Best Preparations of GFMC Exam 2025 Government Financial Manager Unlimited 117 Questions
Focus on GFMC All-in-One Exam Guide For Quick Preparation.
AGA GFMC Exam Syllabus Topics:
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NEW QUESTION # 70
Government performance measurement promotes
- A. profitability.
- B. responsibility.
- C. accountability.
- D. cash availability.
Answer: C
Explanation:
What Is Government Performance Measurement?
Government performance measurement is the process of setting goals, tracking progress, and evaluating outcomes for government programs and services. This system ensures that public funds are used effectively and that programs achieve intended results.
How Does It Promote Accountability?
* Accountability is the primary goal of performance measurement. It holds government officials and agencies responsible for managing public resources efficiently and achieving measurable outcomes.
* By measuring performance, governments can transparently demonstrate how resources are being used and whether programs are meeting their objectives.
Why Other Options Are Incorrect:
* A. Responsibility:While responsibility is important, it refers more to the assignment of duties, not the system of holding entities accountable.
* B. Profitability:Governments are not profit-driven organizations; their focus is on service delivery, not profits.
* D. Cash Availability:Performance measurement focuses on outcomes, not managing cash flows.
References and Documents:
* Government Performance and Results Act (GPRA):Promotes accountability through performance measurement and reporting.
* GAO Report on Performance Accountability:Emphasizes the role of performance measurement in achieving government accountability.
NEW QUESTION # 71
All of the following ae among the stated purposes of GPRA EXCEPT to
- A. provide instructions on program reporting.
- B. improve internal management practices.
- C. improve program effectiveness.
- D. help managers improve service delivery.
Answer: A
Explanation:
What Is GPRA?
TheGovernment Performance and Results Act (GPRA)of 1993 was designed to improve the performance of federal programs by requiring federal agencies to establish goals, measure performance, and report on their progress.
Stated Purposes of GPRA:
* Improve Service Delivery (Option A):GPRA helps agencies align performance goals with customer needs, improving service delivery.
* Improve Internal Management Practices (Option B):By requiring performance metrics and evaluations, GPRA enhances internal management and decision-making processes.
* Improve Program Effectiveness (Option D):GPRA aims to make federal programs more effective by fostering accountability and linking resources to results.
Why Option C Is Incorrect:
* GPRA does not provide detailedinstructions on program reporting.While it requires agencies to report on their performance, it does not dictate the specific steps or instructions for reporting. Instead, agencies design their own reporting processes within the GPRA framework.
References and Documents:
* Government Performance and Results Act of 1993:Stipulates the law's objectives but does not mention program reporting instructions.
* GAO Report on GPRA Implementation:Highlights GPRA's purpose to improve performance management and accountability without prescribing reporting instructions.
NEW QUESTION # 72
In an internal control evaluation, what are the roles of management and the auditor regarding the risk of fraud, waste and abuse?
- A. Management identifies risks, auditors assess control effectiveness.
- B. Management mitigates risks, auditors monitor compliance with controls.
- C. Auditors identify risks, management implements control measures.
- D. Both management and auditors determine risk tolerance levels.
Answer: A
Explanation:
Role of Management in Internal Control Evaluation:
* Responsibility for Risk Identification:Management has the primary responsibility for designing, implementing, and maintaining an effective system of internal controls. As part of this process, management identifies the risks related to fraud, waste, and abuse that could impact financial reporting or operational efficiency.
* Mitigating Risks:Once risks are identified, management is responsible for mitigating them by developing appropriate policies, procedures, and controls.
Role of the Auditor in Internal Control Evaluation:
* Assessing Control Effectiveness:Auditors are not responsible for designing or implementing controls; rather, their role is to evaluate whether the controls put in place by management are effective. They do this through testing, observation, and other audit procedures.
* Fraud Risk Assessment:As part of their duties under Generally Accepted Government Auditing Standards (GAGAS), auditors must assess the risk of material misstatement due to fraud and evaluate how management's controls address those risks.
