that suggested. 23 Beside the financial performance that must be calculated, other impact of socio-economics of waqf also crucial to be determined.
Due to cash waqf recently is trending in Indonesia, and easy to be done, there is a model for gauging the impact of waqf cash as suggested with some modifications that suitable for Indonesian condition as shown in table 3. 24 This measurement is proposed to be adopted by waqf institutions to estimate impact of cash waqf on socio economy Dwi Nita Aryani, Bunyamin, Hanif Mauludin, Rosnia Masruki, and Mustafa Mohd Hanefah  In addition, it's also advised other measurements that can be utilized for measuring the impact of waqf that have adapted by Majlis Ugama Islam Singapora (MUIS) as the benchmark on waqf reporting. 25 Table 4 describes the suggested impact measurement of waqf project with some modification which suitable with Indonesian condition. We could adopt some of those impact measurement which suitable with Indonesian condition, at least they have an indicator model to assess the productivity of waqf asset and cash. Performance measurements proposed in this research will address transparency, accountability, effectiveness, efficiency, and social economic impact of the Waqf institutions. By applying the suggested socio-economic impact model as mentioned above, this could assure the sustainability of waqf boards in Indonesia, as well as have good governance, more accountable, disclose, and trusted.
Moreover, the proposed measurement also makes the mutawallis easy to publish a comprehensive report. However, a commitment, capability of waqf management, and studiousness of mutawalli and nadzir in managing waqf are needed.

Limitation
This research only use 20 website of waqf institutions (10% of population in Indonesia) that might not be able to be generated the result to other countries. Due to less of data in the waqf report in their website, financial performance and socio economic impact of waqf could not be measured and analysed. There is only one completed method for assessing disclosure of waqf boards and measuring the impact of waqf on socio economics and governance, next researchers are suggested to employ this method. The scholars are also able to count ratios and to analyse the implementation of PSAK 112 in waqf organizations.