Assignment 5 - Waseela Foundation

Assignment # 5
Case Study
Waseela Foundation: Accounting for Zakat
Student Name: Waqar Mansoor (62790)
Course Name: SFAD
Term: Fall 2020
Instructor: Dr. Arsalan Hashmi
1. What is the existing accounting system at Waseela for the collection of donations and spending
money from the donation pool?
Their objective was to ensure that all funds received should be properly safeguarded and
utilized to achieve the stated mission of the organization. To make it possible their system
was quite simple and easy. They were not using any software, they were recording all the
entries by their hand. The recording of all donations received on a timely basis and in the
proper reporting period.
All donations were received by the front desk officer against pre-printed. These donations
were then recorded in the donation register with details of the name of donor, amount, date,
and donation receipt number. At the day end, the front desk officer prepared a daily donation
receipt summary and forwarded it to the accounts department. The Accounts department
would record the amount as donation income in the books of the foundation.
Expenditures were incurred on different projects and recorded under different heads.
However, all payments were made from the general pool of funds, indiscriminately. The
budgeting and planning process were informal. Major expenditure decisions were usually
made in board meetings. However, minutes were taken and maintained for all board
meetings.
2. How would zakat donors evaluate the current accounting practices at Waseela? What would
they like to see in the system to satisfy them?
Since the Zakat donor of Waseela foundation were the peer or relatives and the people who
already know the managing community of Waseela the need to dearly define the process of
fund allocation was not the make issue. But since they ask the whole random society to
contribute for the operations and new projects of welfare, they wanted to know the allocation
of their fund focusing on religious point of view as well as for the sake of preventing their
money for any unhumanitarian activity that could occur.
They wanted to see the proper allocation of each category of fund either Zakat, sadqa ,normal
donation etc. by knowing them that where were they money are supposed to invest.
Donors could get to know about this allocation in their annual reports mentioning details of
complete plan and future forecasting of any welfare project they are going to start. And who
will get the most of its benefits.
3. What changes should the foundation make in the accounting and reporting system to properly
account for zakat donations?
Firstly, they should make sure that all the recording of the Zakat should be managed and
recorded any software, there are vast number of accounting software’s which other Nonprofit
Organizations i.e. Edhi, Saylani and Cheema etc. are using to control their Zakat collections
and other incomes.
Also, one more mistake which they are doing is that they are using the Zakat collection for
their day to day expenditures which is not right, there should be different account for the
daily expense and for zakat collection.
4. Once a proper system of accounting is put in place and zakat starts pouring in, will it help the
foundation in setting up the hospital? What further challenges can arise? How can the
management address those challenges?
After implementing a proper accounting system to manage and record the Zakat, also the Zakat start
pouring in their challenge of setting up the hospital won’t be possible because the amount they have
required for the hospital is 22 million which is very huge, they should have think differently. They
should not have to be dependent on the Zakat only there should be any investment plan to raise the
income by itself. It could be buying Shares of some profit generated company or any other.
Additionally, they likewise Shaukat khanum memorial hospital they should hire a brand ambassador,
a face who have a great name in the society. Moreover, they should have shown people that they are
spending their zakat in a place where it should be spent. This will help them to generate the funds
more.
5. How can this learning be generalized and applied to other situations?
The scenario of Waseela is not so different from any small-scale institute who wanted to help the
society. Any emerging company or institute who are obliged on people’s funds needs to show their
credibility and authenticity. And when it comes to religion people become more vigilant and wanted
to make it assure that they are not unintentionally or unknowing become a part of any hazardous
human or religion activity.
The learning from this case is that either your intentions are pure but in real world facts and figure
does matter and when it comes the need of others contribution you surely need to first prove the
methods and tricks that you are going to apply for the profitability of any company who have almost
all of its share belongs to its stakeholder.
Making a proper project plan is a must to start Any business particularly the NGOs, whose credibility
and associations worth to trust.

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Assignment # 5

5. How can this learning be generalized and applied to other situations?

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