Why Other Options Are Incorrect:
* B.Auditors do not identify risks-this is management's job. Auditors evaluate and assess the controls already in place.
* C.Determining risk tolerance is a governance and management responsibility, not the joint responsibility of auditors and management.
* D.Management mitigates risks, but auditors don't monitor compliance with controls-they test and evaluate the controls as part of their audit procedures.
References and Documents:
* GAGAS (Yellow Book) by GAO:Emphasizes management's responsibility for risk identification and the auditor's responsibility for assessing control effectiveness.
* COSO Internal Control Framework (2013):Highlights management's responsibility for risk assessment and control design, while auditors provide independent assurance.
NEW QUESTION # 73
A federal government agency that expends beyond its appropriation is in violation of the
- A. Federal Managers' Financial Integrity Act.
- B. Sarbanes-Oxley Act.
- C. Federal Financial Management Improvement Act.
- D. Antideficiency Act.
Answer: D
Explanation:
* Antideficiency Act Overview:
* TheAntideficiency Act (31 U.S.C. §§ 1341, 1342, 1517)prohibits federal agencies from:
* Obligating or expending funds in excess of their appropriations.
* Entering into contracts without sufficient appropriated funds.
* Violating the Act is a serious matter, and agencies are required to report such violations to Congress and the President.
* Explanation of Answer Choices:
* A. Federal Managers' Financial Integrity Act: Incorrect. This Act requires agencies to assess internal controls, not monitor appropriations.
* B. Federal Financial Management Improvement Act: Incorrect. This Act focuses on improving financial systems, not budgetary compliance.
* C. Antideficiency Act: Correct. This Act directly prohibits expenditures beyond appropriations.
* D. Sarbanes-Oxley Act: Incorrect. This Act applies to corporate financial reporting, not federal appropriations.
:
Antideficiency Act (31 U.S.C. §§ 1341, 1342, 1517).
GAO,Principles of Federal Appropriations Law.
NEW QUESTION # 74
Planning to support ongoing financial operations in the event of a natural disaster is based on the assumption that
- A. a fully redundant infrastructure will be available to staff at an alternate location.
- B. there may be no warning of the potential emergency.
- C. leadership and staff will reconvene at an alternate location.
- D. government agencies will need to operate as standalone organizations.
Answer: B
Explanation:
* Assumptions in Disaster Planning:
* Financial continuity planning for natural disasters must account for scenarios where the event occurs suddenly and without warning.
* This assumption ensures that governments are prepared to quickly resume critical financial operations even under challenging and unpredictable circumstances.
* Explanation of Answer Choices:
* A. Leadership and staff will reconvene at an alternate location: While this is part of disaster planning, it is not the primary assumption.
* B. A fully redundant infrastructure will be available to staff at an alternate location: This may not always be realistic or feasible.
* C. There may be no warning of the potential emergency: Correct. Disaster planning assumes that emergencies can occur without prior notice.
* D. Government agencies will need to operate as standalone organizations: This is not a standard assumption in disaster planning.
:
FEMA,Continuity Guidance Circular.
GAO,Disaster Resilience and Continuity Planning.
NEW QUESTION # 75
An analyst has identified several variables that may be impacting state lottery ticket sales, including investments in advertising, potential pay-out amounts and the size of lottery cards. Which of the following techniques would help determine the extent to which each variable is impacting sales?
- A. content analysis
- B. regression analysis
- C. narrative analysis
- D. cost-benefit analysis
Answer: B
Explanation:
* Regression Analysis:
* Regression analysis is a statistical technique used to examine the relationships between a dependent variable (e.g., lottery ticket sales) and one or more independent variables (e.g., advertising, potential payouts, size of lottery cards).
* This method helps quantify the extent to which each variable impacts sales.
* Explanation of Answer Choices:
* A. Content analysis: Incorrect. This method is used to analyze qualitative data (e.g., text or media) rather than numerical relationships.
* B. Cost-benefit analysis: Incorrect. This technique evaluates the costs and benefits of a decision but does not identify the relationships between variables.
