audit opinion

A pervasive matter is one that affects the financial statements as a whole. For example, a fire destroyed all accounting records, which were not backed up, say for the last 3 months of the financial year. Even though some reconstruction would be possible to prepare financial statements at the reporting date, there will be a lack of evidence that potentially affects major classes of transactions (sales/purchases/wages etc) and account balances (receivables, payables, inventory, etc). The auditor would therefore be unable to form an opinion on the financial statements as a whole (i.e. disclaim an opinion).
A matter that clearly affects only a specific class of transactions and/or account balance is not pervasive. For example – failure to recognise a material bad debt or writedown of inventory to net realisable value.