Government Finance and Budgeting, Exams of Nursing

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CGFM Exam 1 questions with correct answers

I1. A significant difference between special-purpose and general-purpose governments is that general-purpose governments CORRECT ANSWER Correct Answer: perform multiple functions, while special-purpose governments are typically formed to perform one or two specific functions. I2. A commission that manages water and sewer services for several counties is an example of a CORRECT ANSWER Correct Answer: jointly-governed organization. I3. A county commission meets to address the budget. In attendance are the five members of the county commission the district attorney, the county executive officer and the county sheriff. If the county budget officer presents the annual budget, who will enact it? CORRECT ANSWER Correct Answer: the county commission I4. The primary role of the judicial branch is to hear cases that CORRECT ANSWER Correct Answer: seek interpretation and challenge legislation. I5. Every state legislature has the authority to CORRECT ANSWER Correct Answer: approve the budget. I6. Which of the following is a state government responsibility allowed by the U.S. Constitution? CORRECT ANSWER Correct Answer: license professionals, such as attorneys I7. The executive branch of the U.S. government has the ability to CORRECT ANSWER Correct Answer: issue and enforce regulations required by statute.

I8. Executive orders are defined as CORRECT ANSWER Correct Answer: official documents specifying policy and procedures for government. I9. The hierarchy of government authority is CORRECT ANSWER Correct Answer: U.S. Constitution, state constitution, state laws, state rules and regulations. I10. The key principles in the relationship among the three branches of government include all of the following EXCEPT CORRECT ANSWER Correct Answer: popular sovereignty. I11. The U.S. Constitution provides for separation of powers between which of the following? CORRECT ANSWER Correct Answer: the president, the Supreme Court and Congress I12. Which of the following powers was granted exclusively to the federal government in the U.S. Constitution? CORRECT ANSWER Correct Answer: to regulate commerce with Native American tribal governments I13. A conservation authority is established in a state to focus solely on swamp conservation efforts; the authority has the power to levy taxes. This is an example of which type of government? CORRECT ANSWER Correct Answer: special- purpose district I14. The legislative branch of the U.S. government has the ability to CORRECT ANSWER Correct Answer: limit government spending. I15. If a citizen complains about trash in a county park the responsibility for addressing the complaint resides with the CORRECT ANSWER Correct Answer: county executive officer.

I16. Regulations promulgated by federal agencies must comply with CORRECT ANSWER Correct Answer: the U.S. Constitution, federal laws, and executive orders issued by the president. I17. A local government's authority is outlined in its constitution or CORRECT ANSWER Correct Answer: charter. I18. A county-wide utility district is an example of a CORRECT ANSWER Correct Answer: special-purpose government. I19. Several local school districts are forming a jointly-governed district to provide education services to disabled students in a central location. The primary reason for forming such an organization is to CORRECT ANSWER Correct Answer: manage the program more effectively and efficiently. I20. A document is issued with the following title: "Amending Title 10 of the Philadelphia Code entitled 'Regulation of Individual Conduct and Activity' by allowing the granting of permanent licenses for guide dogs for the blind handicapped persons or government-owned dogs used for law enforcement; all under certain terms and conditions." This is an example of CORRECT ANSWER Correct Answer: an ordinance. I21. With regard to lands held by Native American tribal governments the U.S. Constitution and subsequent Supreme Court decisions affirm that CORRECT ANSWER Correct Answer: tribes have limited sovereignty over tribal lands and are subject to certain U.S. government jurisdictions. I22. A city council is representative of which branch of government? CORRECT ANSWER Correct Answer: legislative

I23. What type of laws may the U.S. Congress pass with respect to tribal governments? CORRECT ANSWER Correct Answer: Congress may pass laws pertaining to commerce with tribal governments. I24. Which of the following examples demonstrates how the separation of powers and checks and balances among the three branches of the government affect spending by governmental agencies? CORRECT ANSWER Correct Answer: the use of a line-item veto by a president, governor or mayor, but only if that power is available and deemed constitutional and legal I25. State laws can limit local authority EXCEPT in cases where state law CORRECT ANSWER Correct Answer: violates the U.S. Constitution. I26. Which of the following statements describes the relationship that the U.S. Constitution provides among the branches of the government? CORRECT ANSWER Correct Answer: Congress establishes laws, the executive branch establishes and implements regulations, and the judiciary determines if the laws or regulations violate the Constitution. II 1. Congress passes a national budget every year while state and local governments enact either of what type of budgets? CORRECT ANSWER Correct Answer: annual or biennial II 2. How does the executive branch of the federal government control spending? CORRECT ANSWER Correct Answer: OMB apportions resources by time period or program, or both. II 3. What is monetary policy and who may exercise it? CORRECT ANSWER Correct Answer: It is the power to establish the money supply exercised by the federal government.

II 4. With respect to U.S. monetary policy, the CORRECT ANSWER Correct Answer: Federal Reserve System purchases and sells securities in the open market to supply bank reserves necessary to support the credit and money needed for economic growth. II 5. As resources decrease and demands on government goods and services increase, what role of the budget becomes more critical? CORRECT ANSWER Correct Answer: priority-setting role II 6. The mission of the budget process, as identified by the National Advisory Council on State and Local Budgeting, is to CORRECT ANSWER Correct Answer: help decision-makers make informed choices about the provision of services and capital assets. II 7. The legal authority to incur expenses and expend money is an CORRECT ANSWER Correct Answer: appropriation. II 8. When the budget dictates that a government agency may only spend its funds on specific types of goods or services, it is controlling spending by CORRECT ANSWER Correct Answer: object class. II 9. The sovereignty of a U.S. state is constrained by CORRECT ANSWER Correct Answer: the U.S. Constitution. II 10. The primary objective of the budget process is to CORRECT ANSWER Correct Answer: prioritize government expenditures and allocate resources.

II 11. A sovereign entity's ability to tax, spend and borrow is limited by CORRECT ANSWER Correct Answer: charters, constitutions, laws and ordinances. II 12. A government budget is intended to CORRECT ANSWER Correct Answer: serve as a financial plan and reflect the priorities of elected officials. II 13. Collections that are legally restricted to expenditures for specific purposes would be recorded in CORRECT ANSWER Correct Answer: special revenue funds. II 14. If an appropriation law for the budget year is not enacted before the start of the fiscal year, Congress may pass CORRECT ANSWER Correct Answer: a continuing resolution. II 15. A legislative earmark is intended to CORRECT ANSWER Correct Answer: provide a specific benefit to the constituency of a particular elected official. II 16. All local sovereign governmental entities have the ability to CORRECT ANSWER Correct Answer: establish budgets and spend public funds for authorized purposes. II 17. A budget at any governmental level serves as all of the following EXCEPT CORRECT ANSWER Correct Answer: a vision document. II 18. After the president has signed an appropriation into law, the OMB may further control a federal agency's budget authority using which of the following? CORRECT ANSWER Correct Answer: apportionment

II 19. What legal authority establishes the U.S. government's right to coin money, while prohibiting states from taking the same action? CORRECT ANSWER Correct Answer: U.S. Constitution II 20. Which of the following limits are used in appropriations laws to control federal spending? CORRECT ANSWER Correct Answer: the amount of the appropriation, the time period during which the appropriation is unexpired, and the purpose for the appropriation II 21. The table to the left provides details on the Transportation Security Administration's annual operating appropriation. The budget authority has been apportioned on a quarterly basis with object class breakouts. Figures below are in millions of dollars. The Transportation Security Administration's financial managers estimate Q2 labor costs will be approximately $8.5 million. Based on this information the Transportation Security Administration staff should take which of following actions? CORRECT ANSWER Correct Answer: request an adjustment to the apportionment distribution II 22. The September 11th Victim Compensation Fund and similar funds established to settle class-action lawsuits are examples of CORRECT ANSWER Correct Answer: special funds. II 23. The concept of sovereign immunity CORRECT ANSWER Correct Answer: means that the U. S. government cannot be sued without its permission. II 24. Apportionments and allotments are typically distributed by CORRECT ANSWER Correct Answer: quarter. II 25. An apportionment may be subdivided by a federal agency into CORRECT ANSWER Correct Answer: allotments.