* C. Regression analysis: Correct. This technique determines the impact of multiple variables on a single outcome.
* D. Narrative analysis: Incorrect. This is used to analyze stories or qualitative information, not numerical data.
:
Association of Government Accountants (AGA),Data Analytics and Predictive Techniques in Government.
U).S. Census Bureau,Statistical Techniques for Economic Analysis.
NEW QUESTION # 76
What is the most fupdamental cash control?
- A. segregation of duties
- B. use of automated systems
- C. frequent reconciliation of bank accounts
- D. analysis of cash reports
Answer: C
Explanation:
* Cash Control Fundamentals:
* The primary goal of cash controls is to safeguard assets and prevent fraud, errors, or misappropriation.
* Frequent bank reconciliations ensure that recorded cash balances match actual bank balances, detecting discrepancies quickly.
* Explanation of Answer Choices:
* A. Segregation of duties: While critical for cash management, it is not the most fundamental cash control.
* B. Use of automated systems: Helpful for efficiency but not a fundamental control.
* C. Analysis of cash reports: Important, but reconciling bank accounts is more critical for detecting errors or fraud.
* D. Frequent reconciliation of bank accounts: Correct. This is the most fundamental and widely recognized control for safeguarding cash.
:
Association of Government Accountants (AGA),Cash Management Best Practices.
Government Finance Officers Association (GFOA),Bank Reconciliation Best Practices.
NEW QUESTION # 77
Under the control environment component of internal control, management should
- A. demonstrate a commitment to integrity and ethical values.
- B. establish and operate activities to monitor the internal control system.
- C. implement control activities through policies.
- D. communicate quality information to achieve the entity's objectives.
Answer: A
Explanation:
* Control Environment Component:
* The control environment is the foundation of an internal control system, setting the tone at the top.
* Demonstrating integrity and ethical values is the first principle of the control environment, as outlined in theCOSO Internal Control Framework.
* Explanation of Answer Choices:
* A. Demonstrate a commitment to integrity and ethical values: Correct. This is a foundational principle of the control environment.
* B. Implement control activities through policies: This relates to the "Control Activities" component, not the control environment.
* C. Communicate quality information to achieve the entity's objectives: This relates to the
"Information and Communication" component.
* D. Establish and operate activities to monitor the internal control system: This relates to the
"Monitoring Activities" component.
:
COSO,Internal Control - Integrated Framework.
GAO,Standards for Internal Control in the Federal Government (Green Book).
NEW QUESTION # 78
The scope of a single audit engagement includes all of the following EXCEPT
- A. financial statements.
- B. internal controls.
- C. compliance with terms of the award.
- D. performance results.
Answer: D
Explanation:
* Scope of Single Audit:The scope includes:
* Financial Statements: Ensuring accurate reporting of financial activities.
* Internal Controls: Evaluating effectiveness in compliance with federal requirements.
* Compliance: Ensuring compliance with the terms and conditions of the award.
* Explanation of Answer Choices:
* A. Financial statements: Included in the audit.
* B. Internal controls: Included to ensure compliance.
* C. Performance results: Correct. Single audits do not assess program outcomes or effectiveness.
* D. Compliance with terms of the award: Included to ensure federal funds are used appropriately.
:
Uniform Guidance (2 CFR Part 200),Audit Requirements.
Government Accountability Office (GAO),Yellow Book: Standards for Audits of Federal Awards.
NEW QUESTION # 79
When planning for local government financial statement audit, what data source should the auditor consider first?
- A. reconciliations between fund financial statements
- B. previous audit findings
- C. government-wide financial statements
- D. fund financial statements
Answer: B
Explanation:
* Importance of Prior Audit Findings:
* When planning a local government financial statement audit, auditors should first review previous audit findingsto identify recurring issues, control weaknesses, or non-compliance areas. This helps auditors focus on areas of higher risk and guides the development of an effective audit strategy.
* Explanation of Answer Choices:
* A. Government-wide financial statements: Important, but these are reviewed after identifying risk areas from prior findings.
* B. Fund financial statements: These are part of the audit process but not the starting point for planning.
* C. Reconciliations between fund financial statements: These are analyzed during the audit but come later in the process.
* D. Previous audit findings: Correct. Reviewing past findings ensures the auditor addresses previously identified risks and compliance issues.
:
GAO,Government Auditing Standards (Yellow Book).
AICPA,Audit Planning and Risk Assessment Best Practices.
NEW QUESTION # 80
The first step in the internal control evaluation process is
- A. identifying potential risks.
- B. documenting how transactions of events are processed.
- C. assessing the adequacy of controls.
- D. identifying the effectiveness of management activities.
Answer: A
Explanation:
What Is Internal Control Evaluation?
Internal control evaluation is the process of assessing an organization's internal controls to ensure they are adequate and effective in mitigating risks, ensuring compliance, and achieving objectives.
Why Is Identifying Potential Risks the First Step?
* The entire purpose of internal controls is to mitigate risks. Therefore, before evaluating the controls, you need to identify the risks they are meant to address.
* Once risks are identified, the organization can evaluate whether the existing controls are adequate and effective in mitigating those risks.
* This approach aligns with risk-based frameworks like theCOSO Internal Control Framework, which emphasizes risk identification as the foundation for effective controls.
Why Other Options Are Incorrect:
* A. Identifying the effectiveness of management activities:This is part of control evaluation but occurs after risks and controls are identified.
* B. Assessing the adequacy of controls:Controls cannot be assessed until the risks they address are identified.
* C. Documenting how transactions or events are processed:While this step is important, it comes later in the process, after risks and controls are identified.
References and Documents:
* COSO Internal Control Framework:Identifies risk assessment as the foundation for designing and evaluating controls.
* GAO Standards for Internal Control (Green Book):Highlights risk identification as the first step in the control process.
NEW QUESTION # 81
In addition to the Yellow Book, which group's external audit standards can the GAO reference?
- A. Public Company Accounting Oversight Board
- B. AICPA
- C. International Organization of Supreme Audit Institutions
- D. International Auditing and Assurance Standards Board.
Answer: C
Explanation:
* GAO and External Audit Standards:The Government Accountability Office (GAO) uses the Yellow Book as its primary standard. However, it may also reference external standards from recognized international and professional auditing organizations. INTOSAI is specifically mentioned in the Yellow Book as a source of additional standards for governmental audits.
* Explanation of Answer Choices:
* A. Public Company Accounting Oversight Board (PCAOB): This regulates audits of publicly traded companies, not government entities.
* B. International Auditing and Assurance Standards Board (IAASB): This focuses on global private-sector audits, not specifically government-related.
* C. International Organization of Supreme Audit Institutions (INTOSAI): Correct. INTOSAI sets audit standards for public-sector auditors worldwide and is relevant for the GAO.
* D. AICPA: While the AICPA sets standards for U.S. auditors, INTOSAI is more relevant for international public-sector audits.
:
GAO,Government Auditing Standards (Yellow Book).
INTOSAI,Framework of Professional Standards for Supreme Audit Institutions.
NEW QUESTION # 82
Management segregates duties among staff in order to reduce the risk of fraud
- A. pressure.
- B. detection.
- C. rationalization.
- D. opportunity.
Answer: D
Explanation:
Segregation of Duties and the Fraud Triangle:
* TheFraud Triangleidentifies three conditions that contribute to fraud:pressure,opportunity, and rationalization.
* Segregating duties (e.g., separating authorization, recordkeeping, and asset custody) is specifically designed to reduceopportunity, which is the chance for an employee to commit fraud without detection.
Why Opportunity Is Key:
* If one person has too much control over a process, they may exploit it for personal gain. Segregating duties creates checks and balances, making it harder for fraudulent activities to go unnoticed.
Why Other Options Are Incorrect:
* A. Pressure:Pressure refers to personal or financial stresses that drive someone to commit fraud, but segregation of duties does not address this directly.
* C. Rationalization:Rationalization involves justifying fraudulent behavior, which segregation does not prevent.
