CGFM LATEST 2026 EXAM QUESTIONS AND SOLUTIONS
GRADED A+
✔✔Chief Financial Officers (CFO) Act - ✔✔A 1990 law that, among other provisions,
requires the federal government's major executive branch agencies to have a CFO.
Prescribes duties and reporting requirements, and requires audited financial statements
✔✔Commission - ✔✔Government component established by law, statute, or ordinance.
May be permanent or temporary. Because it is establish by law, it may have greater
autonomy and authority that government components that are administratively
established.
✔✔Component - ✔✔Organized unit of government, such as agency, office, or
department. Found in all branches of government at all levels
✔✔Comprehensive Annual Financial Report (CAFR) - ✔✔A financial report that
includes MD&A, basic financial statements, footnotes, and other required
supplementary information, as well as an introductory section, additional financial
information (i.e. combing and individual fund schedules, if applicable), and a statistical
section
✔✔Conflict of Interest - ✔✔Arise when one has a personal interest in matters relating to
official duties or activities. Such conflicts can destroy objectivity and independence and
prevent the exercise of due care
✔✔Consumption tax - ✔✔Broad category of tax that includes sales, use, excise and
value-added taxes
✔✔Continuity of operations - ✔✔Refers to efforts to ensure the organization can sustain
essential operations, regardless of planned or unplanned incidents or disruptions
✔✔Covenant (bond) - ✔✔legal requirements pertaining to a specific bond issue.
Typically defined the maturity date, revenue stream that will be used to repay the debt,
interest rate and repayment schedule. May require a sinking fund and may specify
conditions that must be met while bonds are outstanding, and/or before new debt can
be issued
✔✔Credit-rating Agency - ✔✔Independent organization that assesses the credit
worthiness of borrower. Three major rating agencies are Standards & Poors, Moody's
Investor Service, and Fitch Ratings
✔✔Data Mining - ✔✔Using special, computer-based techniques, such as filters and
algorithms, to extract meaningful information from large bodies of data
, ✔✔Dedicated collections - ✔✔Taxes levied or other revenues collected to finance a
specific activity. Proceeds that are deposited into an account restricted to that activity.
Also referred to as earmarked or restricted taxes
✔✔Deficit - ✔✔Occurs when government expenditures for a specific fiscal period
exceed revenues and other financial inflows
✔✔Diligence - ✔✔Pursuing an event, action, or assignment to a timely and sufficient
end or close
✔✔Discretionary grant - ✔✔A term sometimes used to mean "Project Grant"
✔✔Donation - ✔✔Voluntary contribution that confers no rights or benefits on the giver
✔✔Due Care - ✔✔To discharge professional responsibilities with competence and
diligence, to the best of one's ability, and with the same level of ability and skill as others
in similar positions. It also means to act in the best interest of those served
✔✔Earmarking - ✔✔Variation on use of special funds. Revenues from specific taxes or
other sources is set aside for specific activities. One example is the use of gasoline
taxes for highway improvements. Also referred to as "dedicated collections". The term is
used to signify the legislature reserving a portion of an appropriation for a specific,
limited purpose
✔✔Enterprise resource planning (ERP) system - ✔✔Major "end-to-end" computer
system that links many functions and departments. Used to simplify and streamline
financial management, and to integrate operations with financial mangement
✔✔Estate tax - ✔✔Form of wealth tax. Levied on the estate of the deceased person
before his or her assets are distributed to heirs
✔✔Ethics - ✔✔A complex system of discipline that civilized societies impose on
themselves through laws, customs, standards, social etiquette and other rules to govern
moral conduct.
✔✔Excise tax - ✔✔Form of consumption tax. Levied on the consumption of a particular
type of good or participation in a certain type of activity. Whereas general sales taxes
are broad-based, this is more narrow
✔✔Executive Order - ✔✔Order issues by the president, governor or a local
government's chief executive that does not violate laws or statutes, and has substantial
impact on policy and procedures of government. It carries less weight than a law
because of the legislature or next chief executive may overturn the previous order
GRADED A+
✔✔Chief Financial Officers (CFO) Act - ✔✔A 1990 law that, among other provisions,
requires the federal government's major executive branch agencies to have a CFO.
Prescribes duties and reporting requirements, and requires audited financial statements
✔✔Commission - ✔✔Government component established by law, statute, or ordinance.
May be permanent or temporary. Because it is establish by law, it may have greater
autonomy and authority that government components that are administratively
established.
✔✔Component - ✔✔Organized unit of government, such as agency, office, or
department. Found in all branches of government at all levels
✔✔Comprehensive Annual Financial Report (CAFR) - ✔✔A financial report that
includes MD&A, basic financial statements, footnotes, and other required
supplementary information, as well as an introductory section, additional financial
information (i.e. combing and individual fund schedules, if applicable), and a statistical
section
✔✔Conflict of Interest - ✔✔Arise when one has a personal interest in matters relating to
official duties or activities. Such conflicts can destroy objectivity and independence and
prevent the exercise of due care
✔✔Consumption tax - ✔✔Broad category of tax that includes sales, use, excise and
value-added taxes
✔✔Continuity of operations - ✔✔Refers to efforts to ensure the organization can sustain
essential operations, regardless of planned or unplanned incidents or disruptions
✔✔Covenant (bond) - ✔✔legal requirements pertaining to a specific bond issue.
Typically defined the maturity date, revenue stream that will be used to repay the debt,
interest rate and repayment schedule. May require a sinking fund and may specify
conditions that must be met while bonds are outstanding, and/or before new debt can
be issued
✔✔Credit-rating Agency - ✔✔Independent organization that assesses the credit
worthiness of borrower. Three major rating agencies are Standards & Poors, Moody's
Investor Service, and Fitch Ratings
✔✔Data Mining - ✔✔Using special, computer-based techniques, such as filters and
algorithms, to extract meaningful information from large bodies of data
, ✔✔Dedicated collections - ✔✔Taxes levied or other revenues collected to finance a
specific activity. Proceeds that are deposited into an account restricted to that activity.
Also referred to as earmarked or restricted taxes
✔✔Deficit - ✔✔Occurs when government expenditures for a specific fiscal period
exceed revenues and other financial inflows
✔✔Diligence - ✔✔Pursuing an event, action, or assignment to a timely and sufficient
end or close
✔✔Discretionary grant - ✔✔A term sometimes used to mean "Project Grant"
✔✔Donation - ✔✔Voluntary contribution that confers no rights or benefits on the giver
✔✔Due Care - ✔✔To discharge professional responsibilities with competence and
diligence, to the best of one's ability, and with the same level of ability and skill as others
in similar positions. It also means to act in the best interest of those served
✔✔Earmarking - ✔✔Variation on use of special funds. Revenues from specific taxes or
other sources is set aside for specific activities. One example is the use of gasoline
taxes for highway improvements. Also referred to as "dedicated collections". The term is
used to signify the legislature reserving a portion of an appropriation for a specific,
limited purpose
✔✔Enterprise resource planning (ERP) system - ✔✔Major "end-to-end" computer
system that links many functions and departments. Used to simplify and streamline
financial management, and to integrate operations with financial mangement
✔✔Estate tax - ✔✔Form of wealth tax. Levied on the estate of the deceased person
before his or her assets are distributed to heirs
✔✔Ethics - ✔✔A complex system of discipline that civilized societies impose on
themselves through laws, customs, standards, social etiquette and other rules to govern
moral conduct.
✔✔Excise tax - ✔✔Form of consumption tax. Levied on the consumption of a particular
type of good or participation in a certain type of activity. Whereas general sales taxes
are broad-based, this is more narrow
✔✔Executive Order - ✔✔Order issues by the president, governor or a local
government's chief executive that does not violate laws or statutes, and has substantial
impact on policy and procedures of government. It carries less weight than a law
because of the legislature or next chief executive may overturn the previous order
