CGFM TEST 3 QUESTIONS WITH
VERIFIED ANSWERS
Three Broad Government Spending Purposes CORRECT ANSWERS 1) Current
Operations
2) Capital Outlays
3) Debt Service
Present Value Analysis - Three Components CORRECT ANSWERS Determines what
$$ Rec'd in Future is Worth Today
1) inflation component - year over year loss in value
2) enterprise component - inherent risk
3) unique component -
Budget Accounting and Procedures Act of 1950 CORRECT ANSWERS Requires the
head of each federal agency to establish and maintain I/C's.
Federal Managers Financial Integrity Act of 1982 (FMFIA) CORRECT ANSWERS
requires the head of each agency to evaluate controls on an annual basis, reporting any
weakness along with a corrective action plan
** (resulted in the "green book") **
Service Efforts and Accomplishments (SEA) Reports CORRECT ANSWERS
established by FASB in 1979
GASB Concept Statement 1 - Objectives in Financial Reporting (1987) CORRECT
ANSWERS for state and locals
"financial reporting should assist in fulfilling government's duty to be publicly
accountable and should enable users to assess that accountability by ... providing
information to assist users in assessing the service efforts, costs, and accomplishments
of the government entity"
GASB Concept Statement 2 - Service Efforts and Accomplishments (SEA) Reporting
(1994) CORRECT ANSWERS Sets guidelines for performance measure reporting for
state/local, however never made a mandatory reporting requirement. Set four essential
components:
1) purpose and scope
2) major goals and objectives
3) key measures of SEA performance
4) discussion and analysis of results/challenges
,Single Audit Act of 1984 (amended in 1996) CORRECT ANSWERS requires the audit
of state and local governments and npo's receiving federal funding
Sarbanes Oxley Act of 2002 CORRECT ANSWERS Placed restrictions on publicly
traded companies following Enron scandal. Requires mgmt to report on I/C's for
financial reporting in its annual report.
(ICOFR) CORRECT ANSWERS Internal Controls Over Financial Reporting
Chief Financial Officers Act of 1990 (CFO Act): CORRECT ANSWERS required 10
federal agencies to produce audited annual financial reports that included a report on
internal control.
expanded in 1994 by GMRA
INTERNAL CONTROLS CORRECT ANSWERS systems and techniques managers
use to provide reasonable assurance that agency objectives met in an effective/efficient
manner, in compliance with laws/regulations, and to safeguard assets.
Implemented to accomplish certain results, prevent problems, or detect problems that
have occurred.
Some controls can both detect and prevent problems (but only if their existence is
known).
TIME VALUE OF MONEY CORRECT ANSWERS Used in consideration of capital
budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
Flowcharting CORRECT ANSWERS Iterative process requiring changes throughout
development, each step represents a decision, also used to evaluate processes for
effective internal controls
Earned Value Management (EVM) CORRECT ANSWERS project mgmt system that
weighs both schedule and cost performance to determine if a project is delivering
expected results on time and within budget
Regression Analysis CORRECT ANSWERS Predicts the relationship between
variables:
1) Direct Linear Regression
2) Indirect Linerar Regression
,3) Non-linear Regression
4) No Relationship
** See Limits of Regression Analysis
Correlation Coefficient CORRECT ANSWERS Determines the degree of accuracy the
analysis (variables) can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
Multiple Regressions CORRECT ANSWERS analyzes multiple IV's and look for items
with the highest correlation coefficient as being the most like predictors
Limits of Regression Analysis CORRECT ANSWERS Data ranges must be relevant
(e.g., sample size might be too small to project on a larger population)
Difficult to find data sets with high correlation coefficients
Bad data = bad results (garbage in, garbage out)
Correlation is not Causation, have to be able to explain how one set of data would
influence another
Data Analytics CORRECT ANSWERS inspecting, cleaning, transforming, and
modeling data to find useful information, conclusions, and support decision making
Data Mining CORRECT ANSWERS (Predictive) sorting through large data sets and
using filters and algorithms to pick out relationships
** See strengths and weaknesses
Predictive Analytics CORRECT ANSWERS data collected through a variety of
techniques to analyze current and historical facts to make predictions about future
events
Data Mining Strengths and Weaknesses CORRECT ANSWERS * Strengths
Analyst is able to review complete data sets
Ability to link together multiple data sources
* Weaknesses
Must have quality data
Must have ability to understand program requirements and how this is represented in
the data
Starting a Data Analytic Program CORRECT ANSWERS Collaborate with other
agencies for data collection and sharing
Determine ROI in Analytics Programs
Give leaders clear concise analysis they can use to support data driven programs
, Enable employees at all levels to see and utilize data for their needs (not just the needs
of senior leaders
Managers to demand the use of data and provide employees with targeted on the job
training
Forensic Auditing CORRECT ANSWERS examination of financial information that is
likely to be used for the investigation and prosecution of financial crimes
Need to have knowledge of basic legal principles, standards for discovery
Steps for Forensic Auditing CORRECT ANSWERS a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
Benford Digital Analysis CORRECT ANSWERS based on observation that more
transactions begin with the number one than larger numbers. More transactions will
start with number one than number two ... and more with number two, than number
three, etc...
