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Hello,
How can I know whether a misstament is ‘pervasive’ to provide audit opinion ‘adverse’ or ‘qualified but except for’ ?
There is no definite rule. If the problem is pervasive, either because of a misstatement or a lack of sufficient appropriate audit evidence, then the audit opinion is saying that the FS are useless. In ‘except for’ qualifications the problem is isolated and the rest of the FS can be relied upon.
Generally, auditors are reluctant to go down the ‘pervasive’ route because shareholders are left with useless FS. Therefore the problem has to be veey serious before that happens, either because of its size or because the error affects many areas of the FS.
Itmis a matter of judgement and opinion.
Thank you sir for your explaination.
Could you give me an example of a pervasive misstatement?
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