CGFM TEST 3 Questions with
Correct/Verified Answers 2026 Updated.
Three Broad Government Spending Purposes - Answer 1) Current Operations
2) Capital Outlays
3) Debt Service
Present Value Analysis - Three Components - Answer 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 -
Budget Accounting and Procedures Act of 1950 - Answer Requires the head of each federal
agency to establish and maintain I/C's.
Federal Managers Financial Integrity Act of 1982 (FMFIA) - Answer 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") **
Single Audit Act of 1984 (amended in 1996) - Answer requires the audit of state and local
governments and npo's receiving federal funding
Sarbanes Oxley Act of 2002 - Answer Placed restrictions on publicly traded companies
following Enron scandal. Requires mgmt to report on I/C's for financial reporting in its annual
report.
(ICOFR) - Answer Internal Controls Over Financial Reporting
Chief Financial Officers Act of 1990 (CFO Act): - Answer required 10 federal agencies to
produce audited annual financial reports that included a report on internal control.
expanded in 1994 by GMRA
,INTERNAL CONTROLS - Answer systems and techniques managers use to provide reasonable
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).
TIME VALUE OF MONEY - Answer Used in consideration of capital budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
Flowcharting - Answer Iterative process requiring changes throughout development, each step
represents a decision, also used to evaluate processes for effective internal controls
Earned Value Management (EVM) - Answer project mgmt system that weighs both schedule
and cost performance to determine if a project is delivering expected results on time and within
budget
Regression Analysis - Answer 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
Correlation Coefficient - Answer Determines the degree of accuracy the analysis (variables)
can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
,Multiple Regressions - Answer analyzes multiple IV's and look for items with the highest
correlation coefficient as being the most like predictors
Limits of Regression Analysis - Answer 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
Data Analytics - Answer inspecting, cleaning, transforming, and modeling data to find useful
information, conclusions, and support decision making
Data Mining - Answer (Predictive) sorting through large data sets and using filters and
algorithms to pick out relationships
** See strengths and weaknesses
Predictive Analytics - Answer data collected through a variety of techniques to analyze current
and historical facts to make predictions about future events
Data Mining Strengths and Weaknesses - Answer * 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
Starting a Data Analytic Program - Answer 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
, Forensic Auditing - Answer 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
Steps for Forensic Auditing - Answer a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
Benford Digital Analysis - Answer 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
Competitive Source Analysis - Answer Used to determine if there is a benefit to contracting
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
Ratio Analysis - Answer 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.
Pure Ratios - Answer relating one number to another to create a meaningful indicator of
performance (ex., total expenditures to budget).
Comparative Analysis - Answer Comparing entities numbers and ratios to another agency or
benchmarks. Credit rating agencies also publish median ratios by industry and what they
consider to be reasonable ranges and ratios
Correct/Verified Answers 2026 Updated.
Three Broad Government Spending Purposes - Answer 1) Current Operations
2) Capital Outlays
3) Debt Service
Present Value Analysis - Three Components - Answer 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 -
Budget Accounting and Procedures Act of 1950 - Answer Requires the head of each federal
agency to establish and maintain I/C's.
Federal Managers Financial Integrity Act of 1982 (FMFIA) - Answer 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") **
Single Audit Act of 1984 (amended in 1996) - Answer requires the audit of state and local
governments and npo's receiving federal funding
Sarbanes Oxley Act of 2002 - Answer Placed restrictions on publicly traded companies
following Enron scandal. Requires mgmt to report on I/C's for financial reporting in its annual
report.
(ICOFR) - Answer Internal Controls Over Financial Reporting
Chief Financial Officers Act of 1990 (CFO Act): - Answer required 10 federal agencies to
produce audited annual financial reports that included a report on internal control.
expanded in 1994 by GMRA
,INTERNAL CONTROLS - Answer systems and techniques managers use to provide reasonable
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).
TIME VALUE OF MONEY - Answer Used in consideration of capital budgeting
1) Present Value Analysis
2) Future Value Analysis
3) Payback Analysis
Flowcharting - Answer Iterative process requiring changes throughout development, each step
represents a decision, also used to evaluate processes for effective internal controls
Earned Value Management (EVM) - Answer project mgmt system that weighs both schedule
and cost performance to determine if a project is delivering expected results on time and within
budget
Regression Analysis - Answer 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
Correlation Coefficient - Answer Determines the degree of accuracy the analysis (variables)
can be used to predict results (1=perfect correlation
.85 considered reliable for forecasting)
,Multiple Regressions - Answer analyzes multiple IV's and look for items with the highest
correlation coefficient as being the most like predictors
Limits of Regression Analysis - Answer 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
Data Analytics - Answer inspecting, cleaning, transforming, and modeling data to find useful
information, conclusions, and support decision making
Data Mining - Answer (Predictive) sorting through large data sets and using filters and
algorithms to pick out relationships
** See strengths and weaknesses
Predictive Analytics - Answer data collected through a variety of techniques to analyze current
and historical facts to make predictions about future events
Data Mining Strengths and Weaknesses - Answer * 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
Starting a Data Analytic Program - Answer 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
, Forensic Auditing - Answer 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
Steps for Forensic Auditing - Answer a) data collection,
b) data preparation,
c) data analysis,
and d) reporting
Benford Digital Analysis - Answer 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
Competitive Source Analysis - Answer Used to determine if there is a benefit to contracting
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
Ratio Analysis - Answer 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.
Pure Ratios - Answer relating one number to another to create a meaningful indicator of
performance (ex., total expenditures to budget).
Comparative Analysis - Answer Comparing entities numbers and ratios to another agency or
benchmarks. Credit rating agencies also publish median ratios by industry and what they
consider to be reasonable ranges and ratios
