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CMFO FUND FINANCIAL REPORTING I EXAM 2024/2025
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CMFO FUND FINANCIAL REPORTING I EXAM 2024/2025
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CMFO FUND FINANCIAL REPORTING IEXAM 2024/2025
What are the three groups of primary users of external financial reports identified by GASB? - Precise
Answer ✔✔i. Citizens
ii. Legislative and oversight bodies
iii. Investors and creditors
What is each groups basic information needs? - Precise Answer ✔✔i. Citizens need to know the
consistency achieved between the actual financial transactions of the government and the legally
adopted budget, the overall financial condition of the government, and the efficiency and effectiveness
of government operations.
ii. Legislative and oversight bodies need to monitor budget compliance, and they need to know whether
the government is complying with laws, roles, and regulations related to financial matters and grants.
iii. Creditors and investors most critically need to keep informed of the financial condition of the
government; they are also interested in its efficiency and effectiveness.
According to GASB, what are the six basic characteristics that financial reports must have? - Precise
Answer ✔✔1. Understandability
2. Reliability
3. Relevance
4. Timeliness
5. Consistency
6. Comparability
What is understandability? - Precise Answer ✔✔Understandability is the concept that users with a
reasonable understanding of public financial activities will be better equipped to comprehend the
financial statements.
, What is reliability? - Precise Answer ✔✔The financial data presented in the financial statements should
be reliable − verifiable and free of bias.
What is relevance? - Precise Answer ✔✔Financial data must be relevant to financial statement users.
Information that is insignificant or trivial is of no use to financial statement users and only reduces the
relevance of the financial data as a whole.
What is timeliness? - Precise Answer ✔✔Financial statements must be issued timely enough to provide
decision makers with valuable information for the decision-making process.
What is consistency? - Precise Answer ✔✔Consistency in presentation of financial data is crucial to
providing adequate trend data and meaningful financial analysis.
What is comparability? - Precise Answer ✔✔Comparability is important to ensure events and
transactions are viewed similarly − "apples to apples" − when compared to other entities.
What does the goal of Understandability and Relevance entail? - Precise Answer ✔✔1. Financial
reporting should assist in fulfilling government's duty to be publicly accountable and should enable users
to assess that accountability by:
a. Providing information to determine whether current-year revenues were sufficient to pay for current-
year services.
b. Demonstrating whether resources were obtained and used in accordance with the entity's legally
adopted budget and demonstrating compliance with other finance-related legal or contractual
requirements.
c. Providing information to assist users in assessing the service efforts, costs, and accomplishments of
the governmental entity.
What does the goal of Timeliness and Consistency? - Precise Answer ✔✔2. Financial reporting should
assist users in evaluating the operating results of the governmental entity for the year by:
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