CGFM TEST 2 GUIDE
QUESTIONS AND
CORRECT ANSWERS
GRADED A+2025-2026
Governments exist to provide services - ANS-no profit motive, no single measure of
success
Primary funding source = - ANS-taxes (involuntary payments, because there is no
ability to match services to those who provide the resource)
Budget process = - ANS-primary control device in government
US Constitution provides two levels of government - ANS-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 - ANS-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 - ANS-public officials are accountable for the extablishment of
controls to ensure that transations are processed properly
2) Performance Accountability - ANS-acting in an efficient, effective, or economic
manner.
,3) Fiscal Accountability - ANS-raising and allocation of resources to accomplish
objectives
4) Operational Accountability - ANS-stewardship of public resources
Which branch is accountable to whom? - ANS-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANS-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 - ANS-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANS-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 - ANS-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 - ANS-provides current information as of the date of the
reports (e.g. balance sheet)
Period financial reports - ANS-reports the activity for an entire fiscal period (month,
year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANS-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) -
ANS-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANS-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) - ANS-** 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 - ANS-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) - ANS-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 - ANS-making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - ANS-vested with the power to
regulate securities markets, requires publicly traded companies to disclose certain
financial information
QUESTIONS AND
CORRECT ANSWERS
GRADED A+2025-2026
Governments exist to provide services - ANS-no profit motive, no single measure of
success
Primary funding source = - ANS-taxes (involuntary payments, because there is no
ability to match services to those who provide the resource)
Budget process = - ANS-primary control device in government
US Constitution provides two levels of government - ANS-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 - ANS-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 - ANS-public officials are accountable for the extablishment of
controls to ensure that transations are processed properly
2) Performance Accountability - ANS-acting in an efficient, effective, or economic
manner.
,3) Fiscal Accountability - ANS-raising and allocation of resources to accomplish
objectives
4) Operational Accountability - ANS-stewardship of public resources
Which branch is accountable to whom? - ANS-Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - ANS-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 - ANS-* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - ANS-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 - ANS-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 - ANS-provides current information as of the date of the
reports (e.g. balance sheet)
Period financial reports - ANS-reports the activity for an entire fiscal period (month,
year)
General Purpose External Financial Reports (GPEFR)/CAFR - ANS-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) -
ANS-* budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - ANS-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) - ANS-** 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 - ANS-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) - ANS-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 - ANS-making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - ANS-vested with the power to
regulate securities markets, requires publicly traded companies to disclose certain
financial information
