CGFM Governmental Financial Reporting Standards 2 — Questions and Answers
Question 1: Which component of a state or local government's Annual Comprehensive Financial Report (ACFR) contains the independent auditor's report?
- Introductory section
- Financial section (Correct answer)
- Statistical section
- Supplementary section
Correct answer: Financial section
The financial section of the ACFR contains the independent auditor's report, the MD&A, basic financial statements, notes, and required supplementary information.
Question 2: What is 'fiscal transparency' as it relates to governmental financial reporting?
- Reporting only revenues and expenditures
- Providing clear, complete, and accessible financial information to stakeholders (Correct answer)
- Publishing the budget on a public website
- Disclosing only major fund activities
Correct answer: Providing clear, complete, and accessible financial information to stakeholders
Fiscal transparency means providing clear, complete, and accessible financial information so citizens and stakeholders can hold governments accountable.
Question 3: Which GASB statement addresses pension reporting for state and local government employers?
- GASB 54
- GASB 63
- GASB 68 (Correct answer)
- GASB 75
Correct answer: GASB 68
GASB Statement No. 68 established accounting and financial reporting requirements for pensions provided through defined benefit plans by state and local government employers.
Question 4: In governmental accounting, what is a 'fiduciary fund'?
- A fund used for capital improvement projects
- A fund used to account for resources held in trust or as an agent for others (Correct answer)
- A fund used for enterprise activities
- A fund used to account for debt service
Correct answer: A fund used to account for resources held in trust or as an agent for others
Fiduciary funds account for resources held by the government in a trustee or agent capacity for others, such as pension trust funds and agency funds.
Question 5: What does GASB's concept of 'interperiod equity' mean in the context of governmental accounting?
- Equal treatment of all government departments
- Ensuring current-year revenues are sufficient to pay current-year costs (Correct answer)
- Distributing funds equally among jurisdictions
- Balancing the budget across multiple years
Correct answer: Ensuring current-year revenues are sufficient to pay current-year costs
Interperiod equity means today's taxpayers are paying for today's services, not shifting the burden to future taxpayers.
Question 6: Which fund type is typically used by state and local governments to account for general operations not assigned to another fund?
- Special Revenue Fund
- Debt Service Fund
- General Fund (Correct answer)
- Capital Projects Fund
Correct answer: General Fund
The General Fund accounts for all financial resources not required to be accounted for in another fund and is typically the government's primary operating fund.
CGFM Governmental Financial Reporting Standards 2
Which component of a state or local government's Annual Comprehensive Financial Report (ACFR) contains the independent auditor's report?