The Diwan is a name given to the place where the secretaries sit down to work and records are kept. It is also a name given to the records themselves, and there is an attachment between the two meanings.

The first establishment of Diwans and designation of a place to keep them in was at the time of ‘Umar b. Al-Khattab in the year 20AH. In the life time of the Messenger of Allah (saw) , the Treasury did not have a reserved Diwan though the Messenger of Allah (saw) did appoint secretaries to keep record of the funds. He appointed Mu’ayqeeb Ibnu Abi Fatima Aldusi as secretary of the spoils (Al-ghanaim), and Zubayr Ibnul Awwam as secretary of the Sadaqat, Huzaifah Ibnul Yaman as secretary over the agricultural produce of Hijaz, and Abdullah Ibnu Ruwaha as secretary over the agricultural produce of Khaybar. Al Mughira Ibnu Shu’ba was appointed as secretary for the loans and transactions, while Abdullah Ibnu Arqam was a secretary for the records of the tribes and their water. However, the Messenger of Allah (saw) did not keep any Diwans nor did he set up a place for keeping them and writing them. This went on during the Khilafah of Abu Bakr . However, things changed when ‘Umar b. Al-Khattab became Khalifah, and the conquests increased. This consequently increased funds pouring into Madinah, which necessitated the setting up of diwans and writing records and designating places for keeping them and writing them.

It has been reported that the direct reason behind establishing the Diwans was because Abu Hurayra once brought to ‘Umar a large amount of funds from Bahrain. So ‘Umar asked him: “What have you brought?” He said: “I brought you five hundred thousand Dirhams (500,0000).” ‘Umar said to him: “Do you know what you are talking about? You must be tired, so go to sleep and come and see me in the morning. When he came the next day, ‘Umar asked him ‘How much is it?’ Abu Hurayra said: ‘500,000 Dirham.’ ‘Umar enquired: ‘Is it legitimate (Halal)?’ Abu Hurayra replied: ‘I know nothing else but that. Upon this ‘Umar stepped up the Mimbar, praised Allah (swt) and glorified Him, then said: ‘O people! A large amount of funds has reached us, so if you wish we can divide it among you in measure or if you wish we can count it. A man from among the people said: “O Amir al-Mu’amineen!, Why don’t you set up account books (Diwan) so that you can record whatever you give to people.’”.