CGFM TEST 2 (2025) Actual Exam
Questions and Answers A+ Graded
Governments .exist .to .provide .services .- .CORRECT .ANSWER .-no .profit .motive,
.no .single .measure .of .success
Primary .funding .source .= .- .CORRECT .ANSWER .-taxes .(involuntary .payments,
.because .there .is .no .ability .to .match .services .to .those .who .provide .the
.resource)
Budget .process .= .- .CORRECT .ANSWER .-primary .control .device .in .government
US .Constitution .provides .two .levels .of .government .- .CORRECT .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 .- .CORRECT .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 .- .CORRECT .ANSWER .-public .officials .are .accountable
.for .the .extablishment .of .controls .to .ensure .that .transations .are .processed
.properly
2) .Performance .Accountability .- .CORRECT .ANSWER .-acting .in .an .efficient,
.effective, .or .economic .manner.
3) .Fiscal .Accountability .- .CORRECT .ANSWER .-raising .and .allocation .of
.resources .to .accomplish .objectives
4) .Operational .Accountability .- .CORRECT .ANSWER .-stewardship .of .public
.resources
Which .branch .is .accountable .to .whom? .- .CORRECT .ANSWER .-Legislative .--> .to
.the .public
Executive .--> .to .legislative .and .public .as .well .as .other .governments
,Interperiod .Equity .- .CORRECT .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 .- .CORRECT .ANSWER .-* .only .to .meet .cash .flow
.needs
* .not .for .operating .purposes
* .should .match .the .useful .life .of .capital .assets
Users .of .financial .reports .- .CORRECT .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 .- .CORRECT .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 .- .CORRECT .ANSWER .-provides .current
.information .as .of .the .date .of .the .reports .(e.g. .balance .sheet)
Period .financial .reports .- .CORRECT .ANSWER .-reports .the .activity .for .an .entire
.fiscal .period .(month, .year)
General .Purpose .External .Financial .Reports .(GPEFR)/CAFR .- .CORRECT
.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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT
.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 .- .CORRECT .ANSWER .-making .information
.accessible .while .securing .personally .identifiable .information
Securities .and .Exchange .Commission .(SEC) .1934 .- .CORRECT .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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT .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) .- .CORRECT .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) .- .CORRECT
.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)
GASB .Mission .- .CORRECT .ANSWER .-1) .set .and .improve .standards .of
.state/local .accounting .and .financial .reporting
2) .guide .and .educate .the .public .in .using .these .reports
GASB .Rules .of .Procedure .- .CORRECT .ANSWER .-1) .establish .an .advisory .task
.force .to .provide .feedback .on .issues
2) .publish .documents .for .comment
3) .broadly .distribute .an .exposure .draft .for .public .comment
4) .conduct .public .hearings .on .due .process .documents
5) .issue .a .final .standard
FASAB .Mission .- .CORRECT .ANSWER .-improving .federal .financial .reporting
.through .issuing .financial .standards, .which .are .published .in .the .Federal
.Register .and .reviewed .by .Congress
FASAB .rules .of .procedure .- .CORRECT .ANSWER .-1) .identify .accounting .issues
.and .set .agendas
2) .prepare .initial .documents
Questions and Answers A+ Graded
Governments .exist .to .provide .services .- .CORRECT .ANSWER .-no .profit .motive,
.no .single .measure .of .success
Primary .funding .source .= .- .CORRECT .ANSWER .-taxes .(involuntary .payments,
.because .there .is .no .ability .to .match .services .to .those .who .provide .the
.resource)
Budget .process .= .- .CORRECT .ANSWER .-primary .control .device .in .government
US .Constitution .provides .two .levels .of .government .- .CORRECT .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 .- .CORRECT .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 .- .CORRECT .ANSWER .-public .officials .are .accountable
.for .the .extablishment .of .controls .to .ensure .that .transations .are .processed
.properly
2) .Performance .Accountability .- .CORRECT .ANSWER .-acting .in .an .efficient,
.effective, .or .economic .manner.
3) .Fiscal .Accountability .- .CORRECT .ANSWER .-raising .and .allocation .of
.resources .to .accomplish .objectives
4) .Operational .Accountability .- .CORRECT .ANSWER .-stewardship .of .public
.resources
Which .branch .is .accountable .to .whom? .- .CORRECT .ANSWER .-Legislative .--> .to
.the .public
Executive .--> .to .legislative .and .public .as .well .as .other .governments
,Interperiod .Equity .- .CORRECT .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 .- .CORRECT .ANSWER .-* .only .to .meet .cash .flow
.needs
* .not .for .operating .purposes
* .should .match .the .useful .life .of .capital .assets
Users .of .financial .reports .- .CORRECT .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 .- .CORRECT .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 .- .CORRECT .ANSWER .-provides .current
.information .as .of .the .date .of .the .reports .(e.g. .balance .sheet)
Period .financial .reports .- .CORRECT .ANSWER .-reports .the .activity .for .an .entire
.fiscal .period .(month, .year)
General .Purpose .External .Financial .Reports .(GPEFR)/CAFR .- .CORRECT
.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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT
.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 .- .CORRECT .ANSWER .-making .information
.accessible .while .securing .personally .identifiable .information
Securities .and .Exchange .Commission .(SEC) .1934 .- .CORRECT .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) .- .CORRECT .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 .- .CORRECT .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) .- .CORRECT .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) .- .CORRECT .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) .- .CORRECT
.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)
GASB .Mission .- .CORRECT .ANSWER .-1) .set .and .improve .standards .of
.state/local .accounting .and .financial .reporting
2) .guide .and .educate .the .public .in .using .these .reports
GASB .Rules .of .Procedure .- .CORRECT .ANSWER .-1) .establish .an .advisory .task
.force .to .provide .feedback .on .issues
2) .publish .documents .for .comment
3) .broadly .distribute .an .exposure .draft .for .public .comment
4) .conduct .public .hearings .on .due .process .documents
5) .issue .a .final .standard
FASAB .Mission .- .CORRECT .ANSWER .-improving .federal .financial .reporting
.through .issuing .financial .standards, .which .are .published .in .the .Federal
.Register .and .reviewed .by .Congress
FASAB .rules .of .procedure .- .CORRECT .ANSWER .-1) .identify .accounting .issues
.and .set .agendas
2) .prepare .initial .documents
