INTHEBLACK April 2026 - Magazine - Page 59
Cognitive bias in
accounting and finance
“Individuals tend to disregard
information that disproves their
own worldview or goes against
what they believe to be true.”
Cognitive biases, Goh explains, stem from the brain’s
reliance on heuristics. These are shortcuts that allow
people to process information efficiently, but they
come with risks.
“Cognitive biases are a large family of flaws
in thinking that most humans are susceptible to,”
he says. While heuristics help people navigate
complexity, they can also lead people to flawed
decision-making “and that is when the heuristic that
we have becomes known as a cognitive bias”.
In high-pressure, detail-oriented fields such
as accounting and finance, certain biases surface
repeatedly. Drawing on his experience consulting
with organisations, Goh identifies “anchoring bias,
confirmation bias, loss aversion … as well as an
overconfidence bias” as particularly common.
These tendencies intensify in environments where
mistakes feel unacceptable. “When you cannot make
a mistake, that is when confirmation bias, anchoring
biases and availability heuristics come into play much
more,” he notes.
LISTEN
EMBEDDED BELIEFS
Confirmation bias poses significant ethical and
professional risks. Goh describes it as “the tendency
for people to seek out information that already
confirms their pre-existing beliefs”. The danger,
he says, lies not only in what is sought, but in what
is dismissed.
“Individuals tend to disregard information that
disproves their own worldview or goes against what
they believe to be true,” he says. In accounting
and finance, this can erode evidence-based
judgement, because “you are no longer working
based on evidence, but primarily on perception
and emotions … and the consequences could lead
to financial losses”.
HOW TO INTERCEPT BIAS
Organisational culture plays a decisive role
in managing bias. High-pressure cultures can
encourage narrow thinking, while deliberate
challenge can counter it. Goh cites a “quite brilliant”
idea that some Japanese organisations use: they
appoint a devil’s advocate in every meeting, whose
job it is to point out any potential issues in the group’s
decision-making.
At an individual level, vigilance matters most.
“If everything looks great to you, that is when you
should be the most cautious,” Goh advises.
“You have to start questioning and saying, ‘Am I
missing something? Is my perspective too one-sided?’
That’s one of the things that individuals can do
to safeguard themselves against cognitive biases.”
BOLD SIGNALS intheblack.cpaaustralia.com.au 59
PODCAST
BRAIN SHORTCUTS
to the podcast
to the full
podcast episode
Dr Victor Goh Weng Yew, HELP University
Cognitive bias is often treated as a theoretical
concern, yet its influence on accounting, finance and
leadership decision-making is both practical
and pervasive.
In a recent episode of the INTHEBLACK podcast,
applied psychologist Dr Victor Goh Weng Yew
examines how unconscious mental shortcuts shape
judgement in professions that depend on evidence,
accuracy and public trust.
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