THE VALUE OF ISLAMIC SOCIAL REPORTING DISCLOSURE

Abstract

Indonesia is one of the largest muslim country in the world. Therefore, Islam has significant value that influencing the manner in wich muslim conduct their public and private live. In fact, the rapid development in Islamic Capital Market and sharia banks in Indonesia, show that sharia Islam has formulated a comprehensive ethic governing how business should be run and how banking and finance is to be arranged. Those also force accounting to have additional dimension to financial reporting to stakeholders. The sharia bankings need to disclose a religious aspect to their financial statement. The additional information should cover the fulfilment of companies obligation with sharia frameworks, such as zakat, sadaqa, shariah compliance status, wages and compensation, etc. This situation makes companies, particularly sharia bankings, are expecting to have Islamic social reporting disclosure. The muslim stakeholders need to be assure that the companies were operating under Islamic laws or sharia framework. This paper aims to measure the extent of ISR as practiced by sharia banking in their annual report on 2015. The result showed that there were two themes that highly disclosed by sharia banking, which were employees and society. Based on the data of the disclosure index, it could be concluded that the extent of ISR in the annual reports of 5 top sharia banking around 2015 in Indonesia is considered to be adequate.