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The purpose of this study is to find out how financial accounting in the zakat institutions of Malang city, in accordance with PSAK 109 as a guide in the accounting treatment. Indonesia is one of the countries with the majority of the population with Islam religion, which has a high potential of zakat. The potential of zakat is not only on zakat fitrah but also on other types of zakat such as zakat maal, infaq / sedekah. Therefore, the acceptance of zakat in Indonesia have a high potential, if the management of funds managed well, neatly, regularly and transparently. Zakat institutions must make correct financial reports and readily audited by public accountants. Audit is one of the important things to increase public trust in zakat management institutions. Therefore, IAI issued a regulation related to the accounting treatment of zakat, infaq / sedekah, namely PSAK 109. PSAK No. 109 expected to create uniformity of reporting and simplicity of reporting. Besides that, the application of PSAK No. 109 aimed to ensure that zakat management institutions comply with sharia principles and how far zakat management institutions have a level of compliance in implementing them. This study used a descriptive qualitative approach with a phenomenological study. This study uses interview techniques, where the interviews were conducted with the heads of foundations and accountants at the zakat institution. The data analysis method use primary data and secondary data. In which the data obtained directly from respondents regarding financial accounting treatment carried out at zakat institutions. Then, secondary data is also collected to support research documents from the institution. The results of this study found that YDSF Malang and LAZ Yatim Mandiri Malang in carried out accounting treatment differently. It is divided into accounting in the receipt, expenditure and reporting of funds. The recognition and measurement of funds acceptance and expenditure is based on the guidelines of PSAK 109. However, the report of funds in the zakat institution in Malang in the form of financial statements that have not been fully compliant with PSAK 109 because in terms of disclosure of funds the institution has not disclosed in PSAK 109. Thus, it is hoped that it can provide a progress in improving the performance of the Malang city zakat institution by presenting financial statements in accordance with PSAK No. 109. In the presentation of financial statements, it must be clear and accountable by disclosing financial statements in accordance with those stipulated in PSAK No. 109. As such, this will increase public trust in making the zakat institution in the city of Malang as the choice of fund collection and management institutions to pay zakat.