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I’m having problems with understanding the meaning of material or material and pervasive and also identifying with reasons whether the following example is material or material and pervasive
•The Flying Burrito Brothers Proprietary Limited’s aeroplanes are carried in the statement of financial position at R 70 000 000 000. Management has not stated the aeroplanes at the depreciated value as per their policy but has stated them solely at cost. The Aeroplanes constitutes 95% of total assets.An early respond would be great!thank you in advance
If you use search function on the key words of your query you’ll find very similar Qs answered, for example:
https://opentuition.com/topic/adverse-opinions/
Pervasive is not a “degree” of material.
You have chosen such an extreme example some would no doubt argue that this is pervasive – but I would consider – what % of assets is the amount of the mistatement? i.e the non-depreciation? Only PPE and depreciation in SoPL are affected – so the auditor could say “except for” … non-depreciation and put some amount on it (there must be something like an industry standard for the depreciation of airplanes). There is no misstatement in revenue, current assets, liabilities, etc – so the matter is not pervasive.
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