GAC Regulatory Compliance & Standards 2 — Questions and Answers
Question 1: Which GASB standard established the framework for measuring fair value in governmental financial reporting?
- GASB 72 (Correct answer)
- GASB 68
- GASB 87
- GASB 54
Correct answer: GASB 72
GASB Statement 72 established guidance on fair value measurement and application for state and local governments.
Question 2: Under the Single Audit Act, which threshold requires a non-federal entity to undergo a single audit?
- $500,000 in federal expenditures
- $750,000 in federal expenditures (Correct answer)
- $1 million in federal expenditures
- $250,000 in federal expenditures
Correct answer: $750,000 in federal expenditures
The 2 CFR Part 200 Uniform Guidance requires a single audit when federal expenditures equal or exceed $750,000 in a fiscal year.
Question 3: A government entity must recognize an on-behalf payment for fringe benefits when:
- It receives cash from the paying entity
- Another entity makes payments directly to third parties for the government's employees (Correct answer)
- The government reimburses the paying entity at year-end
- The government records a memorandum entry only
Correct answer: Another entity makes payments directly to third parties for the government's employees
GASB 24 requires recognition of on-behalf payments when another entity pays fringe benefits or salary supplements directly on behalf of the government's employees.
Question 4: Which type of federal award requires the recipient to contribute a specified percentage of non-federal resources?
- Formula grant
- Matching grant (Correct answer)
- Block grant
- Categorical grant
Correct answer: Matching grant
A matching grant requires the recipient to provide a non-federal cost-share or matching contribution as a condition of receiving federal funds.
Question 5: Under 2 CFR Part 200, what is the purpose of an indirect cost rate agreement?
- To set the maximum allowable direct costs on a federal grant
- To establish the rate at which indirect costs are charged to federal awards (Correct answer)
- To determine the total federal expenditure threshold
- To define allowable fringe benefit rates for federal employees
Correct answer: To establish the rate at which indirect costs are charged to federal awards
An indirect cost rate agreement, negotiated with a cognizant agency, establishes the approved rate for allocating indirect costs to federal awards.
Question 6: Which GASB standard requires governments to report pension liabilities on the face of the government-wide financial statements?
- GASB 45
- GASB 57
- GASB 68 (Correct answer)
- GASB 75
Correct answer: GASB 68
GASB 68 requires employers to recognize their net pension liability on the statement of net position in the government-wide financial statements.
Question 7: What is the primary objective of the Government Finance Officers Association's (GFOA) Certificate of Achievement for Excellence in Financial Reporting?
- To certify that the government passed its single audit with no findings
- To recognize governments that publish high-quality, transparent comprehensive annual financial reports (Correct answer)
- To attest that the government has no material weaknesses in internal controls
- To confirm compliance with all applicable federal grant requirements
Correct answer: To recognize governments that publish high-quality, transparent comprehensive annual financial reports
The GFOA Certificate of Achievement recognizes governments whose CAFRs (now called Annual Comprehensive Financial Reports) meet or exceed program standards for transparency and understandability.
GAC Regulatory Compliance & Standards 2
Which GASB standard established the framework for measuring fair value in governmental financial reporting?