CMFO FUND FINANCIAL REPORTING I QUESTIONS AND CORRECT ANSWERS

CMFO FUND FINANCIAL REPORTING I
QUESTIONS AND CORRECT
ANSWERS
WhatA2areA2theA2threeA2groupsA2ofA2primaryA2usersA2ofA2externalA2financialA2reportsA2iden
tifiedA2byA2GASB?A2-A2Ans--i.A2Citizens
ii.A2LegislativeA2andA2oversightA2bodies
iii.A2InvestorsA2andA2creditors

WhatA2isA2eachA2groupsA2basicA2informationA2needs?A2-A2Ans--
i.A2CitizensA2needA2toA2knowA2theA2consistencyA2achievedA2betweenA2theA2actualA2financi
alA2transactionsA2ofA2theA2governmentA2andA2theA2legallyA2adoptedA2budget,A2theA2overall
A2financialA2conditionA2ofA2theA2government,A2andA2theA2efficiencyA2andA2effectivenessA2of
A2governmentA2operations.


ii.A2LegislativeA2andA2oversightA2bodiesA2needA2toA2monitorA2budgetA2compliance,A2andA2t
heyA2needA2toA2knowA2whetherA2theA2governmentA2isA2complyingA2withA2laws,A2roles,A2an
dA2regulationsA2relatedA2toA2financialA2mattersA2andA2grants.

iii.A2CreditorsA2andA2investorsA2mostA2criticallyA2needA2toA2keepA2informedA2ofA2theA2financ
ialA2conditionA2ofA2theA2government;A2theyA2areA2alsoA2interestedA2inA2itsA2efficiencyA2andA
2effectiveness.


AccordingA2toA2GASB,A2whatA2areA2theA2sixA2basicA2characteristicsA2thatA2financialA2repor
tsA2mustA2have?A2-A2Ans--1.A2Understandability
2.A2Reliability
3.A2Relevance
4.A2Timeliness
5.A2Consistency
6.A2Comparability

WhatA2isA2understandability?A2-A2Ans--
UnderstandabilityA2isA2theA2conceptA2thatA2usersA2withA2aA2reasonableA2understandingA2o
fA2publicA2financialA2activitiesA2willA2beA2betterA2equippedA2toA2comprehendA2theA2financial
A2statements.


WhatA2isA2reliability?A2-A2Ans--
TheA2financialA2dataA2presentedA2inA2theA2financialA2statementsA2shouldA2beA2reliableA2−A2
verifiableA2andA2freeA2ofA2bias.

WhatA2isA2relevance?A2-A2Ans--
FinancialA2dataA2mustA2beA2relevantA2toA2financialA2statementA2users.A2InformationA2thatA2

, isA2insignificantA2orA2trivialA2isA2ofA2noA2useA2toA2financialA2statementA2usersA2andA2onlyA2r
educesA2theA2relevanceA2ofA2theA2financialA2dataA2asA2aA2whole.

WhatA2isA2timeliness?A2-A2Ans--
FinancialA2statementsA2mustA2beA2issuedA2timelyA2enoughA2toA2provideA2decisionA2maker
sA2withA2valuableA2informationA2forA2theA2decision-makingA2process.

WhatA2isA2consistency?A2-A2Ans--
ConsistencyA2inA2presentationA2ofA2financialA2dataA2isA2crucialA2toA2providingA2adequateA2t
rendA2dataA2andA2meaningfulA2financialA2analysis.

WhatA2isA2comparability?A2-A2Ans--
ComparabilityA2isA2importantA2toA2ensureA2eventsA2andA2transactionsA2areA2viewedA2simil
arlyA2−A2"applesA2toA2apples"A2−A2whenA2comparedA2toA2otherA2entities.

WhatA2doesA2theA2goalA2ofA2UnderstandabilityA2andA2RelevanceA2entail?A2-A2Ans--
1.A2FinancialA2reportingA2shouldA2assistA2inA2fulfillingA2government'sA2dutyA2toA2beA2publicl
yA2accountableA2andA2shouldA2enableA2usersA2toA2assessA2thatA2accountabilityA2by:

a.A2ProvidingA2informationA2toA2determineA2whetherA2current-
yearA2revenuesA2wereA2sufficientA2toA2payA2forA2current-yearA2services.

b.A2DemonstratingA2whetherA2resourcesA2wereA2obtainedA2andA2usedA2inA2accordanceA2w
ithA2theA2entity'sA2legallyA2adoptedA2budgetA2andA2demonstratingA2complianceA2withA2othe
rA2finance-relatedA2legalA2orA2contractualA2requirements.

c.A2ProvidingA2informationA2toA2assistA2usersA2inA2assessingA2theA2serviceA2efforts,A2costs
,A2andA2accomplishmentsA2ofA2theA2governmentalA2entity.

WhatA2doesA2theA2goalA2ofA2TimelinessA2andA2Consistency?A2-A2Ans--
2.A2FinancialA2reportingA2shouldA2assistA2usersA2inA2evaluatingA2theA2operatingA2resultsA2o
fA2theA2governmentalA2entityA2forA2theA2yearA2by:

a.A2ProvidingA2informationA2aboutA2sourcesA2andA2usesA2ofA2financialA2resources.

b.A2ProvidingA2informationA2aboutA2howA2itA2financedA2itsA2activitiesA2andA2metA2itsA2cashA
2requirements.


c.A2ProvidingA2informationA2necessaryA2toA2determineA2whetherA2itsA2financialA2positionA2i
mprovedA2orA2deterioratedA2asA2aA2resultA2ofA2theA2year'sA2operations.

WhatA2doesA2theA2ReliabilityA2andA2ComparabilityA2entail?A2-A2Ans--
3.A2FinancialA2reportingA2shouldA2assistA2usersA2inA2assessingA2theA2levelA2ofA2servicesA2t
hat
canA2beA2providedA2byA2theA2governmentalA2entityA2andA2itsA2abilityA2toA2meetA2itsA2obligat
ionsA2asA2theyA2becomeA2dueA2by: