CGFM Exam 2 Questions with Verified Answers Graded A+
What is the difference in budgets between Government and the private sector? - Answers Its the
primary control device in governement (accountability) but in the private sector its a guide to
operations
Is every State constitution the same? Why? - Answers No, but common requirements are:
executive branch functions, legislative branch, and how local govt are formed
What is the cornerstone of financial reporting? - Answers accountability
What are four types of accountability? - Answers 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? - Answers paying current-years services to
future-year taxpayers
What is one way the federal gov't tries to balance a budget? - Answers debt ceiling (public debt
that can be outstanding)
What are the common users of governmental financial reports? - Answers legislators, other
oversight org's, citizens, investors, creditors, media, financial mangers and program managers
What is an example of intergovernmental revenues? - Answers grants
What are the two types of government financial reports? - Answers 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? - Answers 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?" - Answers 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? - Answers 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. - Answers 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? - Answers 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? - Answers free from bias;
views of constituents; benefits exceed costs; changes the minimize disruption
What are the characteristics of the "Due Process" of standard setting? - Answers 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?" - Answers 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?" - Answers clarify points that may be
ambiguous in a previous standard
What is the FASAB hierarchy? - Answers Category (a) - officially established acct principles and
interpretations
Category (b) - FASAB technical bulletins and if specific the AICPA industry audit and accounting
guide
Category (c) - Technical releases
Category (d) - implementation guides published by FASAB staff
What happens if an accounting treatment is not in the FASAB hierarchy? - Answers If not in
category a-d or something similar in a-d, then consider "other accounting literature" (i.e FASAB
concept statements, pronouncements of other standard-setting bodies, professional
associations, accounting textbooks, handbooks, and articles
What is the GASB hierarchy? - Answers Category (a) - officially established acct principles and
interpretations
Category (b) - GASB technical bulletins and if specific the AICPA industry audit and accounting
guide
Category (c) - AICPA practice bulletins if specifically made applicable to state/local govt entities
and cleared by GASB; consensus groups established by GASB
Category (d) - implementation guides published by GASB staff
What happens if an accounting treatment is not in the GASB hierarchy? - Answers If not in
category a-d or something similar in a-d, then consider "other accounting literature" (i.e GASB
concept statements, issue papers, textbooks, and pronouncements of professional
associations or regulatory agencies, handbooks, or articles
What is a major factor in the establishment of user fees? - Answers cost accounting
What are examples of cost outputs? - Answers direct and indirect cost
What is the preferred sequence of assigning cost? - Answers direct, cause-and-effect, allocated
on a reasonable and consistent basis
What are the five standards for providing full cost of federal programs information for cost
accounting? - Answers requirement for cost accounting; responsibility of segments; full cost;
inter-entity costs; costing methodologies
What does OMB Circular A-87 set forth? - Answers procedures that state, local, and tribal govt's
can be reimbursed for appropriate direct and indirect cost as a result of accepting a grant
What is the difference in budgets between Government and the private sector? - Answers Its the
primary control device in governement (accountability) but in the private sector its a guide to
operations
Is every State constitution the same? Why? - Answers No, but common requirements are:
executive branch functions, legislative branch, and how local govt are formed
What is the cornerstone of financial reporting? - Answers accountability
What are four types of accountability? - Answers 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? - Answers paying current-years services to
future-year taxpayers
What is one way the federal gov't tries to balance a budget? - Answers debt ceiling (public debt
that can be outstanding)
What are the common users of governmental financial reports? - Answers legislators, other
oversight org's, citizens, investors, creditors, media, financial mangers and program managers
What is an example of intergovernmental revenues? - Answers grants
What are the two types of government financial reports? - Answers 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? - Answers 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?" - Answers 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? - Answers 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. - Answers 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? - Answers 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? - Answers free from bias;
views of constituents; benefits exceed costs; changes the minimize disruption
What are the characteristics of the "Due Process" of standard setting? - Answers 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?" - Answers 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?" - Answers clarify points that may be
ambiguous in a previous standard
What is the FASAB hierarchy? - Answers Category (a) - officially established acct principles and
interpretations
Category (b) - FASAB technical bulletins and if specific the AICPA industry audit and accounting
guide
Category (c) - Technical releases
Category (d) - implementation guides published by FASAB staff
What happens if an accounting treatment is not in the FASAB hierarchy? - Answers If not in
category a-d or something similar in a-d, then consider "other accounting literature" (i.e FASAB
concept statements, pronouncements of other standard-setting bodies, professional
associations, accounting textbooks, handbooks, and articles
What is the GASB hierarchy? - Answers Category (a) - officially established acct principles and
interpretations
Category (b) - GASB technical bulletins and if specific the AICPA industry audit and accounting
guide
Category (c) - AICPA practice bulletins if specifically made applicable to state/local govt entities
and cleared by GASB; consensus groups established by GASB
Category (d) - implementation guides published by GASB staff
What happens if an accounting treatment is not in the GASB hierarchy? - Answers If not in
category a-d or something similar in a-d, then consider "other accounting literature" (i.e GASB
concept statements, issue papers, textbooks, and pronouncements of professional
associations or regulatory agencies, handbooks, or articles
What is a major factor in the establishment of user fees? - Answers cost accounting
What are examples of cost outputs? - Answers direct and indirect cost
What is the preferred sequence of assigning cost? - Answers direct, cause-and-effect, allocated
on a reasonable and consistent basis
What are the five standards for providing full cost of federal programs information for cost
accounting? - Answers requirement for cost accounting; responsibility of segments; full cost;
inter-entity costs; costing methodologies
What does OMB Circular A-87 set forth? - Answers procedures that state, local, and tribal govt's
can be reimbursed for appropriate direct and indirect cost as a result of accepting a grant