II 26. Popular Sovereignty is CORRECT ANSWER Correct Answer: the supreme power the people possess over government and public policies. II 27. From the perspective of the federal government, legislative earmarking is a provision inserted into a discretionary spending by the CORRECT ANSWER Correct Answer: Congressional Appropriations Bill. II 28. The fiscal powers of a local government include all of the following abilities EXCEPT CORRECT ANSWER Correct Answer: levy a tax on interstate internet sales. II 29. Time constraints for an agency's spending are imposed by which budgetary control? CORRECT ANSWER Correct Answer: appropriation II 30. All of the following are constraints on the supreme sovereignty of the federal government EXCEPT the CORRECT ANSWER Correct Answer: decisions made by the state supreme courts. II 31. Language that members of Congress insert into bills or conference reports, usually near the end of the legislative process, to fund specific projects are commonly referred to as CORRECT ANSWER Correct Answer: earmarks. II 32. The judicial branch of the government influences the budget by CORRECT ANSWER Correct Answer: issuing decisions that restrain actions related to programs. II 33. Under the doctrine of sovereign immunity and the Supremacy Clause of the Constitution - as interpreted by the Supreme Court - the federal government will appropriately refuse to pay taxes when CORRECT ANSWER Correct Answer: a

state entity doing business with the federal government directly bills the tax to the federal agency. II 34. Which organization publishes a guide to best practices in budgeting? CORRECT ANSWER Correct Answer: GFOA III 1. The following attributes are associated with which governmental management cycle phases? - Identifying mission and goals - Forecasting finances - Implementing internal controls CORRECT ANSWER Correct Answer: planning, budgeting, operations III 2. A federal agency that provides school lunch funding to low-income students is considering expanding the program to provide take-home food supplementation for weekends. The agency has been asked to provide information regarding the estimated costs, utilization, and implementation. During which government management cycle phase would these questions be addressed? CORRECT ANSWER Correct Answer: during the programming phase, where resources needed to accomplish goals and objectives are identified III 3. Which task would be accomplished during the accounting phase of the government management cycle? CORRECT ANSWER Correct Answer: changes in net position determined III 4. Which of the following statements describes an interrelationship between government management cycle phases? CORRECT ANSWER Correct Answer: Budgeting matches programming objectives with available resources. III 5. Data from which phase of the government management cycle is used in reporting and auditing? CORRECT ANSWER Correct Answer: accounting

III 6. An outcome of the programming phase is the determination of the level of resources to be requested in which government management phase? CORRECT ANSWER Correct Answer: budgeting III 7. In the government management cycle, planning CORRECT ANSWER Correct Answer: should occur throughout the year. III 8. All of the following are illustrations of how the phases in the government cycle are interrelated EXCEPT CORRECT ANSWER Correct Answer: the budgeting phase influences findings in the auditing phase. III 9. Which area of the expanded government framework enables users to have confidence in government reports? CORRECT ANSWER Correct Answer: auditing III 10. The first step in strategic planning includes the identification of CORRECT ANSWER Correct Answer: goals. III 11. During which phase of the government management system is the most cost-effective means for accomplishing goals and objectives determined? CORRECT ANSWER Correct Answer: programming III 12. Which phase is considered the foundation of the government management cycle? CORRECT ANSWER Correct Answer: planning III 13. Some of the steps of the government management cycle, in order, include CORRECT ANSWER Correct Answer: planning, budgeting, operations and auditing.

III 14. A city prepares journal entries to record the effects of financial events on the city's financial position. This function demonstrates which element of the government management cycle? CORRECT ANSWER Correct Answer: accounting III 15. A federal government entity manages tracts of land that are habitat for several endangered species; the agency is responsible for their protection. The entity performs the following tasks related to managing this land: - assesses the impact of a planned adjacent state game reserve - sets a goal of making 95% of the land habitable for endangered species - hires experts to assess the food supply for the endangered species - captures cost by endangered species type - assembles data to document progress toward goals. Match the tasks described above with the government management cycle phases in which the tasks would be accomplished. CORRECT ANSWER Correct Answer: programming, planning and/or programming, operations, accounting, reporting III 16. The following statement is an example of which phase in the government management cycle? The transportation department has 9 snow plows. They have determined that they will need 11 snow plows to achieve their objective this winter. CORRECT ANSWER Correct Answer: programming III 17. Which forecasting technique assumes certain trends will continue and, based on that assumption, enables charting of future results? CORRECT ANSWER Correct Answer: extrapolation III 18. During which phase of the government management cycle are the mission and goals of the organization identified? CORRECT ANSWER Correct Answer: planning III 19. How are programming and budgeting in the government management cycle similar to and different from each other? CORRECT ANSWER Correct Answer:

Both are derived from the planning process, however, programming tends to cover a more extensive period of time than budgeting. III 20. The federal budget is a document that CORRECT ANSWER Correct Answer: specifies expenditures and means to finance those expenditures. III 21. Which of the following activities would be most closely associated with managerial accounting? CORRECT ANSWER Correct Answer: an analysis of revenues of activities offered at different parks III 22. A homeless shelter has established a new program with a mission of reducing the number of individuals living at the shelter. The main goal is to help the homeless secure employment, gradually reducing the time individuals spend in the shelter. A task force was appointed to develop the requirements of one of the objectives: reducing a barrier to employment by providing suitable clothing for interviewing and subsequent work. In which phase of the government management cycle is this task force activity? CORRECT ANSWER Correct Answer: programming III 23. Under the government management cycle, what outputs from the programming phase are also inputs to the budgeting phase? CORRECT ANSWER Correct Answer: refined objectives and identified resources required to meet objectives III 24. Reports that link financial resources to service outputs and outcomes achieved are CORRECT ANSWER Correct Answer: performance reports. III 25. Which phase of the government management cycle immediately follows the accounting phase? CORRECT ANSWER Correct Answer: reporting

III 26. Identifying specific and measurable objectives is performed during which phase of the government management cycle? CORRECT ANSWER Correct Answer: programming III 27. Under the auditing phase of the government management cycle, performance audits are completed in order to CORRECT ANSWER Correct Answer: assess the effectiveness of a program in meeting its goals. III 28. Typically, a highway construction project would be planned using which of the following types of budget? CORRECT ANSWER Correct Answer: capital III 29. External users primarily use reports generated from CORRECT ANSWER Correct Answer: financial accounting. IV 1. The city's decision to purchase bond insurance for park enhancement debt should include consideration of CORRECT ANSWER Correct Answer: desired interest rates. IV 2. What role do credit rating agencies serve in the issuance of local government debt? CORRECT ANSWER Correct Answer: to provide an independent assessment of the entity's risk of default on payments IV 3. A characteristic of debt issued by the federal government compared to debt issued by state or local governments is that federal debt CORRECT ANSWER Correct Answer: may be used for operating expenses. IV 4. A city is considering financing the construction of an international airport. All of the following factors are pertinent to this consideration EXCEPT the CORRECT ANSWER Correct Answer: operating expenses of the existing airport.

IV 5. A real estate development corporation built a level 1 trauma center hospital in a city for a cost of $300 million. The city signed a 25-year lease with the corporation in conjunction with the development effort. This financing arrangement is an example of CORRECT ANSWER Correct Answer: a public- private partnership. IV 6. A debt limit is defined as a limit on the CORRECT ANSWER Correct Answer: total debt that can be outstanding at any time. IV 7. Governments may increase consumption tax rates in order to CORRECT ANSWER Correct Answer: discourage the purchase of certain goods or services. IV 8. An effective debt policy guards against CORRECT ANSWER Correct Answer: excessive debt and exceeding legal debt limits. IV 9. In order for a state to provide backing of school bonds "in full-faith and credit guarantees," the program must be identified in CORRECT ANSWER Correct Answer: state law. IV 10. The use of public-private partnerships is likely to grow because of increased CORRECT ANSWER Correct Answer: government budget pressures. IV 11. A state's human service department receives a voluntary contribution from an individual whose recently-deceased, disabled sister received food and Medicaid from the department. The revenue should be reported as CORRECT ANSWER Correct Answer: a donation. IV 12. A state disbursed $4.7 million income in tax revenues to a county in 2015. The county did not perform any specific services for the state, there were no specific restrictions upon how the county was to use the funds, and there were no

reporting requirements associated with accepting the funds. This is an example of CORRECT ANSWER Correct Answer: shared revenues. IV 13. All of the following are examples of goals supported by tax expenditures EXCEPT to CORRECT ANSWER Correct Answer: encourage the consumption of goods covered by excise taxes. IV 14. The definition of a tax expenditure is CORRECT ANSWER Correct Answer: revenue lost through exceptions in the tax code. IV 15. A property has an assessed value of $350,000 and a levy rate of 25 mills. What would the annual tax bill be? CORRECT ANSWER Correct Answer: $8, IV 16. Which of the following are requirements and expectations of grantors? CORRECT ANSWER Correct Answer: Matching funds and level of effort are met, and the difference between allowable and unallowable program costs is upheld. IV 17. Which principle regarding government debt states that loaned funds should be obtained at the lowest cost possible relative to the risk? CORRECT ANSWER Correct Answer: efficiency IV 18. The state treasurer charges the greater of the application fee of $5,000 or a transaction fee of not more than .05% of the total principal and interest payable for a debt guarantee. A school district issued a 10-year bond at the par amount of 50 million dollars with a simple interest rate of 1.5%. The state treasurer would charge CORRECT ANSWER Correct Answer: $25, IV 19. The most common purpose of debt at state and local levels is to CORRECT ANSWER Correct Answer: fund capital improvements.

IV 20. Which type of grant provides the grantee the greatest amount of discretion regarding the use of the grant funds? CORRECT ANSWER Correct Answer: block grants IV 21. A city issues debt to construct a bridge, primarily for the purpose of financing the cost of the bridge over its expected useful life. This is an example of CORRECT ANSWER Correct Answer: equity. IV 22. On January 1, a small museum signed a 5-year operating lease for a sales office for some of its collections at $120,000 per year. The lease includes a provision of additional rent 2% of annual sales in excess of $1,000,000. The museum is expected to collect $1,100,000 sales revenue in its first year. The museum's rental expense for the year will be CORRECT ANSWER Correct Answer: $122, IV 23. Which of the following is an example of a tax expenditure? CORRECT ANSWER Correct Answer: tax credits that encourage certain behaviors by individuals or businesses IV 24. A Moody's bond rating of Aa will affect a local government debt issuance by CORRECT ANSWER Correct Answer: establishing a lower interest rate than a Caa rated issuance. IV 25. Limits on federal debt are set by CORRECT ANSWER Correct Answer: Congress. IV 26. The most common forms of intergovernmental revenues include CORRECT ANSWER Correct Answer: grants, shared revenues and contracts.