* D. Detection:While segregation can aid in fraud detection, its primary role is to reduce opportunities for fraud.
References and Documents:
* GAO Standards for Internal Control (Green Book):Emphasizes segregation of duties as a control to mitigate opportunities for fraud.
* COSO Internal Control Framework:Identifies segregation of duties as a key tool to reduce fraud risk.
NEW QUESTION # 83
According to the GAO, internal control is a process used by management to
- A. design an ERM system.
- B. develop a strategic plan.
- C. help an entity achieve its objectives.
- D. set the tone at the top.
Answer: C
Explanation:
* Definition of Internal Control (According to GAO):
* Internal control is aprocess implemented by managementto provide reasonable assurance that the organization will achieve its objectives in:
* Operations(effectiveness and efficiency).
* Reporting(reliable and accurate financial and non-financial reporting).
* Compliance(adherence to laws and regulations).
* Explanation of Answer Choices:
* A. Help an entity achieve its objectives: Correct. This is the primary purpose of internal controls.
* B. Design an ERM system: Incorrect. Enterprise Risk Management (ERM) is broader than internal control and includes risk strategy and appetite.
* C. Set the tone at the top: Incorrect. While the tone at the top is part of the control environment, it is not the full scope of internal control.
* D. Develop a strategic plan: Incorrect. Internal control supports strategic plans but is not directly involved in developing them.
:
GAO,Standards for Internal Control in the Federal Government (Green Book).
COSO,Internal Control - Integrated Framework.
NEW QUESTION # 84
A city parks department is selecting a contractor to renovate a community playground. Which of the following contractors should be selected?
- A. The contractor with the second-lowest bid, who has no prior violations and meets all bid specifications.
- B. The contractor whose bid was submitted past the deadline but offers a discount for early payment.
- C. The contractor with the lowest bid who has a history of delayed projects.
- D. The contractor with the highest bid, who includes luxury, non-requested upgrades to the design.
Answer: A
Explanation:
* Understanding the Procurement Process for Contractors:
* When selecting contractors for government projects, the goal is to ensure the selection of a responsible and responsive bidderwho meets all requirements outlined in the Request for Proposal (RFP) or bidding documents.
* Key considerations include the contractor's ability to meet deadlines, quality of work, and compliance with laws and regulations.
* Analyzing the Answer Options:
* A. The contractor with the lowest bid who has a history of delayed projects:While cost savings are important, a contractor with a history of delays poses a significant risk to project timelines and community satisfaction. This bidder is not considered "responsible" based on their track record.
* B. The contractor with the second-lowest bid, who has no prior violations and meets all bid specifications:Although this is not the lowest bid, it is the best choice because the contractor meets all requirements and has a clean history. Selecting a reliable bidder ensures the project is completed on time and within acceptable quality standards. This is the most responsible and justified decision.
* C. The contractor with the highest bid, who includes luxury, non-requested upgrades to the design:Selecting a contractor who proposes unnecessary and expensive upgrades is not cost- effective. Government procurement prioritizes fulfilling project specifications within the approved budget, making this choice impractical.
* D. The contractor whose bid was submitted past the deadline but offers a discount for early payment:Late bids violate procurement rules, which emphasize fairness and transparency.
Accepting this bid could lead to legal challenges or allegations of favoritism. Discounts do not justify breaching procurement guidelines.
* Why Option B is Correct:
* The second-lowest bid is the most responsible choice because the contractor:
* Meets all bid requirements.
* Has a strong history of compliance with regulations.
* Avoids risks associated with unreliable or excessively expensive options.
* This selection aligns with government procurement standards that prioritize balancing cost, quality, and reliability.
* References and Documentation from the Government Financial Manager (GFM) by AGA:
* Procurement Best Practices: The AGA emphasizes the importance of selecting bidders who demonstrate responsibility, reliability, and compliance with the bidding process.
* Ethical Procurement Standards: TheYellow Book (Government Auditing Standards) highlights the importance of fairness, transparency, and accountability in contractor selection.
