Shariah Related Disclosure in Malaysian Takaful Companies: Is It

Necessary?
Fahru Azwa bin Mohd Zain*
fahruazwa@gmail.com
Wan Amalina binti Wan Abdullah @ Wan Muda
amalina@unisza.edu.my
Faculty of Law, Accountancy and International Relations, Universiti Sultan Zainal Abidin (UniSZA)

Abstract

Shariah reporting protects the Islamic identity of takaful operators by enhancing their governance and
accountability. The fact that Shariah governs all aspects of Muslim conducts underlines the
importance of Shariah related disclosure. This paper examines the need of Shariah related disclosure
for takaful companies in Malaysia. A review of relevant literature is performed to provide a consensus
of the literature regarding disclosure of Shariah information in Islamic financial institutions particularly
takaful operators. Subsequently, a Shariah disclosure compliance index is constructed for future
examination of disclosure in the annual reports of takaful companies. The study provides suggestions
for enhancing the practice of accounting disclosures, moving towards Shariah compliance reporting.
This paper will examine the reporting framework, guidelines or standards issued by Bank Negara
Malaysia, Malaysian Accounting Standards Board, the Islamic Financial Services Board and the
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). This discussion paper
provides the basis for future empirical study in order to examine the Shari'ah reporting in Malaysian
takaful companies.
Keyword: Shariah disclosure, Malaysian takaful companies, AAOIFI.

*Corresponding author