International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

Pervasive material misstatements in audit reports

Document Type : Review paper

Authors
Azadeh kohzadi Tahne 1
Mehrdad ghanbari 2
babak Jamshidi Navid 2
Mojtaba Chavoshani 2
1 PhD Student, Accounting Department, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran
2 Assistant Professor, Accounting Department, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran
10.30495/ijfma.2025.78154.2214
Abstract
Abstract
Professional judgment is always an important factor in detecting pervasive material misstatements, and the detection of pervasive material misstatements also affects the auditors' opinion. The term pervasive in financial statement auditing is used to identify the effects of misstatements or potential misstatements on financial statements that lead to an adverse or disclaimer of opinion, as defined in paragraph 5 of ISA 705, “Modified Opinions in the Independent Auditor’s Report. However, auditors in practice have different interpretations of the concept of pervasive, which leads to different opinions in audit reports, even in similar circumstances. Efforts to introduce materiality criteria began in the early 1950s, and numerous guidelines have been provided by professional bodies and researchers. However, it is rare to find a reliable source that discusses or researches the concept of comprehensiveness or provides guidance for it. In this article, an attempt has been made to describe the concept of comprehensiveness in a way that provides a basis for better professional judgment and improved audit opinions by examining the views and opinions that played a key role in introducing the term comprehensiveness in the International Standard on Auditing 705.
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