CGFM EXAM 3 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
◉ 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
QUESTIONS AND CORRECT ANSWERS
◉ 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
