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While revising I came through this question and have a doubt over here..
In this question Development cost has been Debited to Profit and Loss fully i.e $25000 and this misstatement makes 25% for Profit before tax.
So in the answer it has been given Qualified opinion i.e Material and not Pervasive.
My question is way isn’t it Pervasive? 25% is substantial amount isn’t it?
If auditors give an adverse opinion or they disclaim an opinion, they are effectively saying the FS are useless. If possible an ‘except…for” qualification will be preferred and will be given if the error is confined to one area. ‘Pervasive’ means that everything is affected.