CGFM CERTIFIED GOVERNMENT
FINANCIAL MANAGER EXAM 2
UPDATED QUESTIONS WITH
VERIFIED ANSWERS 2024
What is the difference in budgets between Government and the private sector? -
CORRECT ANSWER>>>>Its the primary control device in governement
(accountability) but in the private sector its a guide to operations
Is every State constitution the same? Why? - CORRECT ANSWER>>>>No, but
common requirements are: executive branch functions, legislative branch, and
how local govt are formed
What is the cornerstone of financial reporting? - CORRECT
ANSWER>>>>accountability
What are four types of accountability? - CORRECT ANSWER>>>>legal accountability
- need to comply with rules/regulations
performance accountability - gov't acts in an efficient and effective manner
Fiscal accountability - raising of resources and the allocation of those resources
to accomplish objectives
operational accountability - stewardship of public resources
What is interperiod or intergenerational equity? - CORRECT ANSWER>>>>paying
current-years services to future-year taxpayers
What is one way the federal gov't tries to balance a budget? - CORRECT
ANSWER>>>>debt ceiling (public debt that can be outstanding)
What are the common users of governmental financial reports? - CORRECT
ANSWER>>>>legislators, other oversight org's, citizens, investors, creditors,
media, financial mangers and program managers
What is an example of intergovernmental revenues? - CORRECT
ANSWER>>>>grants
What are the two types of government financial reports? - CORRECT
ANSWER>>>>point-in-time (aka stock reports) - current info as of the date of the
report (example: balance sheet)
period report (aka flow reports) - covers the entire fiscal year
,What do the general purpose external financial reports (GPEFR) consist of? -
CORRECT ANSWER>>>>audited financial statements, notes, required
supplemental info. Other accompanying info isn't required but can be included
What is an example of "other financial reports?" - CORRECT ANSWER>>>>budget,
budget comparison reports, reports that disclose condition of operations (report
on cash, a/r O/s, revenues generated), offering reports, project reports, and
popular reports
All aka "special purpose financial reports"
What are the characteristics of all reports? - CORRECT
ANSWER>>>>Understandability - explanations and interpretations to help users
understand
Reliability - verifiable, free from bias
Relevance - s/b capable of making a difference
Timeliness - reported on a time frame
Consistency - principles are used in current and future reports
Comparability - like entities should report same info the same way
Describe the steps it took to get to the reporting standards today. - CORRECT
ANSWER>>>>1929 stock market crash due to companies inducing public on their
"profitability."
1934 SEC was established to regulate securities. SEC granted authority to FASB
for standards. But no standards for local & state govt's
1934-1941 municipal finance officers association advocated reporting principles
1968 GAAFR issued ("blue book")
1970 fiscal crises in NY and Cleveland
1974 AICPA issued audit guide
1984 GASB was created but no requirement for state/local gov't although they
adopted it; however, nothing for federal
1990 MOU established FASAB
What are the standard setting organizations? - CORRECT ANSWER>>>>GASB - set
and improve standards of state and local gov't
FASAB - improving federal financial reporting
FASB - set and improve financial acct & reporting standards in the private sector
What are common objectives with the GASB and FASAB boards? - CORRECT
ANSWER>>>>free from bias; views of constituents; benefits exceed costs;
changes the minimize disruption
What are the characteristics of the "Due Process" of standard setting? - CORRECT
ANSWER>>>>time & location of board meetings are publicly announced; task
force may be established; documents are issued (discussion memo; invitation to
comment; preliminary reviews; exposure draft)
, What is a "concept statement?" - CORRECT ANSWER>>>>does not establish
standards but it describes a concept the board will use as a framework for
evaluating existing or establishing a new standard
What are "interpretations" and "technical bulletins?" - CORRECT ANSWER>>>>clarify
points that may be ambiguous in a previous standard
What is the FASAB hierarchy? - CORRECT ANSWER>>>>Category (a) - officially
established acct principles and interpretations
Category (b) - FASAB technical bulletins and if specific the AICPA industry audit
and accounting guide
Category (c) - Technical releases
Category (d) - implementation guides published by FASAB staff
What happens if an accounting treatment is not in the FASAB hierarchy? - CORRECT
ANSWER>>>>If not in category a-d or something similar in a-d, then consider
"other accounting literature" (i.e FASAB concept statements, pronouncements of
other standard-setting bodies, professional associations, accounting textbooks,
handbooks, and articles
What is the GASB hierarchy? - CORRECT ANSWER>>>>Category (a) - officially
established acct principles and interpretations
Category (b) - GASB technical bulletins and if specific the AICPA industry audit
and accounting guide
Category (c) - AICPA practice bulletins if specifically made applicable to
state/local govt entities and cleared by GASB; consensus groups established by
GASB
Category (d) - implementation guides published by GASB staff
What happens if an accounting treatment is not in the GASB hierarchy? - CORRECT
ANSWER>>>>If not in category a-d or something similar in a-d, then consider
"other accounting literature" (i.e GASB concept statements, issue papers,
textbooks, and pronouncements of professional associations or regulatory
agencies, handbooks, or articles
What is a major factor in the establishment of user fees? - CORRECT
ANSWER>>>>cost accounting
What are examples of cost outputs? - CORRECT ANSWER>>>>direct and indirect
cost
What is the preferred sequence of assigning cost? - CORRECT ANSWER>>>>direct,
cause-and-effect, allocated on a reasonable and consistent basis
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