CGFM TEST 2 2026 correct answers
Governments exist to provide services - correct answers no profit motive, no single measure of
success
Primary funding source = - correct answers taxes (involuntary payments, because there is no
ability to match services to those who provide the resource)
Budget process = - correct answers primary control device in government
US Constitution provides two levels of government - correct answers 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 - correct answers 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 - correct answers public officials are accountable for the extablishment
of controls to ensure that transations are processed properly
2) Performance Accountability - correct answers acting in an efficient, effective, or economic
manner.
3) Fiscal Accountability - correct answers raising and allocation of resources to accomplish
objectives
,4) Operational Accountability - correct answers stewardship of public resources
Which branch is accountable to whom? - correct answers Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - correct answers 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 - correct answers * only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - correct answers 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 - correct answers 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 - correct answers provides current information as of the date of
the reports (e.g. balance sheet)
Period financial reports - correct answers reports the activity for an entire fiscal period (month,
year)
General Purpose External Financial Reports (GPEFR)/CAFR - correct answers 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) - correct
answers * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - correct answers 1) understandability
, 2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
** most comprehensive financial reports provide non-financial information regarding the
performance of the entity.
** info is often based on judgements or estimates base on the application of rules or
conventions
American Recovery and Reinvestment Act (2009) - correct answers ** important because it
required online reporting of the use of government funds awarded for the purpose of
stimulating the economy - Recovery.gov
Federal Open Government Initiative - correct answers government should be transparent,
participatory, and collaborative
* State Dept, Justice Dept, HHS, NASA, Treasury Dept, EPA, Defense, and SSA
Digital Accountability and Transparency Act (DATA Act - 2014) - correct answers 1) expanded
FFATA of 2006
2) established government wide data standards that is displayed on USAspending.gov
3) simplified reporting for federal funding recipients
4) agencies held accountable for the accuracy and completeness of data submitted to
USAspending.gov
5) apply approaches developed by the Recovery Accountability and Transparency Board
Governments exist to provide services - correct answers no profit motive, no single measure of
success
Primary funding source = - correct answers taxes (involuntary payments, because there is no
ability to match services to those who provide the resource)
Budget process = - correct answers primary control device in government
US Constitution provides two levels of government - correct answers 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 - correct answers 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 - correct answers public officials are accountable for the extablishment
of controls to ensure that transations are processed properly
2) Performance Accountability - correct answers acting in an efficient, effective, or economic
manner.
3) Fiscal Accountability - correct answers raising and allocation of resources to accomplish
objectives
,4) Operational Accountability - correct answers stewardship of public resources
Which branch is accountable to whom? - correct answers Legislative --> to the public
Executive --> to legislative and public as well as other governments
Interperiod Equity - correct answers 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 - correct answers * only to meet cash flow needs
* not for operating purposes
* should match the useful life of capital assets
Users of financial reports - correct answers 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 - correct answers 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 - correct answers provides current information as of the date of
the reports (e.g. balance sheet)
Period financial reports - correct answers reports the activity for an entire fiscal period (month,
year)
General Purpose External Financial Reports (GPEFR)/CAFR - correct answers 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) - correct
answers * budget comparison reports
* cash position reports
* offering statements (when issuing debt)
* popular reports
*grantor reports
* service efforts and accomplishments
* economy and efficiency
Reporting Characteristics - correct answers 1) understandability
, 2) reliability - info is verfiable and free from bias
3) relevance
4) timeliness - for decision making purposes
5) consistency - any change in method or principle should be noted
6) comparability
** most comprehensive financial reports provide non-financial information regarding the
performance of the entity.
** info is often based on judgements or estimates base on the application of rules or
conventions
American Recovery and Reinvestment Act (2009) - correct answers ** important because it
required online reporting of the use of government funds awarded for the purpose of
stimulating the economy - Recovery.gov
Federal Open Government Initiative - correct answers government should be transparent,
participatory, and collaborative
* State Dept, Justice Dept, HHS, NASA, Treasury Dept, EPA, Defense, and SSA
Digital Accountability and Transparency Act (DATA Act - 2014) - correct answers 1) expanded
FFATA of 2006
2) established government wide data standards that is displayed on USAspending.gov
3) simplified reporting for federal funding recipients
4) agencies held accountable for the accuracy and completeness of data submitted to
USAspending.gov
5) apply approaches developed by the Recovery Accountability and Transparency Board
