CERTIFIED GOVERNMENT FINANCIAL MANAGER (CGFM) EXAM
STUDY GUIDE | QUESTIONS & ANSWERS | NEW 2026/2027 UPDATE |
GRADED A+| 100% CORRECT (VERIFIED SOLUTIONS)
Governments exist to provide services -
ANSWER
no profit motive, no single measure of success
Primary funding source = -
ANSWER
taxes (involuntary payments, because there is no ability to match services to those who provide the
resource)
Budget process = -
ANSWER
primary control device in government
US Constitution provides two levels of government -
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 -
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 -
ANSWER
public officials are accountable for the extablishment of controls to ensure that transations are
processed properly
,2) Performance Accountability -
ANSWER
acting in an efficient, effective, or economic manner.
3) Fiscal Accountability -
ANSWER
raising and allocation of resources to accomplish objectives
4) Operational Accountability -
ANSWER
stewardship of public resources
Which branch is accountable to whom? -
ANSWER
Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity -
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 -
ANSWER
* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
,Users of financial reports -
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 -
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 -
ANSWER
provides current information as of the date of the reports (e.g. balance sheet)
Period financial reports -
ANSWER
reports the activity for an entire fiscal period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR -
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) -
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 -
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) -
ANSWER
** important because it required online reporting of the use of government funds awarded for the
purpose of stimulating the economy - Recovery.gov
STUDY GUIDE | QUESTIONS & ANSWERS | NEW 2026/2027 UPDATE |
GRADED A+| 100% CORRECT (VERIFIED SOLUTIONS)
Governments exist to provide services -
ANSWER
no profit motive, no single measure of success
Primary funding source = -
ANSWER
taxes (involuntary payments, because there is no ability to match services to those who provide the
resource)
Budget process = -
ANSWER
primary control device in government
US Constitution provides two levels of government -
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 -
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 -
ANSWER
public officials are accountable for the extablishment of controls to ensure that transations are
processed properly
,2) Performance Accountability -
ANSWER
acting in an efficient, effective, or economic manner.
3) Fiscal Accountability -
ANSWER
raising and allocation of resources to accomplish objectives
4) Operational Accountability -
ANSWER
stewardship of public resources
Which branch is accountable to whom? -
ANSWER
Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity -
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 -
ANSWER
* only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
,Users of financial reports -
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 -
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 -
ANSWER
provides current information as of the date of the reports (e.g. balance sheet)
Period financial reports -
ANSWER
reports the activity for an entire fiscal period (month, year)
General Purpose External Financial Reports (GPEFR)/CAFR -
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) -
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 -
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) -
ANSWER
** important because it required online reporting of the use of government funds awarded for the
purpose of stimulating the economy - Recovery.gov
