CGFM COMPREHENSIVE EXAM 2026 QUESTIONS AND
SOLUTIONS GRADED A+
✔✔Cash Management Improvement Act - ✔✔addresses disbursement of federal funds
to states, territories.
1) minimize time between transfer to state and program payout
2) ensure federal funds are available when requested
3) assess interest liability
✔✔Cash Controls - Separation of Duties - ✔✔Four Distinct Roles/individuals:
1) authorization and collection
2) record transactions
3) deposit receipts/mail payments
4) timely bank reconciliation
* requires 2 different people at the very least
✔✔Safeguarding checks and payments - ✔✔1) use pre-numbered checks and
documents
2) safety features on checks
3) safe storage of blank checks
4) limited signatories
5) frequent reconciliation
6) safeguarding cancelled checks
✔✔Cash Mgmt Policy should include: - ✔✔1) review of aged receiveables
2) review of aged disbursements and vendors
3) identify transactions beyond normal perimiters in age and amounts
4) comparison to budget expectations
5) review of timing, lateness of payments
also: positions authorized to approve pmts. max $$ authorizations, length of time
checks out-standing before considered stale dated.
✔✔Float - ✔✔Period of time between the time the check is issued and the time it is
presented for payment.
Who gets benefit of interest earned during this period?
Float diminished with electronic payments
✔✔Federal Reserve System - ✔✔* founded by Congress in 1913 as the central bank of
the US
,* composed of a Board of Governors nominated by the President and confirmed by the
Senate, and Twelve Federal Reserve Banks
Duties:
1) conducting nations monetary policy
2) bank regulation and consumer credit protection
3) maintaining stability of the financial system
4) providing financial services to fed gov't
✔✔State and Local Gov't Banking - ✔✔Obtained via RFP based on individually
established limitations/criteria and state laws.
Services provided: Collection, concentration of bank services, Zero Balance Accounts,
payment services, short-term borrowing, underwrite bonds, investment advice/mgmt,
credit cards, accounting services, safe deposit boxes, information reporting, bank
account analyses
✔✔Bank Fees - ✔✔1) pay per service used
2) use compensating balance (maintain a minimum amount on deposit allowing bank to
benefit from any interest accrued)
✔✔Cash Forecasting - ✔✔
✔✔Collection Systems - ✔✔* checks and cash deposits
* lockbox services - po box maintained by bank, bank ee's deposit receipts into gov't
accounts. provides additional level of internal control.
* concentration bank systems - for widely disbursed payees
* over-the-counter collections - bank receieves pmts directly on gov'ts behalf
* credit and debt cards
* electronic collections - pmts made via EFT, requires agreement with payee and gov't,
and their financial institutions
* prepaid draw-down account - ex., prepaid toll accounts
✔✔Zero balance accounts - ✔✔mostly used for payroll clearing
✔✔Disbursements - ✔✔* warrants and checks
* electronic payments
* automatic debit/credit card payments
* recurring payments
* Electronic Data Interchange (EDI)
* credit cards
* electronic benefit cards
✔✔Warrant - ✔✔instrument drawn on the treasury of the government
, ✔✔Check - ✔✔instrument drawn on a bank and paid with fund on deposit
✔✔Improper Payments Elimination and Recovery Act (2010)
Improper Payments Elimination and Recovery Improvement Act (2012) - ✔✔
✔✔Reducing Improper Payments - ✔✔1) Prevention Activities
ex. pre-payment review
2) Detection Activities
ex. data matching - PosPay
3) Recapture Activities
ex. recovery efforts
✔✔Three Elements to Investing - ✔✔1) Safety/Risk
2) Liquidity - ease of conversion to cash without suffering significant loss in value
3) Yield - Return, interest, or dividend
✔✔Investing - Types of Risk - ✔✔1) Credit Risk = default risk, risk that investment will
not be paid back
2) Custodial Credit Risk - securities registered in owners name or through agent of
owner most safe
3) Market Risk - loss due to daily market fluctuations
4) Interest Rate Risk - fixed income securities will lose value as interest rates rise
5) Currency Risk
6) Political Risk
✔✔Short-Term Fixed Income Securities - ✔✔*Treasury bills, backed by the full faith and
credit of the US Gov't
*CD's
*Commercial Paper (Short term promissory notes) - typically mature in less than 270
days
* Bankers Acceptances
*Repurchase Agreements
Short term Mutual Funds
*Short term investing Funds (STIF)
✔✔Long-Term Fixed Income Securities - ✔✔* Bonds
* Debenture - backed by general credit, not assets
* Zero-Coupon Bonds - no interest payment
✔✔Equity Securities - ✔✔* Stocks, mutual funds, index funds
✔✔International Securities - ✔✔American Depositary Receipts (Yankee Bonds)
* registered with the SEC
SOLUTIONS GRADED A+
✔✔Cash Management Improvement Act - ✔✔addresses disbursement of federal funds
to states, territories.
1) minimize time between transfer to state and program payout
2) ensure federal funds are available when requested
3) assess interest liability
✔✔Cash Controls - Separation of Duties - ✔✔Four Distinct Roles/individuals:
1) authorization and collection
2) record transactions
3) deposit receipts/mail payments
4) timely bank reconciliation
* requires 2 different people at the very least
✔✔Safeguarding checks and payments - ✔✔1) use pre-numbered checks and
documents
2) safety features on checks
3) safe storage of blank checks
4) limited signatories
5) frequent reconciliation
6) safeguarding cancelled checks
✔✔Cash Mgmt Policy should include: - ✔✔1) review of aged receiveables
2) review of aged disbursements and vendors
3) identify transactions beyond normal perimiters in age and amounts
4) comparison to budget expectations
5) review of timing, lateness of payments
also: positions authorized to approve pmts. max $$ authorizations, length of time
checks out-standing before considered stale dated.
✔✔Float - ✔✔Period of time between the time the check is issued and the time it is
presented for payment.
Who gets benefit of interest earned during this period?
Float diminished with electronic payments
✔✔Federal Reserve System - ✔✔* founded by Congress in 1913 as the central bank of
the US
,* composed of a Board of Governors nominated by the President and confirmed by the
Senate, and Twelve Federal Reserve Banks
Duties:
1) conducting nations monetary policy
2) bank regulation and consumer credit protection
3) maintaining stability of the financial system
4) providing financial services to fed gov't
✔✔State and Local Gov't Banking - ✔✔Obtained via RFP based on individually
established limitations/criteria and state laws.
Services provided: Collection, concentration of bank services, Zero Balance Accounts,
payment services, short-term borrowing, underwrite bonds, investment advice/mgmt,
credit cards, accounting services, safe deposit boxes, information reporting, bank
account analyses
✔✔Bank Fees - ✔✔1) pay per service used
2) use compensating balance (maintain a minimum amount on deposit allowing bank to
benefit from any interest accrued)
✔✔Cash Forecasting - ✔✔
✔✔Collection Systems - ✔✔* checks and cash deposits
* lockbox services - po box maintained by bank, bank ee's deposit receipts into gov't
accounts. provides additional level of internal control.
* concentration bank systems - for widely disbursed payees
* over-the-counter collections - bank receieves pmts directly on gov'ts behalf
* credit and debt cards
* electronic collections - pmts made via EFT, requires agreement with payee and gov't,
and their financial institutions
* prepaid draw-down account - ex., prepaid toll accounts
✔✔Zero balance accounts - ✔✔mostly used for payroll clearing
✔✔Disbursements - ✔✔* warrants and checks
* electronic payments
* automatic debit/credit card payments
* recurring payments
* Electronic Data Interchange (EDI)
* credit cards
* electronic benefit cards
✔✔Warrant - ✔✔instrument drawn on the treasury of the government
, ✔✔Check - ✔✔instrument drawn on a bank and paid with fund on deposit
✔✔Improper Payments Elimination and Recovery Act (2010)
Improper Payments Elimination and Recovery Improvement Act (2012) - ✔✔
✔✔Reducing Improper Payments - ✔✔1) Prevention Activities
ex. pre-payment review
2) Detection Activities
ex. data matching - PosPay
3) Recapture Activities
ex. recovery efforts
✔✔Three Elements to Investing - ✔✔1) Safety/Risk
2) Liquidity - ease of conversion to cash without suffering significant loss in value
3) Yield - Return, interest, or dividend
✔✔Investing - Types of Risk - ✔✔1) Credit Risk = default risk, risk that investment will
not be paid back
2) Custodial Credit Risk - securities registered in owners name or through agent of
owner most safe
3) Market Risk - loss due to daily market fluctuations
4) Interest Rate Risk - fixed income securities will lose value as interest rates rise
5) Currency Risk
6) Political Risk
✔✔Short-Term Fixed Income Securities - ✔✔*Treasury bills, backed by the full faith and
credit of the US Gov't
*CD's
*Commercial Paper (Short term promissory notes) - typically mature in less than 270
days
* Bankers Acceptances
*Repurchase Agreements
Short term Mutual Funds
*Short term investing Funds (STIF)
✔✔Long-Term Fixed Income Securities - ✔✔* Bonds
* Debenture - backed by general credit, not assets
* Zero-Coupon Bonds - no interest payment
✔✔Equity Securities - ✔✔* Stocks, mutual funds, index funds
✔✔International Securities - ✔✔American Depositary Receipts (Yankee Bonds)
* registered with the SEC
