CGFO Ethics, Compliance & Financial Governance 4 — Questions and Answers
Question 1: The Government Accountability Office's 'Yellow Book' (Government Auditing Standards) sets requirements for auditors performing audits of:
- Only federal agencies
- Government entities and entities receiving government funds (Correct answer)
- State and local governments only
- Not-for-profit organizations exclusively
Correct answer: Government entities and entities receiving government funds
The Yellow Book applies to audits of government entities at all levels and to audits of entities that receive government awards, not just federal agencies.
Question 2: Under OMB Uniform Guidance, which type of cost is never allowable as a direct charge to a federal grant regardless of circumstances?
- Indirect administrative costs
- Lobbying costs (Correct answer)
- Depreciation on equipment
- Employee training costs
Correct answer: Lobbying costs
Lobbying costs are expressly unallowable under OMB Uniform Guidance (2 CFR 200) and may never be charged directly or indirectly to federal awards.
Question 3: A government finance officer who learns of a potential fraud scheme but fails to report it to appropriate authorities may be violating which ethical duty?
- Duty of loyalty to the employing agency
- Duty to report known or suspected illegal acts (Correct answer)
- Duty of confidentiality to fellow employees
- Duty to maximize departmental efficiency
Correct answer: Duty to report known or suspected illegal acts
Professional ethics standards and many statutes require finance officers to report suspected fraud or illegal acts to supervisors or appropriate oversight authorities.
Question 4: The Anti-Deficiency Act prohibits federal agencies from:
- Awarding no-bid contracts over $100,000
- Obligating or expending funds in excess of appropriated amounts (Correct answer)
- Transferring funds between major object classes without approval
- Investing idle funds in non-government securities
Correct answer: Obligating or expending funds in excess of appropriated amounts
The Anti-Deficiency Act prohibits federal officials from making or authorizing expenditures or obligations exceeding amounts available in appropriations.
Question 5: When a government entity adopts a formal ethics policy, which element is considered most critical for the policy to be effective?
- Annual policy distribution to all employees
- Tone at the top with visible leadership commitment (Correct answer)
- Monetary penalties for violations
- Third-party ethics certification
Correct answer: Tone at the top with visible leadership commitment
Research and professional standards consistently identify leadership modeling of ethical behavior ('tone at the top') as the most critical element for effective ethics programs.
Question 6: Which GASB concept statement establishes the qualitative characteristics that make governmental financial information useful, including relevance and faithful representation?
- GASB Concepts Statement No. 1
- GASB Concepts Statement No. 3
- GASB Concepts Statement No. 6 (Correct answer)
- GASB Concepts Statement No. 4
Correct answer: GASB Concepts Statement No. 6
GASB Concepts Statement No. 6, 'Measurement of Elements of Financial Statements,' updated the qualitative characteristics framework for governmental financial reporting.
Question 7: A government employee who uses their official position to secure a private sector job with a vendor while still employed by the government is committing which ethics violation?
- Revolving door violation
- Procurement fraud
- Conflicts of interest — private gain from official position (Correct answer)
- Misuse of government resources
Correct answer: Conflicts of interest — private gain from official position
Using official authority or information to secure private employment from a regulated or contracted party constitutes a conflict of interest and often violates specific post-employment restriction statutes.
CGFO Ethics, Compliance & Financial Governance 4
The Government Accountability Office's 'Yellow Book' (Government Auditing Standards) sets requirements for auditors performing audits of: