CGFM
FINAL STUDY GUIDE 2026 EXAM
VERIFIED QUESTIONS AND ANSWERS
Governments exist to provide services - ANSWER-no profit motive, no single measure of success
Primary funding source = - ANSWER-taxes (involuntary payments, because there is no ability to
match services to those who provide the resource)
Budget process = - ANSWER-primary control device in government
US Constitution provides two levels of government - ANSWER-Federal and State
State consitituions similar in that each defines the excutive and legislative braches, establishes
political offices, and defines how local governments can be formed.
Government Accountability - ANSWER-based on the belief that the government has a
responsibility to report, the public has a right to know, andthe ultimate power belongs to the
people.
1) Legal Accountability - ANSWER-public officials are accountable for the extablishment of
controls to ensure that transations are processed properly
2) Performance Accountability - ANSWER-acting in an efficient, effective, or economic manner.
3) Fiscal Accountability - ANSWER-raising and allocation of resources to accomplish objectives
4) Operational Accountability - ANSWER-stewardship of public resources
Which branch is accountable to whom? - ANSWER-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANSWER-current generation of citizens should not be able to shift the
burden of paying for current-year services to future taxpayers
balanced budget law = current year services must be financed with current year revenues
(problem is financial data can be manipulated to achieve this). Fed Gov't not subject to this.
Laws prohibiting borrowing - ANSWER-* only to meet cash flow needs
,* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANSWER-1) Legislators and oversight groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - ANSWER-1) primary communication device for assessing
accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
Point in time financial reports - ANSWER-provides current information as of the date of the
reports (e.g. balance sheet)
Period financial reports - ANSWER-reports the activity for an entire fiscal period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANSWER-1) audited financial
statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) - ANSWER-*
budget comparison reports
* cash position reports
,* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANSWER-1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
** most comprehensive financial reports provide non-financial information regarding the
performance of the entity.
** info is often based on judgements or estimates base on the application of rules or
conventions
American Recovery and Reinvestment Act (2009) - ANSWER-** important because it required
online reporting of the use of government funds awarded for the purpose of stimulating the
economy - Recovery.gov
Federal Open Government Initiative - ANSWER-government should be transparent,
participatory, and collaborative
* State Dept, Justice Dept, HHS, NASA, Treasury Dept, EPA, Defense, and SSA
Digital Accountability and Transparency Act (DATA Act - 2014) - ANSWER-1) expanded FFATA of
2006
2) established government wide data standards that is displayed on USAspending.gov
3) simplified reporting for federal funding recipients
, 4) agencies held accountable for the accuracy and completeness of data submitted to
USAspending.gov
5) apply approaches developed by the Recovery Accountability and Transparency Board
open government challenges - ANSWER-making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - ANSWER-vested with the power to regulate
securities markets, requires publicly traded companies to disclose certain financial information
SEC gave authority to set accounting standards to the Financial Accounting Foundation (FAF),
who appoints members to the FASB to set reporting and accounting standards for private and
non-profits
National Committee of Municipal Accounting (1934) - ANSWER-* set first reporting standards
for states and locals, and established the Municipal Finance Officers Association (MFOA), which
was active until 1941
National Council of Government Accounting (NCGA - 1948)
.... later became GFOA - ANSWER-issued the Governmental Accounting, Auditing, and Financial
Reporting (GAAFR/Blue Book) in 1968, however local policy retained primacy
Audits of State and Local Government Units (ASLGU) - ANSWER-issued in 1974 by AICPA in
response to several government financial melt-downs
* recognized the principles in the GAAFR and made them the accepted principles for all state
and locals within the auditing committee, but there was no requirement for compliance (due to
their sovereign status)
Governmental Accounting Standards Board (GASB, 1984) - ANSWER-established in lieu of
expanding FASBs authority
GASB standards still not required, but may be necessary for bonding and borrowing, plus good
public policy, so many enacted legislation requiring compliance
Federal Accounting Standards Advisory Board (FASAB, 1990) - ANSWER-established by the OMB,
Sec of Treasury, and Comptroller general to address additional financial reporting standards
(most were related to budgetary reporting up until this point)
FINAL STUDY GUIDE 2026 EXAM
VERIFIED QUESTIONS AND ANSWERS
Governments exist to provide services - ANSWER-no profit motive, no single measure of success
Primary funding source = - ANSWER-taxes (involuntary payments, because there is no ability to
match services to those who provide the resource)
Budget process = - ANSWER-primary control device in government
US Constitution provides two levels of government - ANSWER-Federal and State
State consitituions similar in that each defines the excutive and legislative braches, establishes
political offices, and defines how local governments can be formed.