Because there is an expected distribution of numbers, the testing an point out
potentially fraudulent transactions
Competitive Source Analysis CORRECT ANSWERS Used to determine if there is a
benefit to contracting government services to the private sector:
1) Conduct a management study
2) Prepare a performance work statement - defines the expected outputs/results
3) Project the in-house and contract costs
4) Select the best alternative - combination of performance and price
Ratio Analysis CORRECT ANSWERS Active use of numbers to point out problems
and indicate performance, questions to ask, etc. They serve as starting points for further
inquiry.
Ex. numbers revealing that receivables are increasing could trigger an increase in debt
collection efforts. Other rations could indicate fiscal stress, adequacy of reserves,
liquidity, workloads, response times, and accuracy rates.
Pure Ratios CORRECT ANSWERS relating one number to another to create a
meaningful indicator of performance (ex., total expenditures to budget).
Comparative Analysis CORRECT ANSWERS Comparing entities numbers and ratios
to another agency or benchmarks. Credit rating agencies also publish median ratios by
industry and what they consider to be reasonable ranges and ratios
VERIFIED ANSWERS
Three Broad Government Spending Purposes CORRECT ANSWERS 1) Current
Operations
2) Capital Outlays
3) Debt Service
Present Value Analysis - Three Components CORRECT ANSWERS Determines what
$$ Rec'd in Future is Worth Today
1) inflation component - year over year loss in value
2) enterprise component - inherent risk
3) unique component -
Budget Accounting and Procedures Act of 1950 CORRECT ANSWERS Requires the
head of each federal agency to establish and maintain I/C's.
Federal Managers Financial Integrity Act of 1982 (FMFIA) CORRECT ANSWERS
requires the head of each agency to evaluate controls on an annual basis, reporting any
weakness along with a corrective action plan
** (resulted in the "green book") **
Service Efforts and Accomplishments (SEA) Reports CORRECT ANSWERS
established by FASB in 1979
GASB Concept Statement 1 - Objectives in Financial Reporting (1987) CORRECT
ANSWERS for state and locals
"financial reporting should assist in fulfilling government's duty to be publicly
accountable and should enable users to assess that accountability by ... providing
information to assist users in assessing the service efforts, costs, and accomplishments
of the government entity"
GASB Concept Statement 2 - Service Efforts and Accomplishments (SEA) Reporting
(1994) CORRECT ANSWERS Sets guidelines for performance measure reporting for
state/local, however never made a mandatory reporting requirement. Set four essential
components:
1) purpose and scope
2) major goals and objectives
3) key measures of SEA performance
4) discussion and analysis of results/challenges
,Single Audit Act of 1984 (amended in 1996) CORRECT ANSWERS requires the audit
of state and local governments and npo's receiving federal funding
Sarbanes Oxley Act of 2002 CORRECT ANSWERS Placed restrictions on publicly
traded companies following Enron scandal. Requires mgmt to report on I/C's for
financial reporting in its annual report.
(ICOFR) CORRECT ANSWERS Internal Controls Over Financial Reporting
Chief Financial Officers Act of 1990 (CFO Act): CORRECT ANSWERS required 10
federal agencies to produce audited annual financial reports that included a report on
internal control.
expanded in 1994 by GMRA
INTERNAL CONTROLS CORRECT ANSWERS systems and techniques managers
use to provide reasonable assurance that agency objectives met in an effective/efficient
manner, in compliance with laws/regulations, and to safeguard assets.
Implemented to accomplish certain results, prevent problems, or detect problems that
have occurred.
Some controls can both detect and prevent problems (but only if their existence is
known).
TIME VALUE OF MONEY CORRECT ANSWERS Used in consideration of capital
budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
Flowcharting CORRECT ANSWERS Iterative process requiring changes throughout
development, each step represents a decision, also used to evaluate processes for
effective internal controls
Earned Value Management (EVM) CORRECT ANSWERS project mgmt system that
weighs both schedule and cost performance to determine if a project is delivering
expected results on time and within budget
Regression Analysis CORRECT ANSWERS Predicts the relationship between
variables:
1) Direct Linear Regression
2) Indirect Linerar Regression
,3) Non-linear Regression
4) No Relationship
** See Limits of Regression Analysis
Correlation Coefficient CORRECT ANSWERS Determines the degree of accuracy the
analysis (variables) can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
Multiple Regressions CORRECT ANSWERS analyzes multiple IV's and look for items
with the highest correlation coefficient as being the most like predictors
Limits of Regression Analysis CORRECT ANSWERS Data ranges must be relevant
(e.g., sample size might be too small to project on a larger population)
Difficult to find data sets with high correlation coefficients
Bad data = bad results (garbage in, garbage out)
Correlation is not Causation, have to be able to explain how one set of data would
influence another
Data Analytics CORRECT ANSWERS inspecting, cleaning, transforming, and
modeling data to find useful information, conclusions, and support decision making
Data Mining CORRECT ANSWERS (Predictive) sorting through large data sets and
using filters and algorithms to pick out relationships
** See strengths and weaknesses
Predictive Analytics CORRECT ANSWERS data collected through a variety of
techniques to analyze current and historical facts to make predictions about future
events
Data Mining Strengths and Weaknesses CORRECT ANSWERS * Strengths
Analyst is able to review complete data sets
Ability to link together multiple data sources
* Weaknesses
Must have quality data
Must have ability to understand program requirements and how this is represented in
the data
Starting a Data Analytic Program CORRECT ANSWERS Collaborate with other
agencies for data collection and sharing
Determine ROI in Analytics Programs
Give leaders clear concise analysis they can use to support data driven programs
, Enable employees at all levels to see and utilize data for their needs (not just the needs
of senior leaders
Managers to demand the use of data and provide employees with targeted on the job
training
Forensic Auditing CORRECT ANSWERS examination of financial information that is
likely to be used for the investigation and prosecution of financial crimes
Need to have knowledge of basic legal principles, standards for discovery
Steps for Forensic Auditing CORRECT ANSWERS a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
Benford Digital Analysis CORRECT ANSWERS based on observation that more
transactions begin with the number one than larger numbers. More transactions will
start with number one than number two ... and more with number two, than number
three, etc...
Because there is an expected distribution of numbers, the testing an point out
potentially fraudulent transactions
Competitive Source Analysis CORRECT ANSWERS Used to determine if there is a
benefit to contracting government services to the private sector:
1) Conduct a management study
2) Prepare a performance work statement - defines the expected outputs/results
3) Project the in-house and contract costs
4) Select the best alternative - combination of performance and price
Ratio Analysis CORRECT ANSWERS Active use of numbers to point out problems
and indicate performance, questions to ask, etc. They serve as starting points for further
inquiry.
Ex. numbers revealing that receivables are increasing could trigger an increase in debt
collection efforts. Other rations could indicate fiscal stress, adequacy of reserves,
liquidity, workloads, response times, and accuracy rates.
Pure Ratios CORRECT ANSWERS relating one number to another to create a
meaningful indicator of performance (ex., total expenditures to budget).
Comparative Analysis CORRECT ANSWERS Comparing entities numbers and ratios
to another agency or benchmarks. Credit rating agencies also publish median ratios by
industry and what they consider to be reasonable ranges and ratios
