Scott Jackson (Accounting) and co-authors John Keyser (Arizona State University) and Doug Prawitt (Brigham Young University) published their paper, “Psychological Distance and Auditor Assessment of the Severity of an Internal Control Deficiency,” in the journal Behavioral Research in Accounting.

Holding the size of potential misstatement constant, they find that auditors are less likely to correctly assess the severity of an internal control deficiency as the size of a detected financial misstatement decreases. When there is no information about a misstatement, auditors tend to think more abstractly and correctly classify a material weakness compared to when there is an inconsequential misstatement.