Financial Management & Budgeting Flashcards
7 cards from real CMO practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management & Budgeting flashcards as text
A municipality discovers mid-year that revenues will fall $2 million short of projections. The appropriate corrective action is to:
Answer: Adopt a mid-year budget amendment reducing appropriations
A formal mid-year budget amendment approved by the governing body is the legally required mechanism to reduce appropriations when revenues fall short.
The Governmental Accounting Standards Board (GASB) is responsible for:
Answer: Establishing GAAP for state and local governments
GASB establishes and improves Generally Accepted Accounting Principles (GAAP) for U.S. state and local governmental entities.
What is the primary purpose of a municipal investment policy?
Answer: To establish guidelines for safety, liquidity, and yield of public funds
A municipal investment policy prioritizes preservation of principal (safety), then liquidity to meet cash flow needs, and finally yield — in that order.
Which scenario best describes tax increment financing (TIF)?
Answer: Capturing the increase in property tax revenue within a redevelopment district to fund improvements
TIF districts capture incremental property tax growth above a baseline to fund public improvements within the district, without raising tax rates.
A municipality's unassigned fund balance falls to 3% of annual revenues. Most financial best-practice guidelines recommend unassigned fund balance of at least:
Answer: 5–15% of revenues (often 2 months of expenditures)
GFOA recommends governments maintain an unrestricted general fund balance of no less than two months (approximately 16%) of regular general fund operating revenues or expenditures.
Which type of municipal audit provides an independent opinion on whether financial statements are presented fairly in accordance with GAAP?
Answer: Financial statement audit
A financial statement audit conducted by an independent CPA firm expresses an opinion on whether financial statements fairly present the government's financial position per GAAP.
Under the Single Audit Act, a municipality that expends $750,000 or more in federal awards in a fiscal year must:
Answer: Undergo a single audit covering both financial statements and federal program compliance
The Single Audit Act (2 CFR Part 200) requires a single, organization-wide audit of both financial statements and major federal program compliance when the $750,000 expenditure threshold is met.