* Source: AGA Certified Government Financial Manager (CGFM) study guides, Section IV:
Internal Controls, Procurement, and Ethics.
NEW QUESTION # 85
GPRA requires agencies to prepare and submit a strategic plan, an annual performance plan and
- A. a SEA report.
- B. the prior year's audited financial report.
- C. an annual performance report.
- D. a five-year performance plan.
Answer: C
Explanation:
What Does GPRA Require?
TheGovernment Performance and Results Act (GPRA)mandates that federal agencies prepare:
* Astrategic planoutlining long-term goals.
* Anannual performance plandetailing the objectives and performance measures for the upcoming year.
* Anannual performance reportevaluating the agency's success in meeting the goals outlined in the annual performance plan.
Why Is the Annual Performance Report Important?
* The annual performance report provides accountability and transparency by comparing actual results to planned goals. It allows Congress and the public to assess how effectively the agency is achieving its mission.
Why Other Options Are Incorrect:
* A. A five-year performance plan:GPRA requires a strategic plan (updated every four years), not a separate five-year performance plan.
* C. SEA Report:This refers to Service Efforts and Accomplishments reporting, which is not mandated by GPRA.
* D. The prior year's audited financial report:While financial reports are important, they are separate from the performance reporting requirements of GPRA.
References and Documents:
* Government Performance and Results Act (1993):Requires agencies to submit strategic plans, annual performance plans, and annual performance reports.
* GAO Reports on GPRA Compliance:Emphasizes the role of annual performance reports in promoting accountability.
NEW QUESTION # 86
How may a city parks and recreation director meaningfully assess the performance of the department's grounds maintenance division?
- A. compare cost per acre maintained to cost per acre maintained in another jurisdiction
- B. evaluate funds spent on grounds maintenance
- C. use a single measure of citizen satisfaction with parks and recreation
- D. analyze grounds maintenance staffing levels
Answer: A
Explanation:
Why Is This the Best Measure for Performance?
* Comparing thecost per acre maintainedto that of another jurisdiction provides a meaningful benchmark for performance evaluation. It allows the director to assess how efficiently the department is operating relative to similar organizations.
* This comparison ensures that the department is managing resources effectively and identifies potential areas for improvement.
Why Other Options Are Incorrect:
* A. Use a single measure of citizen satisfaction:While citizen satisfaction is important, it is subjective and does not provide insight into operational efficiency.
* B. Evaluate funds spent on grounds maintenance:Total spending does not measure efficiency or productivity; it merely reflects the amount allocated.
* C. Analyze staffing levels:Staffing levels do not directly measure performance; they are only one factor in determining efficiency.
References and Documents:
* Governmental Performance Reporting (AGA):Recommends using comparative benchmarks for evaluating efficiency in service delivery.
* Performance Management Framework by GAO:Highlights cost-effectiveness metrics such as cost per acre maintained.
NEW QUESTION # 87
What is the basis for determining materiality for financial audits?
- A. The entity's main provider of resources typically sets materiality levels for financial reporting.
- B. The auditor establishes materiality based on whether a misstatement would influence the judgement made by a reasonable user of the financial statements.
- C. The auditor sets a standard percentage for all entities by transaction class.
- D. The auditee determines what is material based on their understanding of how the financial statements may be used by third parties.
Answer: B
Explanation:
* Definition of Materiality:
* In financial audits, materiality is the threshold above which a misstatement or omission could influence the economic decisions of users of financial statements.
* Auditors consider theneeds of reasonable userswhen determining materiality, focusing on what would influence their decision-making.
* Explanation of Answer Choices:
* A. The auditee determines what is material: Incorrect. The auditor, not the auditee, is responsible for determining materiality.
* B. The auditor establishes materiality based on whether a misstatement would influence the judgment made by a reasonable user of the financial statements: Correct. This aligns with auditing standards, such as those in the Yellow Book and AICPA guidance.
* C. The entity's main provider of resources typically sets materiality levels: Incorrect.
