CGFM MCQ 2 — Questions and Answers
Question 1: Under the Antideficiency Act, a federal agency that obligates funds in excess of its appropriation must:
- Seek a supplemental appropriation immediately
- Report the violation to the President and Congress (Correct answer)
- Transfer funds from another program
- Suspend all agency operations until resolved
Correct answer: Report the violation to the President and Congress
The Antideficiency Act requires agencies to report violations to the President and Congress and take corrective action.
Question 2: Which financial statement is unique to state and local governments and presents the fiscal accountability of governmental activities?
- Statement of Net Position
- Statement of Cash Flows
- Statement of Revenues, Expenditures, and Changes in Fund Balances (Correct answer)
- Statement of Fiduciary Net Position
Correct answer: Statement of Revenues, Expenditures, and Changes in Fund Balances
The Statement of Revenues, Expenditures, and Changes in Fund Balances is a governmental fund statement that shows fiscal accountability.
Question 3: The primary purpose of the Single Audit Act is to:
- Audit all federal agency financial statements annually
- Provide for audits of non-federal entities expending federal awards (Correct answer)
- Establish internal audit standards for state governments
- Require annual performance audits of federal programs
Correct answer: Provide for audits of non-federal entities expending federal awards
The Single Audit Act requires non-federal entities (states, local governments, nonprofits) expending $750,000+ in federal awards to undergo a single organization-wide audit.
Question 4: In government budgeting, an 'allotment' is best described as:
- The legislative authorization to spend funds
- A subdivision of an apportionment used by an agency to control expenditures (Correct answer)
- The transfer of funds between appropriation accounts
- OMB's quarterly distribution of an agency's appropriation
Correct answer: A subdivision of an apportionment used by an agency to control expenditures
An allotment is an agency's internal subdivision of an apportionment, used to further control the rate of spending within the agency.
Question 5: Which GASB concept requires governments to report infrastructure assets using the modified approach as an alternative to depreciation?
- The economic resources measurement focus
- The infrastructure preservation system under GASB 34 (Correct answer)
- The cost-sharing multiple-employer pension rule
- The blended component unit requirement
Correct answer: The infrastructure preservation system under GASB 34
GASB 34 allows governments to use the modified approach for eligible infrastructure assets if they maintain an asset management system and preserve assets at a condition level.
Question 6: A federal agency's 'budget authority' is best defined as:
- The amount an agency actually spends in a fiscal year
- The legal authority to incur financial obligations that will result in outlays (Correct answer)
- The OMB-approved allocation of appropriated funds by quarter
- The congressional authorization for a program to operate
Correct answer: The legal authority to incur financial obligations that will result in outlays
Budget authority is the legal authority provided by Congress for an agency to incur obligations that will require payment of government funds.
Question 7: Under GASB standards, which of the following would be reported as a special item in a government's financial statements?
- Routine sale of surplus office furniture
- An extraordinary gain from insurance proceeds after a natural disaster
- A significant transaction that is within management's control and unusual or infrequent (Correct answer)
- A transfer of resources between two funds of the same government
Correct answer: A significant transaction that is within management's control and unusual or infrequent
Special items are significant transactions within management's control that are either unusual in nature or infrequent in occurrence, but not both.
CGFM MCQ 2
Under the Antideficiency Act, a federal agency that obligates funds in excess of its appropriation must: