CGFM EXAM 2 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
◉ Is every State constitution the same? Why?
Answer: No, but common requirements are: executive branch
functions, legislative branch, and how local govt are formed
◉ What is the cornerstone of financial reporting?
Answer: accountability
◉ What are four types of accountability?
Answer: legal accountability - need to comply with
rules/regulations
performance accountability - gov't acts in an efficient and effective
manner
Fiscal accountability - raising of resources and the allocation of
those resources to accomplish objectives
operational accountability - stewardship of public resources
◉ What is interperiod or intergenerational equity?
Answer: paying current-years services to future-year taxpayers
◉ What is one way the federal gov't tries to balance a budget?
,Answer: debt ceiling (public debt that can be outstanding)
◉ What are the common users of governmental financial reports?
Answer: legislators, other oversight org's, citizens, investors,
creditors, media, financial mangers and program managers
◉ What is an example of intergovernmental revenues?
Answer: grants
◉ What are the two types of government financial reports?
Answer: point-in-time (aka stock reports) - current info as of the
date of the report (example: balance sheet)
period report (aka flow reports) - covers the entire fiscal year
◉ What do the general purpose external financial reports
(GPEFR) consist of?
Answer: audited financial statements, notes, required
supplemental info. Other accompanying info isn't required but can
be included
◉ What is an example of "other financial reports?"
Answer: budget, budget comparison reports, reports that disclose
condition of operations (report on cash, a/r O/s, revenues
generated), offering reports, project reports, and popular reports
All aka "special purpose financial reports"
,◉ What are the characteristics of all reports?
Answer: Understandability - explanations and interpretations to
help users understand
Reliability - verifiable, free from bias
Relevance - s/b capable of making a difference
Timeliness - reported on a time frame
Consistency - principles are used in current and future reports
Comparability - like entities should report same info the same way
◉ Describe the steps it took to get to the reporting standards
today.
Answer: 1929 stock market crash due to companies inducing
public on their "profitability."
1934 SEC was established to regulate securities. SEC granted
authority to FASB for standards. But no standards for local & state
govt's
1934-1941 municipal finance officers association advocated
reporting principles
1968 GAAFR issued ("blue book")
1970 fiscal crises in NY and Cleveland
1974 AICPA issued audit guide
1984 GASB was created but no requirement for state/local gov't
although they adopted it; however, nothing for federal
1990 MOU established FASAB
, ◉ What are the standard setting organizations?
Answer: GASB - set and improve standards of state and local gov't
FASAB - improving federal financial reporting
FASB - set and improve financial acct & reporting standards in the
private sector
◉ What are common objectives with the GASB and FASAB boards?
Answer: free from bias; views of constituents; benefits exceed
costs; changes the minimize disruption
◉ What are the characteristics of the "Due Process" of standard
setting?
Answer: time & location of board meetings are publicly
announced; task force may be established; documents are issued
(discussion memo; invitation to comment; preliminary reviews;
exposure draft)
◉ What is a "concept statement?"
Answer: does not establish standards but it describes a concept
the board will use as a framework for evaluating existing or
establishing a new standard
◉ What are "interpretations" and "technical bulletins?"
Answer: clarify points that may be ambiguous in a previous
standard
QUESTIONS AND CORRECT ANSWERS
◉ Is every State constitution the same? Why?
Answer: No, but common requirements are: executive branch
functions, legislative branch, and how local govt are formed
◉ What is the cornerstone of financial reporting?
Answer: accountability
◉ What are four types of accountability?
Answer: legal accountability - need to comply with
rules/regulations
performance accountability - gov't acts in an efficient and effective
manner
Fiscal accountability - raising of resources and the allocation of
those resources to accomplish objectives
operational accountability - stewardship of public resources
◉ What is interperiod or intergenerational equity?
Answer: paying current-years services to future-year taxpayers
◉ What is one way the federal gov't tries to balance a budget?
,Answer: debt ceiling (public debt that can be outstanding)
◉ What are the common users of governmental financial reports?
Answer: legislators, other oversight org's, citizens, investors,
creditors, media, financial mangers and program managers
◉ What is an example of intergovernmental revenues?
Answer: grants
◉ What are the two types of government financial reports?
Answer: point-in-time (aka stock reports) - current info as of the
date of the report (example: balance sheet)
period report (aka flow reports) - covers the entire fiscal year
◉ What do the general purpose external financial reports
(GPEFR) consist of?
Answer: audited financial statements, notes, required
supplemental info. Other accompanying info isn't required but can
be included
◉ What is an example of "other financial reports?"
Answer: budget, budget comparison reports, reports that disclose
condition of operations (report on cash, a/r O/s, revenues
generated), offering reports, project reports, and popular reports
All aka "special purpose financial reports"
,◉ What are the characteristics of all reports?
Answer: Understandability - explanations and interpretations to
help users understand
Reliability - verifiable, free from bias
Relevance - s/b capable of making a difference
Timeliness - reported on a time frame
Consistency - principles are used in current and future reports
Comparability - like entities should report same info the same way
◉ Describe the steps it took to get to the reporting standards
today.
Answer: 1929 stock market crash due to companies inducing
public on their "profitability."
1934 SEC was established to regulate securities. SEC granted
authority to FASB for standards. But no standards for local & state
govt's
1934-1941 municipal finance officers association advocated
reporting principles
1968 GAAFR issued ("blue book")
1970 fiscal crises in NY and Cleveland
1974 AICPA issued audit guide
1984 GASB was created but no requirement for state/local gov't
although they adopted it; however, nothing for federal
1990 MOU established FASAB
, ◉ What are the standard setting organizations?
Answer: GASB - set and improve standards of state and local gov't
FASAB - improving federal financial reporting
FASB - set and improve financial acct & reporting standards in the
private sector
◉ What are common objectives with the GASB and FASAB boards?
Answer: free from bias; views of constituents; benefits exceed
costs; changes the minimize disruption
◉ What are the characteristics of the "Due Process" of standard
setting?
Answer: time & location of board meetings are publicly
announced; task force may be established; documents are issued
(discussion memo; invitation to comment; preliminary reviews;
exposure draft)
◉ What is a "concept statement?"
Answer: does not establish standards but it describes a concept
the board will use as a framework for evaluating existing or
establishing a new standard
◉ What are "interpretations" and "technical bulletins?"
Answer: clarify points that may be ambiguous in a previous
standard
