CGFM TEST 3 QUESTIONS WITH COMPLETE SOLUTIONS

CGFM TEST 3 QUESTIONS WITH COMPLETE
SOLUTIONS

(ICOFR) Correct Answers Internal Controls Over Financial
Reporting

* OMB Circular A-123 - Mgmts Responsibility for Internal
Control Correct Answers Mgmt responsible for:
1) develop/implement cost effective I/C's
2) assess the adequacy of I/C's in programs/ operations
3) assess/correct ICOFR
4) identify needed improvements
5) take corresponding corrective action
6) report annually on I/C through mgm Statement of Assurance
(SOA)

Appendix A - strengthened process for ICOFR
Appendix B - mgmt of gov't charge card programs
Appendix C - measurement and remediation of improper
payments
Appendix D (2013) - FFMIA guidance for agencies subject to
CFO Act

7 Threats to Auditor Independence Correct Answers 1) self-
interest
2) self-review
3) bias
4) familiarity
5) undue influence
6) management participation
7) structural

,8 Components to ERM (3 additional from IC triangle model)
Correct Answers 1) Internal Environment (same as Control
Environment)
2) OBJECTIVE SETTING - New
3) EVENT IDENTIFICATION - New
4) RISK ASSESSMENT - New
5) Risk Response
6) Control Activities
7) Information and Communication
8) Monitoring

Ability to repay Debt Correct Answers Excess revenues over
operating expenditures/
Principal payment + interest expense

Accountability of Tax Dollars Act (2002) Correct Answers
Expanded CFO Act to include all federal agencies

Accountability of Tax Dollars Act of 2002 Correct Answers
Annual audit requirement expanded to include ALL federal
agencies

Acquisition Correct Answers get the right product, in the right
quantity, at the right price, at the right time

Additional Audit Fieldwork Correct Answers following audit
plan:

* analyze records
* obtain audit evidence

,* document conclusions
* develop findings

Alternative Investments Correct Answers high risk, low
liquidity - best for large pension or endowment funds

*Hedge funds
*Real Estate Investment Trusts (REIT)
*Private equities sold in secondary markets
*Derivatives

Asset efficiency and Turn-Over ratios Correct Answers
Efficiency in using assets and converting them to cash.

1) Receivables Ratios
2) Inventory Ratios

Attestation Engagements - Fieldwork Standards Correct
Answers The practitioner must have reason to believe that the
subject matte is capable of evaluation against criteria that are
suitable and available to users. AICPA standards require auditor
to:
* property plan the engagement
* supervise assistants
* obtain sufficient evidence

1) Examination - requires same 5 GAGAS requirements for F/S
audits
2) Review - additional requirement to report findings
3) Agreed Upon Procedures - additional requirement to report
findings

, Attestation Engagements - Reporting Standards Correct
Answers 1) identify subject matter and character of the
engagement
2) state conclusions about the subject matter based on audit
criteria
3) state auditor's significant reservations about the engagement
4) state whom the report is intended for use by

Attestation Engagements Correct Answers Standards set by the
AICPA in the Statements on Standards for Attestation
Engagements (SSAEs)

examination based on agreed upon procedures on a subject
matter, e.g., policy or internal control compliance. More
common to private entities. Three Types:
1) Examination
2) Review
3) Agreed-upon procedures

Audit Committees Correct Answers 1) review financial
information for reliability, timeliness, and compliance
2) evaluate internal control programs
3) evaluate independent audit firms
4) oversee the scope/performance of the independent audit
5) oversee the scope/performance of internal audit
6) insure audit recommendations are implemented on a timely
basis
7) provide a communication link between auditors and
governing board