BEYOND AGENCY THEORY: RECONSTRUCTING AUDIT PHILOSOPHY THROUGH THE LENS OF AMANAH AND FASTABIQUL KHAIRAT

Abstract

This study challenges the dominance of agency theory in contemporary audit philosophy and proposes an alternative framework grounded in Islamic ethical principles of Amanah (trustworthiness) and Fastabiqul Khairat (competitive virtue). Through a critical philosophical analysis and empirical investigation of Indonesian audit practices, we demonstrate how Western-centric agency theory, with its assumptions of self-interest and opportunism, fails to capture the complexity of audit relationships in non-Western contexts. Drawing on interpretive phenomenological analysis with 25 senior auditors from Big Four and local firms across Jakarta, Surabaya, and Yogyakarta, we develop an Amanah-based audit theory that reconceptualizes the auditor-client relationship as a sacred trust rather than a contractual mechanism for reducing agency costs. Our findings reveal how Indonesian auditors navigate between professional obligations and spiritual accountability, creating a unique audit philosophy that transcends the material-spiritual dichotomy. This study contributes to decolonizing audit knowledge by offering a culturally-embedded alternative to dominant Western theories, with implications for audit practice, education, and regulation in emerging economies.