CGFO Ethics, Compliance & Financial Governance 3 — Questions and Answers
Question 1: Which type of audit opinion indicates that financial statements are presented fairly in all material respects in conformity with GAAP?
- Adverse opinion
- Disclaimer of opinion
- Qualified opinion
- Unmodified opinion (Correct answer)
Correct answer: Unmodified opinion
An unmodified (clean) opinion is the auditor's conclusion that financial statements present fairly in all material respects according to applicable accounting standards.
Question 2: Under the Single Audit Act, a non-federal entity that expends $750,000 or more in federal awards in a fiscal year must:
- Submit financial statements to the federal grantor agency
- Obtain a single audit covering both financial statements and federal programs (Correct answer)
- Hire a federal auditor approved by the OMB
- Conduct an internal audit of all federal expenditures
Correct answer: Obtain a single audit covering both financial statements and federal programs
The Single Audit Act threshold of $750,000 triggers the requirement for a single audit that covers both the entity's financial statements and its federal award compliance.
Question 3: Whistleblower protections in the government sector are primarily designed to:
- Reward employees financially for reporting fraud
- Protect employees who report suspected wrongdoing from retaliation (Correct answer)
- Require anonymous reporting of all suspected violations
- Transfer liability from the agency to the individual reporter
Correct answer: Protect employees who report suspected wrongdoing from retaliation
Whistleblower laws protect government employees from adverse employment actions when they report suspected fraud, waste, abuse, or legal violations.
Question 4: The 'appearance of impropriety' standard in government ethics goes beyond actual misconduct to prohibit actions that:
- Could theoretically result in financial gain
- A reasonable person would view as unethical, even if technically legal (Correct answer)
- Have been ruled improper by past court decisions
- Involve any contact with lobbyists or vendors
Correct answer: A reasonable person would view as unethical, even if technically legal
Public officials must avoid not just actual misconduct but also situations that would give a reasonable observer the impression of improper behavior.
Question 5: A finance officer who knowingly certifies a fraudulent expenditure claim for payment may be personally liable under which federal statute?
- The Anti-Deficiency Act
- The False Claims Act (Correct answer)
- The Hatch Act
- The Inspector General Act
Correct answer: The False Claims Act
The False Claims Act imposes civil and criminal liability on individuals who knowingly submit or certify false claims for government payment.
Question 6: In government procurement ethics, 'bid rigging' refers to:
- Adjusting bid specifications to favor a preferred vendor
- Colluding among bidders to control contract awards (Correct answer)
- Accepting gifts from vendors during the bid process
- Awarding contracts without competitive bidding
Correct answer: Colluding among bidders to control contract awards
Bid rigging is an anticompetitive practice where competing vendors secretly coordinate bids to predetermine the winner, violating antitrust laws.
Question 7: Which governance principle requires that individuals who authorize transactions should NOT be the same individuals who record, custody, or reconcile them?
- Dual authorization
- Segregation of duties (Correct answer)
- Management override controls
- Compensating controls
Correct answer: Segregation of duties
Segregation of duties divides key financial transaction tasks among different employees to prevent any one person from having unchecked control over an entire process.
CGFO Ethics, Compliance & Financial Governance 3
Which type of audit opinion indicates that financial statements are presented fairly in all material respects in conformity with GAAP?