CGFM TEST 2 WITH COMPLETE
SOLUTIONS
Accountability of Tax Dollars Act (2002) - Answer- required all executive branch entities
to produce audited financial statements (but can be waived if annual budget authority
less than $25M)
Improper Payments Elimination and Recovery Act (2010) - Answer- required:
*agencies to conduct annual risk assessment for improper payments
* agencies to find and report improper payments and recovery efforts
Improper Payments Elimination and Recovery IMPROVEMENT Act (2012) - Answer- *
list of high priority programs that required greater oversight
* created a "don not pay" and "barred payments" vendor list
Digital Accountability and Transparency Act (2014) - Answer- OMB Memorandum M-15-
12 - Increasing Transparency of Federal Spending by Making Federal Spending Data
Accessible, Searchable, and Reliable"
Federal Accounting Standards Advisory Board (FASAB - 1990) - Answer- Advisory
board to GAO, Treasury, and OMB
* develops accounting standards and principles
* determines primary users of federal financial info and their needs
* approved as the GAAP setting authority for Federal Gov't by AICPA in 1999
* several reworks of Board Composition to achieve independence
Due Process - Answer- 1) identify accounting issues
2) preliminary deliberations
3) prepare initial documents (discussion memorandums)
4) release documents to public, hold hearing when necessary
5) further deliberation and consideration of comments
6) approval by 2/3 vote
7) submission for 90 day review
8) publication of final Statement/Interpretation
Users of Federal Financial Reports - Answer- 1) Citizens
2) Congress
3) Executives
4) Program Managers
,SFFAC 1, Chap 4: Objectives of Federal Financial Reporting - Answer- * Objectives:
* budgetary integrity
* operating performance
* stewardship
* systems and controls
* Budgetary Integrity
* Operating Performance (service efforts and accomplishments, asset/liability mgmt)
* Stewardship (change in financial position, sufficiency of future resources, contribution
to nation's well-being)
* Systems and Control (adequacy, transaction execution and recording, asset
safeguarding, support of performance information)
Governments exist to provide services - Answer- no profit motive, no single measure of
success
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
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) - Answer- ** 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 - Answer- 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) - Answer- 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
open government challenges - Answer- making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - Answer- vested with the power to
regulate securities markets, requires publicly traded companies to disclose certain
financial information
SEC gave authority to set accounting standards to the Financial Accounting Foundation
(FAF), who appoints members to the FASB to set reporting and accounting standards
for private and non-profits
SOLUTIONS
Accountability of Tax Dollars Act (2002) - Answer- required all executive branch entities
to produce audited financial statements (but can be waived if annual budget authority
less than $25M)
Improper Payments Elimination and Recovery Act (2010) - Answer- required:
*agencies to conduct annual risk assessment for improper payments
* agencies to find and report improper payments and recovery efforts
Improper Payments Elimination and Recovery IMPROVEMENT Act (2012) - Answer- *
list of high priority programs that required greater oversight
* created a "don not pay" and "barred payments" vendor list
Digital Accountability and Transparency Act (2014) - Answer- OMB Memorandum M-15-
12 - Increasing Transparency of Federal Spending by Making Federal Spending Data
Accessible, Searchable, and Reliable"
Federal Accounting Standards Advisory Board (FASAB - 1990) - Answer- Advisory
board to GAO, Treasury, and OMB
* develops accounting standards and principles
* determines primary users of federal financial info and their needs
* approved as the GAAP setting authority for Federal Gov't by AICPA in 1999
* several reworks of Board Composition to achieve independence
Due Process - Answer- 1) identify accounting issues
2) preliminary deliberations
3) prepare initial documents (discussion memorandums)
4) release documents to public, hold hearing when necessary
5) further deliberation and consideration of comments
6) approval by 2/3 vote
7) submission for 90 day review
8) publication of final Statement/Interpretation
Users of Federal Financial Reports - Answer- 1) Citizens
2) Congress
3) Executives
4) Program Managers
,SFFAC 1, Chap 4: Objectives of Federal Financial Reporting - Answer- * Objectives:
* budgetary integrity
* operating performance
* stewardship
* systems and controls
* Budgetary Integrity
* Operating Performance (service efforts and accomplishments, asset/liability mgmt)
* Stewardship (change in financial position, sufficiency of future resources, contribution
to nation's well-being)
* Systems and Control (adequacy, transaction execution and recording, asset
safeguarding, support of performance information)
Governments exist to provide services - Answer- no profit motive, no single measure of
success
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
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) - Answer- ** 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 - Answer- 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) - Answer- 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
open government challenges - Answer- making information accessible while securing
personally identifiable information
Securities and Exchange Commission (SEC) 1934 - Answer- vested with the power to
regulate securities markets, requires publicly traded companies to disclose certain
financial information
SEC gave authority to set accounting standards to the Financial Accounting Foundation
(FAF), who appoints members to the FASB to set reporting and accounting standards
for private and non-profits
