ACCA AAA - Implications For The Auditor's Report What is material? What Is Pervasive?
In attempting an “implications for the auditor report” type of question, you will first have to consider whether there is a misstatement or a limitation of scope.
If there is a misstatement or a limitation of scope, you will then have to evaluate the SEVERITY of the problem.
In assessing “severity”, you will have to consider whether the matter is MATERIAL & whether it is PERVASIVE.
Students often seem to struggle with the concept of pervasiveness, which is an inherently judgmental area.
There appear to be a significant number of students who consider the definition of pervasive to be something that would change a profit into a loss. This is not the case in all circumstances.
View this video to get a clearer understanding of what is MATERIAL & what is PERVASIVE
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