Final answer:
The concept that must be considered when determining whether an exception is "highly material" is pervasiveness, which looks at how extensively a misstatement affects elements of the financial statements. Materiality, financial analysis, and ratio analysis are related but distinct concepts.
Step-by-step explanation:
When determining whether an exception is "highly material", the concept that must be considered is b. pervasiveness. Pervasiveness in the context of financial statements refers to the extent to which a misstatement or an omission affects different elements of the financial statements. It is not sufficient to look at the amount in question in isolation; rather, it's important to assess the impact on the financial statements as a whole. This impact assessment is made to ensure that the users of the financial statements receive a true and fair view of the company's financial position and performance. If an error or omission is pervasive, it might affect the decisions made by users of the financial statements.
By contrast, materiality is the threshold or cut-off point above which an error or omission in the financial statements is considered to be sufficiently significant to influence the economic decisions of users. Financial analysis is a broader term that encompasses the evaluation of a company's financial information to understand its performance and make business decisions. Ratio analysis is a quantitative analysis tool used within financial analysis that involves comparing and interpreting various financial ratios to assess a company's performance.