CGFM TEST 3 EXAM QUESTION WITH
CORRECT ANSWERS.
1. Three Broad Government Spending Purposes: 1) Current Operations
2) Capital Outlays
3) Debt Service
2. Present Value Analysis - Three Components: 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 -
3. Budget Accounting and Procedures Act of 1950: Requires the head of each
federal agency to establish and maintain I/C's.
4. Federal Managers Financial Integrity Act of 1982 (FMFIA): 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") **
5. Single Audit Act of 1984 (amended in 1996): requires the audit of state and
local governments and npo's receiving federal funding
6. Sarbanes Oxley Act of 2002: Placed restrictions on publicly traded companies
following Enron scandal. Requires mgmt to report on I/C's for financial reporting in
its annual report.
7. (ICOFR): Internal Controls Over Financial Reporting
8. Chief Financial Officers Act of 1990 (CFO Act):: required 10 federal agencies
to produce audited annual financial reports that included a report on internal control.
expanded in 1994 by GMRA
9. INTERNAL CONTROLS: systems and techniques managers use to provide rea-
sonable 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).
10. TIME VALUE OF MONEY: Used in consideration of capital budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
,11. Flowcharting: Iterative process requiring changes throughout development,
each step represents a decision, also used to evaluate processes for effective
internal controls
12. Earned Value Management (EVM): project mgmt system that weighs both
schedule and cost performance to determine if a project is delivering expected
results on time and within budget
13. Regression Analysis: 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
14. Correlation Coefficient: Determines the degree of accuracy the analysis (vari-
ables) can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
15. Multiple Regressions: analyzes multiple IV's and look for items with the highest
correlation coefficient as being the most like predictors
16. Limits of Regression Analysis: 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
17. Data Analytics: inspecting, cleaning, transforming, and modeling data to find
useful information, conclusions, and support decision making
18. Data Mining: (Predictive) sorting through large data sets and using filters and
algorithms to pick out relationships
** See strengths and weaknesses
19. Predictive Analytics: data collected through a variety of techniques to analyze
current and historical facts to make predictions about future events
20. Data Mining Strengths and Weaknesses: * 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
21. Starting a Data Analytic Program: 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
22. Forensic Auditing: 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
23. Steps for Forensic Auditing: a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
24. Benford Digital Analysis: 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
25. Competitive Source Analysis: Used to determine if there is a benefit to con-
tracting 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
26. Ratio Analysis: 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.
CORRECT ANSWERS.
1. Three Broad Government Spending Purposes: 1) Current Operations
2) Capital Outlays
3) Debt Service
2. Present Value Analysis - Three Components: 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 -
3. Budget Accounting and Procedures Act of 1950: Requires the head of each
federal agency to establish and maintain I/C's.
4. Federal Managers Financial Integrity Act of 1982 (FMFIA): 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") **
5. Single Audit Act of 1984 (amended in 1996): requires the audit of state and
local governments and npo's receiving federal funding
6. Sarbanes Oxley Act of 2002: Placed restrictions on publicly traded companies
following Enron scandal. Requires mgmt to report on I/C's for financial reporting in
its annual report.
7. (ICOFR): Internal Controls Over Financial Reporting
8. Chief Financial Officers Act of 1990 (CFO Act):: required 10 federal agencies
to produce audited annual financial reports that included a report on internal control.
expanded in 1994 by GMRA
9. INTERNAL CONTROLS: systems and techniques managers use to provide rea-
sonable 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).
10. TIME VALUE OF MONEY: Used in consideration of capital budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
,11. Flowcharting: Iterative process requiring changes throughout development,
each step represents a decision, also used to evaluate processes for effective
internal controls
12. Earned Value Management (EVM): project mgmt system that weighs both
schedule and cost performance to determine if a project is delivering expected
results on time and within budget
13. Regression Analysis: 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
14. Correlation Coefficient: Determines the degree of accuracy the analysis (vari-
ables) can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
15. Multiple Regressions: analyzes multiple IV's and look for items with the highest
correlation coefficient as being the most like predictors
16. Limits of Regression Analysis: 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
17. Data Analytics: inspecting, cleaning, transforming, and modeling data to find
useful information, conclusions, and support decision making
18. Data Mining: (Predictive) sorting through large data sets and using filters and
algorithms to pick out relationships
** See strengths and weaknesses
19. Predictive Analytics: data collected through a variety of techniques to analyze
current and historical facts to make predictions about future events
20. Data Mining Strengths and Weaknesses: * 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
21. Starting a Data Analytic Program: 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
22. Forensic Auditing: 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
23. Steps for Forensic Auditing: a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
24. Benford Digital Analysis: 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
25. Competitive Source Analysis: Used to determine if there is a benefit to con-
tracting 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
26. Ratio Analysis: 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.