IV 27. The cost of levying a tax should be minimal compared to the revenue generated. This is an example of which consideration when setting tax policy? CORRECT ANSWER Correct Answer: collection efficiency IV 28. Prior to entering into a long-term debt arrangement to fund the construction of new library, a county reviewed the annual revenue generated by the existing tax base that is available to go toward debt payments. In this example, the county has considered which of the following necessary factors before issuing debt? CORRECT ANSWER Correct Answer: the ability of the county to repay the debt IV 29. Long-term debt held by the government affects current operations by allowing the government to CORRECT ANSWER Correct Answer: smooth out cash flows and provide essential services. IV 30. Which of the following describes consumption tax? CORRECT ANSWER Correct Answer: It is regressive. IV 31. A municipal government may not impose a sales tax without authorization from the CORRECT ANSWER Correct Answer: state. IV 32. A local library program currently serves 50 children, but it would like to serve 200 children. The library is considering charging a user fee of $2 to attend the program. This is an example of establishing a user fee to CORRECT ANSWER Correct Answer: expand the capacity of the program. IV 33. A city issues $100 million in debt to raise capital to construct two new high schools. This debt instrument is an example of CORRECT ANSWER Correct Answer: general obligation bonds.

IV 34. An advantage of an income tax is that it is CORRECT ANSWER Correct Answer: relatively easy to administer. IV 35. A city is considering using pay-as-you-go financing for water tower upgrades, which will be completed in one year. All of the following factors support the use of this financing option EXCEPT CORRECT ANSWER Correct Answer: the current interest rate is at the lowest in 10 years. IV 36. Taxpayer 1 has an income of $40,000, and Taxpayer 2 has an income of $50,000. The tax type or tax principle used to ensure that the two taxpayers will pay different amounts of income tax is CORRECT ANSWER Correct Answer: vertical equity. IV 37. Which of the following is generally associated with a sinking fund? CORRECT ANSWER Correct Answer: term bond IV 38. A city is in fiscal distress and is considering using long-term financing for most of its projects for the upcoming year. All of the following would be appropriate considerations for this situation EXCEPT CORRECT ANSWER Correct Answer: purchasing fire hoses that need to be replaced, biannually. IV 39. A city builds a new swimming pool. To fund the development of the new pool, the city issues $5 million in revenue bonds. Based on this information, the bonds will be repaid using CORRECT ANSWER Correct Answer: pool admission fees. IV 40. Which types of grants are typically awarded on a competitive basis? CORRECT ANSWER Correct Answer: discretionary grants

IV 41. A city plans to raise $300 million to build a new professional baseball stadium. To service the debt, a special sales tax will be imposed on stadium sales and sales by businesses in the surrounding area. This financing instrument is an example of CORRECT ANSWER Correct Answer: revenue bonds. IV 42. The State of Florida is working with a construction corporation to build a bridge connecting southeast Florida to the Florida Keys. Rather than the State issuing municipal debt to finance the project, the corporation plans to fund the project and the State of Florida agrees to provide the corporation with a share of toll booth revenues over the next 50 years. This arrangement is an example of CORRECT ANSWER Correct Answer: a public-private partnership. IV 43. A popular dog park in the city has been deteriorating over the last 10 years. To raise funds for the necessary repairs and ongoing upkeep, the city has implemented an annual fee for admission into the dog park of $10 per dog. The annual fee is an example of a CORRECT ANSWER Correct Answer: user fee. IV 44. Vertical tax equity requires that CORRECT ANSWER Correct Answer: taxpayers with different income levels pay different amounts of tax. V 1. If the debt-to-Gross Domestic Product ratio for the U.S. rises from 75% in 2012 to 80% in 2016, under the current policy, this indicates that the amount of the U.S. CORRECT ANSWER Correct Answer: debt divided by the amount of the nation's Gross Domestic Product is .75 in 2012 and will rise to .80 in 2016, under the current policy. V 2. Elected government officials are ultimately accountable to CORRECT ANSWER Correct Answer: citizens. V 3. The state legislature formed an ad hoc committee to review the department of health. Last year, the governor appointed a new secretary of health to implement a

