Pervasiveness is a term used to describe the effects or possible effects on the financial statements of misstatements or undetected misstatements (due to an inability to obtain sufficient appropriate audit evidence). There are three types of pervasive effect:

  • Those that are not confined to specific elements, accounts or items in the financial statements
  • Those that are confined to specific elements, accounts or items in the financial statements and represent or could represent a substantial portion of the financial statements
  • Those that relate to disclosures which are fundamental to users’ understanding of the financial statements