IMPLEMENTATION OF ISLAMIC SOCIAL REPORTING IN ISLAMIC BANKS MALAYSIA

The objectives of this study are (1) to measure the extent to which the Islamic Social Reporting (ISR) is practiced by Islamic banks in Malaysia and (2) to examine the ISR aspect which is most widely disclosed in annual reports. This study used ten Islamic banks in Malaysia as the research sample. The data used were secondary data in the form of information about social activities reported in 2015, 2016, and 2017. The analytical method used was content analysis technique and scoring to assess social activities disclosed in annual reports of the research object. The results showed that the average level of disclosure of the ISR of Malaysian Islamic banks was 32.81%, while the theme that had the highest level of disclosure was society with 10.77%..


Type and Source of Data
Data used were secondary data in the form of information on social activities reported in annual reports in 2015, 2016, and 2017. Items of disclosure of social activities refer to the ISR Index developed by Othman and Thani, 2010, as presented in the following table: p-1412-3789 e-2477-1783

Data Analysis Methods
This study used content analysis techniques and scoring to assess social activities expressed in the annual report of the research object. The annual report of the sample was read carefully to identify the social activities that are disclosed. Every activity reported was given a score of 1 and if not reported was given a score of 0. The maximum score is 100% if all research objects report their social activities. The maximum number of scores on each theme was obtained by comparing the number of disclosure items for each theme with the total p-1412-3789 e-2477-1783 number of disclosure items. The maximum score for each disclosure item is presented in table 4.

Disclosure of ISR of Islamic Bank of Malaysia
The initial step in collecting research data was to do a checklist of all ISR disclosure items in each bank that became the study sample. Each item that is disclosed was given a value of 1, whereas if it was not disclosed it was given a value of 0. An example of the results of a checklist for each item disclosure for each bank is presented in the appendix. The next step was to calculate the percentage of disclosure in each theme, for example in theme A, there are 3 items revealed, the value is 3/43 = 6.98%, and so on. The score of reporting on social activities of selected Islamic banks, in 2015, 2016, and 2017 are as follows:   From table 5, it can be seen that in 2015 the disclosure of the ISR of the Islamic Bank of Malaysia Berhad (BIMB) had the highest score of 65.37%; the next was CIMB Islamic Bank Berhad with a score of 65.11%. The lowest rating was OCBC Al Amin Bank Berhad with a score of 11.64%. In 2016 and 2017, ISR disclosure of Islamic banks in Malaysia had the same pattern as the previous year. Bank Islam Malaysia Berhad (BIMB) in 2016 and 2017 had the highest score of 55.82% and 69.76% respectively, while the lowest rating was OCBC Al Amin Bank Berhad with the same score of 11.64%. None of the ten banks that had a score of 100% meaning that there were no banks that carried out their social activities perfectly. Banks that had a score above 50% were only two banks, while the others had a score below 50%. These results indicate that the efforts of Islamic banks in Malaysia in providing information about their social activities to the community were very low.

Disclosure of ISR of Islamic Bank of Malaysia
The ISR disclosure results based on the theme of disclosure are presented in table 8 and Figure 1. This figure is the average ISR disclosure of the entire study samples. Data from table 6 shows that the average level of the ISR Disclosure of Islamic banks in Malaysia was only 32.81%. p-1412-3789 e-2477-1783

Figure 1. Percentage of ISR disclosure based on Disclosure Themes
In general, the percentage of disclosures based on the theme for the last 3 years has increased. ISR disclosures based on the theme of product and service from 2016 to 2017 rose by 0.7%. ISR's disclosures based on society's theme rose by 0.93%, as well as on the environment theme rose by 0.47%. The theme of finance and investment and employees tends to experience fluctuations while the theme of corporate governance tends to decline.
It can be seen from the figure that disclosure of society (community) theme has the highest percentage compared to other themes with 10.47% in 2015, 10.46% in 2016, and 11.39% in 2017. The disclosure theme of society has 11 sub-items disclosures include saddaqah, waqf, qard hasan, employee volunteerism, education school: scholarship, graduate employment, youth development, underprivileged community, children care, charities, and sponsorship of public health/recreational project/sport/cultural events.
The disclosure theme of finance and investments consists of riba, gharar, zakat (used method, zakatable amount, and beneficiary), policy on late repayment, current value balance sheet, and value added statement. The percentage of disclosures on this theme was 6.05% in 2015 and 2017 respectively, 5.82% in 2016. Theme of product and service has the lowest score with the average percentage of disclosure for the last three years was 3.57%.
After carrying out its social activities, Islamic banks in Malaysia disclosed in the annual report, however, there is no standard, even though Islamic banks need a specific CSR framework. A study conducted by Jusoh and Ibrahim's (2015) concluded that 76.5% of respondents said Islamic banks must have a special CSR framework. From the figure, it can be seen that there were two banks that revealed all disclosure themes consistently, namely Kuwait Finance House and Maybank Islamic Berhad (MIBB). MIBB and CIMB Islamic Bank Berhad are banks that have a strong commitment to carrying out CSR activities; this is indicated by the ISR disclosure rate above 50% over the three years. The results of this study provide the same conclusions as to the results of previous studies conducted at BIMB. The study at BIMB stated that to prove its commitment BIMB has a special department that handles CSR programs (Jusoh and Ibrahim, 2016).
In the previous section, this research has explained that Islamic banks in Malaysia do more social activities related to the theme of society. The trend of disclosure in the society theme showed an increase. In 2016, the disclosure percentage was 10.46, up to 11.39 in 2017. These results indicate that the awareness of Islamic banks to involve themselves in community p-1412-3789 e-2477-1783 activities is increasingly high. The social activities include giving sodaqoh, providing financing from qardul hasan fund, providing scholarships, carrying out charitable activities, and sponsoring various activities. The results of this study support the research of Othman and Thani, 2010 which took a sample of 56 companies listed on Bursa Malaysia.
The theme of finance and investment had a disclosure rate of 5.97%. This theme includes usury activities, gharar, zakat, policies regarding late payments, current value balance sheet, and value added statement. From this sub-theme, the issue of zakat (amount, method of use, benefits) and policies regarding late payments are more expressed than to other subthemes.

Conclusion
The main objective of this study is to measure the extent to which Islamic banks in Malaysia have practiced ISR in their social activities. The results of the analysis showed that the average level of ISR disclosure was still relatively low at 32.81%. From the six themes of disclosure, society was the theme with the highest level of disclosure, while the one with the lowest level of disclosure was product and service. The limitation of this study was the use of only the annual report to identify and know the practice of disclosing the ISR of Islamic banks in Malaysia and not using other sources of information such as interviews. Therefore, for the next study, it is suggested to use other sources of information as a supplement in order to produce the optimal result.