CGFM EXAM 3 ACTUAL EXAM SCRIPT 2026
COMPLETE 100 QUESTIONS AND
DETAILED SOLUTIONS
⩥ Primary funding source =. Answer: taxes (involuntary payments,
because there is no ability to match services to those who provide the
resource)
⩥ Budget process =. Answer: primary control device in government
⩥ US Constitution provides two levels of government. Answer: Federal
and State
State consitituions similar in that each defines the excutive and
legislative braches, establishes political offices, and defines how local
governments can be formed.
⩥ Government Accountability. Answer: based on the belief that the
government has a responsibility to report, the public has a right to know,
andthe ultimate power belongs to the people.
⩥ 1) Legal Accountability. Answer: public officials are accountable for
the extablishment of controls to ensure that transations are processed
properly
,⩥ 2) Performance Accountability. Answer: acting in an efficient,
effective, or economic manner.
⩥ 3) Fiscal Accountability. Answer: raising and allocation of resources
to accomplish objectives
⩥ 4) Operational Accountability. Answer: stewardship of public
resources
⩥ Which branch is accountable to whom?. Answer: Legislative --> to
the public
Executive --> to legislative and public as well as other governments
⩥ Interperiod Equity. Answer: current generation of citizens should not
be able to shift the burden of paying for current-year services to future
taxpayers
balanced budget law = current year services must be financed with
current year revenues (problem is financial data can be manipulated to
achieve this). Fed Gov't not subject to this.
⩥ Laws prohibiting borrowing. Answer: * only to meet cash flow needs
,* not for operating purposes
* should match the useful life of capital assets
⩥ Users of financial reports. Answer: 1) Legislators and oversight
groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
⩥ Need for financial reports. Answer: 1) primary communication device
for assessing accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
⩥ Point in time financial reports. Answer: provides current information
as of the date of the reports (e.g. balance sheet)
, ⩥ Period financial reports. Answer: reports the activity for an entire
fiscal period (month, year)
⩥ General Purpose External Financial Reports (GPEFR)/CAFR.
Answer: 1) audited financial statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
⩥ Special Purpose Financial Reports (may or may not be provided to
external users). Answer: * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
⩥ Reporting Characteristics. Answer: 1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
COMPLETE 100 QUESTIONS AND
DETAILED SOLUTIONS
⩥ Primary funding source =. Answer: taxes (involuntary payments,
because there is no ability to match services to those who provide the
resource)
⩥ Budget process =. Answer: primary control device in government
⩥ US Constitution provides two levels of government. Answer: Federal
and State
State consitituions similar in that each defines the excutive and
legislative braches, establishes political offices, and defines how local
governments can be formed.
⩥ Government Accountability. Answer: based on the belief that the
government has a responsibility to report, the public has a right to know,
andthe ultimate power belongs to the people.
⩥ 1) Legal Accountability. Answer: public officials are accountable for
the extablishment of controls to ensure that transations are processed
properly
,⩥ 2) Performance Accountability. Answer: acting in an efficient,
effective, or economic manner.
⩥ 3) Fiscal Accountability. Answer: raising and allocation of resources
to accomplish objectives
⩥ 4) Operational Accountability. Answer: stewardship of public
resources
⩥ Which branch is accountable to whom?. Answer: Legislative --> to
the public
Executive --> to legislative and public as well as other governments
⩥ Interperiod Equity. Answer: current generation of citizens should not
be able to shift the burden of paying for current-year services to future
taxpayers
balanced budget law = current year services must be financed with
current year revenues (problem is financial data can be manipulated to
achieve this). Fed Gov't not subject to this.
⩥ Laws prohibiting borrowing. Answer: * only to meet cash flow needs
,* not for operating purposes
* should match the useful life of capital assets
⩥ Users of financial reports. Answer: 1) Legislators and oversight
groups
2) Citizens and taxpayers
3) Investors and Creditors
4) Media
5) Financial and Program managers
6) Employees and employee organizations
⩥ Need for financial reports. Answer: 1) primary communication device
for assessing accountability
2) aid in decision making process (economic, social, and political)
* planning and administration
* results of operations
* financial condition of the organization
⩥ Point in time financial reports. Answer: provides current information
as of the date of the reports (e.g. balance sheet)
, ⩥ Period financial reports. Answer: reports the activity for an entire
fiscal period (month, year)
⩥ General Purpose External Financial Reports (GPEFR)/CAFR.
Answer: 1) audited financial statements (including notes)
"basic financial statements" - state/local
"principal financial statements" - federal
2) required supplementary information
3) other accompanying information (voluntary)
⩥ Special Purpose Financial Reports (may or may not be provided to
external users). Answer: * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
⩥ Reporting Characteristics. Answer: 1) understandability
2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
