Social pressures from management causes accounting fraud, research claims

ACCOUNTANTS who are neurologically vulnerable to social pressure from managers promoting their own personal interests are more likely to misreport financial information, research has claimed.

According to Professor Frank Hartmann of Rotterdam School of Management, Erasmus University (RSM), some financial misreporting comes from a neurological make-up that makes accountants more vulnerable to social pressure from managers executing orders for their own personal gain.

The research found that accountants with a very responsive mirror neuron can detect other people’s emotions more easily and tend to adjust their behaviour accordingly.

Commenting on the research, Hartmann said: “Managers are often guilty of pressuring their controllers to manipulate financial reporting because of personal interests such as securing a promotion or a bonus, or avoiding being fired.

“This type of pressure is hard to resist by some controllers because of their neurological characteristics.”

Hartmann warns that the sector should be aware that some people are neurologically less well suited to being financial controllers, adding this cannot simply be countered by new rules or appeals for ethical behaviour.

Hartmann added that his results shed a different light on who should – and who shouldn’t ? be hired for internal accountants’ positions.

The professor believes that accountants who maintain an “often-loathed stereotype” and possess a “cold and aloof” character may be more suited for financial controller roles.

“Having these unsociable characteristics might actually be beneficial because such people respond less readily to inappropriate social pressure,” Hartmann added.

Hartmann’s results also support the current renewed interest in getting people with autistic spectrum disorder into jobs that demand high-level data processing and great integrity, he concludes.