CDFM - Certified Defense Financial Manager Accounting and Financial Reporting Questions and Answers

Question 1

A DoD agency incurs a new obligation for a one-year service contract. Which type of accounting entry primarily records the legal commitment of funds against the appropriation?

Accepted Answer

Budgetary

Answer

Budgetary accounting is used to recognize and track the status of budget authority. Incurring an obligation, which is a legal commitment to pay for goods or services, is a key transaction recorded in the budgetary accounts to show that funds are no longer available for new commitments. Proprietary accounting focuses on the financial position (assets, liabilities, expenses) and uses an accrual basis.

Question 2

An auditor reviewing a DoD Component's Statement of Budgetary Resources (SBR) would expect to find a reconciliation between which two key financial amounts?

Accepted Answer

Budgetary resources and the status of those resources.

Answer

The primary purpose of the Statement of Budgetary Resources (SBR) is to provide information on how budgetary resources were made available and their status at the end of the period. It presents the key equation: Total Budgetary Resources equals the Total Status of Budgetary Resources (e.g., obligated, unobligated).

Question 3

What is the primary purpose of the U.S. Standard General Ledger (USSGL) within the Department of Defense?

Accepted Answer

To provide a uniform chart of accounts and technical guidance for standardized financial reporting.

Answer

The USSGL provides a uniform chart of accounts and technical guidance for standardizing federal agency accounting. This ensures consistency and supports the preparation of standard external reports for central agencies like the Treasury Department and OMB. It integrates both budgetary and proprietary accounts, rather than tracking them separately.

Question 4

Under the Federal Managers' Financial Integrity Act (FMFIA), the head of a DoD agency must provide an annual statement of assurance. This assurance primarily addresses the effectiveness of the agency's:

Accepted Answer

Internal controls and financial management systems.

Answer

The Federal Managers' Financial Integrity Act (FMFIA) requires agency heads to annually evaluate and report on the effectiveness of their internal accounting and administrative controls. The resulting Statement of Assurance reports whether the agency's controls provide reasonable assurance that operations are effective and efficient, reporting is reliable, and laws are followed.

Question 5

In September, the final month of the fiscal year, a DoD depot completes repairs on a naval vessel. The Navy does not pay the invoice from the depot's working capital fund until October of the next fiscal year. According to the full accrual basis of accounting, in which fiscal year should the Navy recognize the expense for the repairs?

Accepted Answer

The fiscal year the repair work was performed.

Answer

The accrual basis of accounting, which is required for federal agencies, recognizes transactions or events when they occur, regardless of when cash is exchanged. Therefore, the expense is recognized in the fiscal year the services were received (September), not when the payment was made (October).

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Practice Test

CDFM - Certified Defense Financial Manager Accounting and Financial Reporting Questions and Answers