Materiality is not determined by resource providers but by the auditor based on the needs of users.
* D. The auditor sets a standard percentage for all entities by transaction class: Incorrect.
Materiality varies depending on the entity and its financial circumstances.
:
GAO,Government Auditing Standards (Yellow Book).
AICPA,Auditing Standards - Materiality in Planning and Performing an Audit.
NEW QUESTION # 88
A governmental attestation engagement may include a requirement to
- A. establish a policy concerning fraud prevention.
- B. monitor purchasing card charges for compliance with travel policies.
- C. monitor a subgrantee for compliance to the grant restrictions.
- D. review the revenue coverage requirements on outstanding bonds.
Answer: D
Explanation:
* Governmental Attestation Engagements:
* These engagements involve providing assurance on specific elements of financial or non- financial information, such as compliance with laws, contracts, or bond covenants.
* Reviewing revenue coverage requirements for outstanding bonds fits the scope of attestation engagements, which focus on confirming adherence to specific requirements.
* Explanation of Answer Choices:
* A. Monitor a subgrantee for compliance to the grant restrictions: Monitoring is a management responsibility, not typically part of an attestation engagement.
* B. Establish a policy concerning fraud prevention: Establishing policies is a management duty, not a task for auditors.
* C. Monitor purchasing card charges for compliance with travel policies: Monitoring is operational, not attestation-related.
* D. Review the revenue coverage requirements on outstanding bonds: Correct. This falls within the scope of attestation engagements.
:
GAO,Government Auditing Standards (Yellow Book).
AICPA,Attestation Standards for Government Engagements.
NEW QUESTION # 89
Which of the following acts requires federal agencies to pay interest to state government funds for entitlements that are not provided in a timely manner?
- A. CFO Act
- B. Cash Management Improvement Act
- C. Debt Collection Improvement Act
- D. Accountability for Tax Dollars Act
Answer: B
Explanation:
What Does the Cash Management Improvement Act (CMIA) Do?
* CMIA governs the transfer of federal funds to state governments and ensures timely and efficient use of these funds.
* If federal agencies fail to provide funds for entitlements (e.g., Medicaid) in a timely manner, CMIA requires them to payinterestto state governments for the delays.
* This ensures states are compensated for any financial burden caused by delayed federal transfers.
Why Other Options Are Incorrect:
* A. Debt Collection Improvement Act:Focuses on improving debt collection practices for the federal government, not entitlements or interest payments to states.
* B. CFO Act:Improves federal financial management but does not address payment timeliness or interest.
* C. Accountability for Tax Dollars Act:Expands audit requirements but does not involve compensation for delays.
References and Documents:
* CMIA (1990):Requires federal agencies to pay interest on late entitlement payments to states.
* Treasury Financial Manual:Details CMIA interest payment provisions.
NEW QUESTION # 90
A local government is reviewing the performance of a contractor that is collecting trash for the county.
Performance can be measured based upon the cost
- A. comparison with closest comparable jurisdiction.
- B. per mile travelled.
- C. per ton of trash collected.
- D. per employee.
Answer: C
Explanation:
Why Measure Performance Based on Cost per Ton of Trash Collected?
* Costper ton of trash collectedis a direct, objective, and quantifiable measure of the contractor's performance. It reflects how efficiently the contractor is operating relative to the amount of trash being managed.
* This measure aligns with the principle of output-based performance evaluation, which focuses on results (e.g., tons of trash collected) rather than inputs or unrelated factors.
Why Other Options Are Incorrect:
* A. Per mile traveled:Mileage is not directly tied to performance; it depends on the route structure and geography, not the quantity of trash collected.
* C. Comparison with closest comparable jurisdiction:While this may provide context, it is not a specific performance measure.
* D. Per employee:Employee count does not directly measure performance or efficiency in trash collection operations.
References and Documents:
* GAO Guide on Contract Performance Evaluation:Recommends using measurable and outcome- based metrics like cost per ton collected for performance reviews.
* Best Practices in Local Government Contracting (AGA):Highlights output-based measures for evaluating contractor performance.
