what is materiality/pervasive?

Well , u don’t need to mix those.

Materiality is the threshold, which makes a difference between which data is material for an auditor and which not.
Usual benchmarks include:
0,5 – 1 % of turnover
5-10 % of profit before tax
1-2% of gross assets.

while pervasive means not just material.
u can think of it , if material is to make some mistake that some mistake up to 5% then pervasive means to get all Financial statements wrong:

as an example:
1 ) Inventory count was poor. And as a result u got insufficient evidence whether stock valuation at 10 m is accurate. Revenue is 300 m and profit 20 m.
10 m out of 20 is higher then 10%.
So the type of misstatement here is : unsufficient evidence.
Significance of misstatement : material
and when u compose ur report, u need to modify the report by adding :
“except for insufficient evidence” paragraph.

now let’s look at pervasive
2) imagine that certain business that u audit is devided to manufacture and retail ,where two thirds is manufacture. But financial statements exclude manufacture segment completely. FS present retail segrement as it’s the only segment of the business.
Here u have a misstatement, but it’s not just a material misstatement.
It’s pervasive, because u can say that literally every figure in FS is just wrong.
So significance of misstatement: pervasive.
And as a result, u can only give an adverse opinion, saying that FS do not show a true and fair view.

hope u are clear with your issue by now.

Spot on! thats right Ansi 🙂