CPWM Budget and Finance 5

Question 1

A public works agency is developing a five-year Capital Improvement Plan (CIP). Which factor should receive the HIGHEST priority when ranking projects?

Accepted Answer

Projects addressing critical safety, regulatory compliance, or infrastructure failure risks

Answer

Capital project prioritization should be driven by risk to public safety, legal/regulatory compliance requirements, and prevention of infrastructure failures.

Question 2

What is the purpose of a budget appropriation transfer?

Accepted Answer

To move spending authority between line items or funds within an approved budget

Answer

An appropriation transfer reallocates spending authority between budget lines without increasing the overall budget total, providing flexibility to address changing needs.

Question 3

Which ratio measures a utility's ability to pay its annual debt service from operating revenues?

Accepted Answer

Debt service coverage ratio

Answer

The debt service coverage ratio compares net operating revenues to annual debt service requirements, indicating the utility's capacity to meet bond obligations.

Question 4

Under generally accepted governmental auditing standards (GAGAS), a performance audit of a public works program primarily evaluates:

Accepted Answer

The economy, efficiency, and effectiveness of program operations

Answer

Performance audits assess whether programs are achieving intended outcomes economically and efficiently, going beyond financial statement accuracy.

Question 5

A public works department is evaluating whether to contract out snow removal or perform it in-house. What type of analysis should guide this decision?

Accepted Answer

Make-or-buy (insource vs. outsource) cost-benefit analysis

Answer

A make-or-buy analysis compares the full cost of in-house service delivery against contracting, including overhead, hidden costs, and service quality considerations.

(CPWM) Certified Public Works Manager Practice Test

(CPWM) Certified Public Works Manager Practice Test

CPWM Budget and Finance 5