Insights into Financial Management Practices of Tahfiz Institutions (TI): A Selangor Perspective

Abstract

This study investigates the financial management practices of TI, which include processes such as planning and budgeting, collection, payment, recording, and reporting. The research was conducted on 58 TI located in Selangor. The participants involved in the study were personnel responsible for the financial matters of the TI, including management and administrative staff. In general, among the five criteria evaluated, the payment status of TI which included payment records with proper supporting documents and details, on time and segregation of duties throughout the payment process. demonstrated an excellent performance with an overall mean score exceeding 4.0 (on a scale of 1 to 5, with 5 being the highest). Following payment, the performance rankings were collection, recording, reporting, planning, and budgeting. The weak performance in reporting, planning, and budgeting mirrors the situation observed and proven empitically in other non-profit organizations (NPOs) and small and medium enterprises (SMEs) literatures. These entities often lack expertise in these areas due to insufficient staff, the absence of guidelines, and lack of awareness regarding the importance of financial management components. While payment, collection, and recording represent the core operations of TI, deficiencies in these areas can adversely impact its day-to-day functioning. Nevertheless, all aspects of financial management (FM) are crucial for TI's sustainability and survival. By establishing sound FM practices, these TI can enhance their chances of maintaining quality standards and avoiding future financial shortfalls. TI as part of the NPO which resources depending on the donation from others really need a good FM to ensure their sustainability and their uninterrupted operation.