The Integration of Disclosure of Islamic Social Reporting (ISR) in Islamic Bank Financial Statements

Faculty of Islamic Economics and Businesses, Universitas Islam Negeri Surabaya

^* Corresponding author’ email: sugianfa@gmail.com

Abstract

Islamic bank has an economy function as well as a social function. So that Islamic banks posses an ethical identity for their social objectives as important if not more important than economic goals due to the fact that the system and its operation is based on the Islamic Shari’ah. This objective is intended to Islamic bank also participate in the improvement of society, so it is expected to describe clear corporate social responsibility in their social reporting practices as evidenced in their annual reports. This study replicated the Haniffa and Hudaib research by examining social reporting practices of Islamic Banks in Indonesia. This examination involves a comparison of social disclosure 12 Islamic banks conducted through their annual reports to the ideal level of social disclosure that Islamic banks should be made, during the years 2014-2015. This comparison is done by using the Ethical Identity Index (EII) developed by Haniffa and Hudaib (2007). The findings revealed that at present, Islamic banks in Indonesia is still poor in the practice of social reporting.