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Meaning of Pervasive 
The term pervasive is used to describe the effect of misstatements on the financial statement.

Whether the effect of material misstatement is pervasive or not it depends on auditors judgement while deciding that
the effect is pervasive or not auditor must keep the following things in mind

Effect is pervasive when it is not confined to a specific element

Even if it is confined to a specific element the effect can be considered as pervasive if it represent a substantial
proportion of financial statements

In relation to disclosures, The effect can be considered as pervasive if It is fundamental to users understanding of the
financial statements.b

 
 
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These notes are incomplete without our videos. Study from these notes at your own risk. We keep on updating our books, notes and videos. You should always 
study from updated notes with our videos. Many concepts are there which are missing in these notes, some are obsolete. We have discussed everything in our 
video classes. ​www.neerajaroraclasses.com​ Amendments and updates will taught in classes and videos. Extra notes and charts will also be given. 
 

 
 
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These notes are incomplete without our videos. Study from these notes at your own risk. We keep on updating our books, notes and videos. You should always 
study from updated notes with our videos. Many concepts are there which are missing in these notes, some are obsolete. We have discussed everything in our 
video classes. ​www.neerajaroraclasses.com​ Amendments and updates will taught in classes and videos. Extra notes and charts will also be given. 
 

 
 
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These notes are incomplete without our videos. Study from these notes at your own risk. We keep on updating our books, notes and videos. You should always 
study from updated notes with our videos. Many concepts are there which are missing in these notes, some are obsolete. We have discussed everything in our 
video classes. ​www.neerajaroraclasses.com​ Amendments and updates will taught in classes and videos. Extra notes and charts will also be given. 
 

Risk Assessment Procedures

● Risk assessment procedures are used to obtain an understanding of the entity and its environment, including its
internal control in order to assess the risk of material misstatement and determine the nature extent and timing
of further audit procedures.
● Risk assessment procedures alone do not provide audit evidence sufficient to support audit opinion.
● They are required in all financial statement audit.

Further Audit Procedures

● Auditor test internal control in order to
○ understand them and
○ to decide whether to rely on them or not .
● We will
○ Check design (SoD, Approvals, Reconciliations etc)
■ No - Leave it go for SP
■ Yes test efficiency (Operation and Continuity)
○ Test of Efficiency (Operation and Continuity) If internal controls are efficient then it is going to have a
direct impact on the nature, extent and timing of substantive procedures.
○ If because of efficiency of internal control we decided to rely on internal control then we will do
more of compliance procedures and less of substantive procedures.
○ So basically the ​nature​ will be more towards control testing yes we will do substantive procedures also
but they will be comparatively less now coming to the extent we will work a little less and (​TIMING​) will
check the interim period and some transaction at the year end

Substantive Procedure
● Auditor will check transactions, account balance presentation and disclosure
○ Analytical Procedures
○ Test of Details (Vouching and Verification)
 

 
 
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