NEW QUESTION # 91
The value, in current dollars, of a sum of money to be received in the future describes
- A. payback value.
- B. annuity value.
- C. present value.
- D. future value.
Answer: C
NEW QUESTION # 92
Performance measures that report the results of providing goods or services are known as
- A. output measures.
- B. outcome measures.
- C. activity measures.
- D. workload measures.
Answer: A
Explanation:
* Definition of Output Measures:
* Output measures trackthe results of providing goods or services, such as the number of items produced or services delivered.
* These measures focus onquantityrather than quality or outcomes.
* Explanation of Answer Choices:
* A. Activity measures: Incorrect. Activity measures refer to inputs or processes, not results.
* B. Outcome measures: Incorrect. Outcome measures assess the impact or effectiveness of a program, not the quantity of goods/services provided.
* C. Output measures: Correct. Output measures focus on results (e.g., number of services delivered).
* D. Workload measures: Incorrect. Workload measures assess the volume of work performed but do not necessarily report on the results.
:
GASB,Performance Measurement Concepts.
GAO,Performance Auditing Standards and Guidance.
NEW QUESTION # 93
Which of the following is an example of an internal control weakness?
- A. The accounting department has one clerk prepare vendor payments and another clerk reconcile bank accounts.
- B. The contract department staff awards contracts and maintains a database for vendor information.
- C. The budget department staff is responsible for preparing the budget and for reporting on budget cost variances.
- D. Management policy allows project managers to oversee controls of companies in which they have a material interest.
Answer: D
Explanation:
* Definition of Internal Control Weakness:Internal control weaknesses occur when controls fail to prevent or detect errors, fraud, or conflicts of interest. Allowing project managers to oversee companies in which they have a material interest introduces aconflict of interest, undermining internal controls.
* Explanation of Answer Choices:
* A. The contract department staff awards contracts and maintains a database for vendor information: While not ideal, this does not automatically signal a critical control weakness.
* B. Management policy allows project managers to oversee controls of companies in which they have a material interest: Correct. This represents a serious conflict of interest and lack of independence.
* C. The budget department staff is responsible for preparing the budget and for reporting on budget cost variances: This may indicate concentration of duties but is less severe than a direct conflict of interest.
* D. The accounting department has one clerk prepare vendor payments and another clerk reconcile bank accounts: This demonstrates good segregation of duties, not a weakness.
:
COSO,Internal Control - Integrated Framework.
GAO,Standards for Internal Control in the Federal Government (Green Book).
NEW QUESTION # 94
Internal control over financial reporting means that management can reasonably make which of the following assertions?
- A. Management has met its legislatively directed program goals.
- B. A physical inventory has been conducted of all assets meeting the jurisdiction's capitalization threshold.
- C. All assets and liabilities have been properly valued and, where applicable, all costs have been properly allocated.
- D. Sufficient spending authority and financial resources exist to support reported expenditures.
Answer: C
Explanation:
What Is Internal Control Over Financial Reporting?
Internal control over financial reporting (ICFR) ensures the reliability of an entity's financial statements. It focuses on maintaining accurate, complete, and properly valued financial information that complies with accounting standards and meets the needs of users.
Why Is Option C Correct?
* Proper valuation of assets and liabilities is a critical component of ICFR. It ensures that financial statements fairly represent the entity's financial position.
* Cost allocation is also essential where applicable, such as assigning costs to programs or projects.
Why Other Options Are Incorrect:
* A. Sufficient spending authority and financial resources exist:This relates to budgetary control, not financial reporting.
* B. Physical inventory of capitalized assets:Conducting a physical inventory is part of asset management, not financial reporting assertions.
* D. Legislatively directed program goals:Meeting program goals is related to performance reporting, not ICFR.
References and Documents:
* GAO Standards for Internal Control (Green Book):Stresses the importance of proper valuation and cost allocation for accurate financial reporting.
* COSO Framework:Emphasizes ICFR's role in ensuring reliable and accurate financial statements.
NEW QUESTION # 95
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