Certified Internal Auditor (CIA) Practice Test

In what circumstance can an internal auditor include an item deemed immaterial during planning in the assurance engagement?

1. Sufficient staff is available.

2. Adverse effects related to the item are likely to occur.

3. Related information is reliable.

4. Miscellaneous income is affected.

The correct answer is: Adverse effects related to the item are likely to occur.

Including an item deemed immaterial during the planning stage of an assurance engagement can be justified when there are likely adverse effects associated with that item. This acknowledges that while an item may not be material in a quantitative sense, its qualitative implications could lead to significant consequences for the organization. For instance, a seemingly immaterial issue could pose a risk that, if realized, might impact the financial statements or the organization's operations adversely. This focus on risk and potential consequences aligns with the internal auditor's objective of providing a comprehensive assessment of the organization's risk management and internal controls. Considering the other options, having sufficient staff available does not necessarily warrant revisiting an immaterial item, as the allocation of resources is based on the overall risk assessment rather than staff availability. Reliable related information may enhance the understanding of the item but does not inherently necessitate its inclusion unless significant risks are identified. Finally, miscellaneous income being affected suggests some impact but does not directly relate to the risk or potential adverse outcomes that would justify including an item during the engagement's planning phase.