restructuring of the department. The actions of the legislature illustrate the CORRECT ANSWER Correct Answer: doctrine of separation of powers. V 4. According to FASAB, the federal government is accountable for CORRECT ANSWER Correct Answer: budget integrity, operating performance, stewardship and internal controls. V 5. Which of the following activities is an example of a government official assessing performance accountability? CORRECT ANSWER Correct Answer: conducting a program review to determine if the program is achieving its goals efficiently V 6. Who holds accountability for appropriating resources required to operate programs? CORRECT ANSWER Correct Answer: legislature V 7. The Department of the Interior is responsible for safeguarding and preserving the forests in Yellowstone National Park. As part of this responsibility, the Department purchases and plants trees in areas previously destroyed by a forest fire. In this role, the Department of the Interior is being accountable to which group? CORRECT ANSWER Correct Answer: future generations V 8. Both government and private businesses are legally accountable to which of the following stakeholders? CORRECT ANSWER Correct Answer: investors V 9. Government program execution is the responsibility of CORRECT ANSWER Correct Answer: the executive branch enacting the program. V 10. Which method of demonstrating and assessing government accountability is used when the objective is to judge appropriateness and cost-effectiveness? CORRECT ANSWER Correct Answer: program evaluations

V 11. A formal job description that establishes a public servant's responsibilities is an example of CORRECT ANSWER Correct Answer: organizational accountability. V 12. For what is the executive branch primarily accountable? CORRECT ANSWER Correct Answer: carrying out programs V 13. What area of the government is held accountable for the oversight of programs? CORRECT ANSWER Correct Answer: legislative branch V 14. Compliance with the legally adopted budget is an example of CORRECT ANSWER Correct Answer: financial accountability. V 15. A key attribute of public accountability at lower levels of government is CORRECT ANSWER Correct Answer: organizational structure. V 16. Which of the following is an institutional device that encourages public accountability and is a decisive driving process of governmental units in the United States? CORRECT ANSWER Correct Answer: public hearings V 17. By enacting the CFO Act of 1990, Congress established a framework for agency accountability by creating the CORRECT ANSWER Correct Answer: deputy director for management position in OMB and specifying the deputy director's duties and reporting requirements. V 18. A technique used to assess government's long-term fiscal sustainability is called the CORRECT ANSWER Correct Answer: debt to gross domestic product ratio.

V 19. Which of the following terms is used to describe a government entity's responsibility to efficiently achieve desired outputs? CORRECT ANSWER Correct Answer: performance accountability V 20. A characteristic of financial reports is that they are CORRECT ANSWER Correct Answer: audited by external parties to demonstrate accountability. V 21. The legislature passes a law requiring children under the age of five to use a car seat with a five-point harness. The legislative branch appropriates funds for outreach activities and the executive branch carries out the program as authorized by the legislation. The actions taken by the executive and legislative branch are examples of CORRECT ANSWER Correct Answer: mutual accountability. VI 1. Due care refers to an employee's obligation to discharge his or her professional duties with CORRECT ANSWER Correct Answer: competence and diligence. VI 2. A CGFM in a government transportation agency has served as a volunteer for an organization that sets standards to help reduce the cost of large-scale transportation acquisitions. The agency procurement office may be adding a requirement that contracts adhere to these standards; this will likely translate into additional revenue for the standards-setting organization. The procurement office has instructed the CGFM to take on a role in having these standards included in future contracts. In this situation the CGFM should CORRECT ANSWER Correct Answer: decline to participate with the procurement office activities due to a conflict of interest, which would harm the reputation of the agency's procurement processes and requirements. VI 3. All of the following activities represent a violation of the responsibilities of a CGFM serving as a public official EXCEPT CORRECT ANSWER Correct Answer: placing a political sign in his or her yard.

VI 4. A senior auditor works for the Office of the Inspector General, and is auditing a government agency. Prior to the end of the audit, the agency offers the senior auditor a job. If the senior auditor accepts the job offer, it would be a violation of which ethical behavior required of public officials? CORRECT ANSWER Correct Answer: conflict of interest VI 5. The buyer at a state agency contracts for cafeteria service. Soon after the contract is awarded, the contractor hires the buyer's daughter as the cafeteria manager. In order to avoid a conflict of interest, the buyer should CORRECT ANSWER Correct Answer: disclose to the agency's management that his daughter has been hired and turn over the contract monitoring to a fellow buyer. VI 6. A CGFM, who is also a CPA, is the managing partner of a CPA firm, specializing in audits of local governments. The audit of a mid-sized local government is being led by the managing partner's brother. Because of staff turnover, the audit team is comprised of six recent college graduates, none with more than nine months of experience and most with three or fewer months of experience. The CPA firm has a major ongoing growth initiative, which will consume 100 per cent of the managing partner's brother's time for six months, leaving no time to oversee the work of the audit team. The managing partner tells the audit team just to update last year's audit work papers and that he will check back with them every three weeks to answer any question's they may have. Based on this scenario, which ethical principle is being compromised? CORRECT ANSWER Correct Answer: due care VI 7. To demonstrate independence in financial operations, many organizations require financial managers to CORRECT ANSWER Correct Answer: disclose their financial assets and identify organizations to which they belong that have a potentially conflicting relationship. VI 8. A divestiture, as it relates to a potential conflict of interest, involves CORRECT ANSWER Correct Answer: the sale or disposal of assets.

VI 9. An agency's budget director has issued a request for proposal seeking contract support from a professional services firm; the budget director's spouse is a key employee at one of the firms invited to respond. To avoid the appearance of a conflict of interest, the budget director should CORRECT ANSWER Correct Answer: recuse herself from the evaluation and selection process. VI 10. To exercise due care, public officials must make an effort to obtain the knowledge and skills needed for their positions, and CORRECT ANSWER Correct Answer: update their skills through continuing education. VI 11. A county board of education is in the process of interviewing candidates for the superintendent of schools. One of the candidates is the brother-in-law of one of the board members. Based on this situation, which standard of ethical behavior may the board member be violating? CORRECT ANSWER Correct Answer: independence VI 12. As described in AGA's Code of Ethics, all of the following are among the fundamental principles needed to achieve the objectives of the government financial management profession EXCEPT CORRECT ANSWER Correct Answer: self-discipline. VI 13. Being free of a relationship that may impair, or appear to impair, a CGFM's ability to act with objectivity is an example of CORRECT ANSWER Correct Answer: independence. VII 1. Which federal law establishes procedures to safeguard the privacy of personal information? CORRECT ANSWER Correct Answer: E-Government Act VII 2. The E-Government Act of 2002 requires federal agencies to CORRECT ANSWER Correct Answer: make citizen-centric information readily available to the public.

VII 3. An agency is conducting a privacy impact assessment on a new online data collection system. The assessment must analyze and describe all of the following EXCEPT CORRECT ANSWER Correct Answer: the length of time the respondent has to complete the information. VII 4. All of the following are characteristics of the delivery of services via e- government EXCEPT CORRECT ANSWER Correct Answer: persistent tracking technology. VII 5. Computers and internet technologies impact government services and operations in all of the following ways EXCEPT CORRECT ANSWER Correct Answer: assuring sensitivity concerning the electronic information that recipients hear and react to, as data is presented in greater volume and at faster speeds. VII 6. E-reporting can include access to information on all of the following EXCEPT CORRECT ANSWER Correct Answer: program beneficiaries. VII 7. When federal agencies and their contractors analyze and describe factors, such as what information is to be collected and its source; why the information is being collected and its intended use; with whom information will be shared; and how information will be secured, this represents CORRECT ANSWER Correct Answer: privacy impact assessments. VII 8. The Department of Natural Resources sends an email to interested participants when registration opens for an annual bass fishing competition. This email is an example of marketing through use of CORRECT ANSWER Correct Answer: a listserv.