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When auditor unable to obtain sufficient appropriate evidence on which to base an opinion, but concludes possible effects on financial statement of undetected misstatements, when is it “material but not pervasive” or “material and pervasive”? The former would lead to a qualified opinion while the latter, a disclaimer of opinion.
Thank you.There is no definite rule about when a misstatement or lack of evidence becomes pervasive. Pervasive means the problem fatally undermines the FS and cannot be easily isolated for and ‘except for’ modification.
Really is is saying the FS are a waste of paper.
Auditors are reluctant to disclaim or issue an adverse opinion because it leaves members with no financial information they can rely on.
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