material but not pervasive vs pervasive

Pervasive means found everywhere or spread everywhere. A pervasive misstatement would be so serious that, to all intents and purposes the FS are useless. Similarly with a pervasive lack of sufficient appropriate audit evidence.

Pervasive problems (leading to a disclaimer or and adverse opinion) are rare. It is much more common to have qualified (except for) modified opinions where the shareholders can still make some use of the FS.

An example of pervasive leading to a disclaimer of opinion cold be the destruction after the year-end, but before the audit of all of the client’s the supporting documentation. Sometimes a problem with very large single item can be pervasive. Eg profits = $10 million, total assets = $50 million, but there a complete lack of evidence about inventory of $25 million.

Meaning of pervasive has been well explained above by our Tutor, Ken Garret.

This is just to add my own contribution which i think could be helpful as well.

Where the error is more than 5% but less than 20% , it is ‘material but not pervasive’, this results in a modified opinion :- Qualified Opinion, Except for………..,the FS gives a true and fair view of the entity. ( i.e in a case of material misstatement or limitation of scope)

But when the error is greater than 20% it is ‘material and pervasive’ resulting in a modified opinion. Here opinion is expressed depending on reason for modification: i.e:-
For material misstatement =Adverse Opinion, accounts do not give a true and fair view of entity’s affairs.
For Limitation of scope(auditor unable to obtain sufficient appropriate evidence)= Disclaimer of opinion. i.e unable to give opinion.

Regards,
Achor.