pervasive or not 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.

Going concern qualifications are not always pervasive. If there was no real prospect of the company continuing and the FS were drawn up on a going concern basis, then the misstatement would be pervasive: the FS should have been produced on a break-up basis. If there was merely some doubt about GC that has not been mentioned in the FS (and that could have been handled by the inclusion of a note to that effect and an emphasis of matter drawing attention to that note), then the misstatement wold not be pervasive: it could be cured by the note.