Government Accountability - ANSWER-based on the belief that the government has a
responsibility to report, the public has a right to know, andthe ultimate power belongs to the
people.
1) Legal Accountability - ANSWER-public officials are accountable for the extablishment of
controls to ensure that transations are processed properly
2) Performance Accountability - ANSWER-acting in an efficient, effective, or economic manner.
3) Fiscal Accountability - ANSWER-raising and allocation of resources to accomplish objectives
4) Operational Accountability - ANSWER-stewardship of public resources
Which branch is accountable to whom? - ANSWER-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANSWER-current generation of citizens should not be able to shift the
burden of paying for current-year services to future taxpayers
balanced budget law = current year services must be financed with current year revenues
(problem is financial data can be manipulated to achieve this). Fed Gov't not subject to this.
Laws prohibiting borrowing - ANSWER-* only to meet cash flow needs
,* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANSWER-1) Legislators and oversight groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
Need for financial reports - ANSWER-1) primary communication device for assessing
accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
Point in time financial reports - ANSWER-provides current information as of the date of the
reports (e.g. balance sheet)
Period financial reports - ANSWER-reports the activity for an entire fiscal period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANSWER-1) audited financial
statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
Special Purpose Financial Reports (may or may not be provided to external users) - ANSWER-*
budget comparison reports
* cash position reports
,* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANSWER-1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
** most comprehensive financial reports provide non-financial information regarding the
performance of the entity.
** info is often based on judgements or estimates base on the application of rules or
conventions
American Recovery and Reinvestment Act (2009) - ANSWER-** important because it required
online reporting of the use of government funds awarded for the purpose of stimulating the
economy - Recovery.gov
Federal Open Government Initiative - ANSWER-government should be transparent,
participatory, and collaborative
* State Dept, Justice Dept, HHS, NASA, Treasury Dept, EPA, Defense, and SSA
Digital Accountability and Transparency Act (DATA Act - 2014) - ANSWER-1) expanded FFATA of
2006
2) established government wide data standards that is displayed on USAspending.gov
3) simplified reporting for federal funding recipients
, 4) agencies held accountable for the accuracy and completeness of data submitted to
USAspending.gov
5) apply approaches developed by the Recovery Accountability and Transparency Board
open government challenges - ANSWER-making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - ANSWER-vested with the power to regulate
securities markets, requires publicly traded companies to disclose certain financial information
SEC gave authority to set accounting standards to the Financial Accounting Foundation (FAF),
who appoints members to the FASB to set reporting and accounting standards for private and
non-profits
National Committee of Municipal Accounting (1934) - ANSWER-* set first reporting standards
for states and locals, and established the Municipal Finance Officers Association (MFOA), which
was active until 1941
National Council of Government Accounting (NCGA - 1948)
.... later became GFOA - ANSWER-issued the Governmental Accounting, Auditing, and Financial
Reporting (GAAFR/Blue Book) in 1968, however local policy retained primacy
Audits of State and Local Government Units (ASLGU) - ANSWER-issued in 1974 by AICPA in
response to several government financial melt-downs
* recognized the principles in the GAAFR and made them the accepted principles for all state
and locals within the auditing committee, but there was no requirement for compliance (due to
their sovereign status)
Governmental Accounting Standards Board (GASB, 1984) - ANSWER-established in lieu of
expanding FASBs authority
GASB standards still not required, but may be necessary for bonding and borrowing, plus good
public policy, so many enacted legislation requiring compliance
Federal Accounting Standards Advisory Board (FASAB, 1990) - ANSWER-established by the OMB,
Sec of Treasury, and Comptroller general to address additional financial reporting standards
(most were related to budgetary reporting up until this point)
