CPWM Financial Planning & Budgeting 5

Question 1

Which term describes the practice of pooling multiple short-term investments to maximize yield while maintaining liquidity for a government's operating accounts?

Accepted Answer

Investment pooling (LGIP)

Answer

Local Government Investment Pools (LGIPs) allow governments to combine idle funds for better yields and professional management while preserving daily liquidity.

Question 2

A public works department is asked to identify savings through a budget reduction scenario. The most strategic first step is to:

Accepted Answer

Analyze programs by priority, cost-effectiveness, and statutory mandate

Answer

Priority-based budgeting analysis helps managers protect core mandated services and high-value programs while identifying low-priority or redundant activities for reduction.

Question 3

Under GASB Statement No. 34, infrastructure assets reported using the modified approach do NOT require periodic depreciation if the government:

Accepted Answer

Manages the assets to a documented condition level and discloses preservation costs

Answer

GASB 34's modified approach allows governments to substitute condition-level maintenance reporting for depreciation when assets are maintained at or above an established and disclosed condition standard.

Question 4

Which type of financial forecast estimates revenues and expenditures for multiple future years to identify structural imbalances before they become crises?

Accepted Answer

Multi-year financial forecast

Answer

Multi-year financial forecasts extend budget projections three to five years, enabling early detection of structural gaps caused by growing costs outpacing revenues.

Question 5

A public works department enters into a cooperative purchasing agreement with neighboring jurisdictions for road materials. The primary financial benefit is:

Accepted Answer

Achieving volume discounts and reduced administrative costs through pooled purchasing

Answer

Cooperative purchasing leverages combined buying power to negotiate better unit prices and reduces each jurisdiction's procurement overhead.

(CPWM) Certified Public Works Manager Practice Test

(CPWM) Certified Public Works Manager Practice Test

CPWM Financial Planning & Budgeting 5