Free CGFM Practice Test

The Certified Government Financial Manager (CGFM) examination was developed by the Association of Government Accountants (AGA) to identify especially qualified professionals. Success on this exam is a clear indication of the academic, practical, and ethical skills required of a government financial manager. The CGFM really consists of three examinations: Government Environment; Governmental Accounting, Financial Reporting, and Budgeting; and Governmental Financial Management and Control.

The CGFM Governmental Environment exam is 115 questions on the following subjects: Organization, Structure, and Authority of Government (15% of the exam); Legal and Other Aspects of the Government Environment (25%); Demonstrate an understanding of the Government Management System including the Interrelationships among Planning, Programming, Budgeting, Operations, Accounting, Reporting, and Auditing (15%); Governmental Financial Process (25%); concepts, definitions, and notions of Public Accountability (5%); the role of Ethics in Government, and Ethical Practice as Government Financial Manager (5%); and Financial Management Responsibilities and Skills (10%).

The CGFM Governmental Accounting, Financial Reporting, and Budgeting exam is 115 questions on the following subjects: Organization, Structure, and Authority of Government (15% of the exam); Legal and Other Aspects of the Government Environment (25%); Government Management System, including the interrelationships among Planning, Programming, Budgeting, Operations, Accounting, Reporting, and Auditing (15%); Governmental Financing Process (25%); concepts, definitions, and notions of Public Accountability (5%); the role of Ethics in Government, and Ethical Practice as a Government Financial Manager (5%); and Financial Management Responsibilities and Skills (10%). The CGFM Governmental Financial Management and Control exam is 115 questions on the following subjects: Internal Controls (25% of the exam); Internal and External Auditing (25%); Performance Measurement Reporting (13%); Financial and Managerial Analysis Techniques (7%); and Financial and Managerial Concepts, Controls, and Techniques (30%).

Practice Questions

1. The Code of Ethics of the Association of Governments Accountants obligates its members to be accountable for all conduct except...

a. compliance with the standards and rules of the position of financial manager
b. personal responsibility for actions and inactions
c. reporting others that do not comply with the Code of Ethics
d. consideration for the long-term interest of the government and its citizens

2. Which scenario depicts a financial manager not acting in the public interest?

a. Implementing systems and procedures so that information technology can be used to manage government programs
b. Relying on outside information to make recommendations regarding the feasibility of a program
c. Making a determination of the effectiveness of an internal control system
d. Formulating plans to use financial resources to address public policy issues

3. "The Governmental Accounting Standards Board (GASB) uses due process when setting standards." Which best explains "due process" with respect to that statement?

a. The GASB has a pre-determined process to develop concepts and standards
b. The GASB carefully weighs the views of its constituents to develop concepts and standards
c. The GASB identifies the scope issues to be addressed to develop concepts and standards
d. The GASB uses a committee system to determine the viability of developing concepts and standards

4. Which inventory valuation method determines ending inventory based on the last goods that were purchased?

a. First-in First-out
b. Last-in First-out
c. Average cost
d. Specific identification

5. A positive control environment affects the quality of internal control by...

a. providing discipline and structure
b. implementing goals and procedures
c. eliminating fraud, waste and misuse
d. establishing an information technology system to implement internal control procedures

6. An individual auditor assigned to an audit project would not necessarily be required to possess which of the following sets of knowledge?

a. Professional knowledge and competence in auditing
b. Knowledge of the operations of the federal agency being audited
c. Knowledge of the fieldwork standards for various audits
d. Knowledge of information processing systems and information technology control measures

Answer Key

1. C: Reporting others that do not comply with the Code of Ethics. The Association of Government Accountants encourages its members to serve in the public interest with the highest ethical principles. Through its Code of Ethics, financial managers are provided with standards of behavior and guidance for making ethical decisions. In order to foster a sense of accountability, members have the obligation to:

  • Become familiar with, and abide by, the expectations, standards and rules of the position and to seek out information needed to interpret and apply them
  • Accept personal responsibility for the consequences of actions and inactions
  • Take into account the long-term interest of the government and its citizens

2. B: Relying on outside information to make recommendations regarding the feasibility of a program. In addition to providing sound accounting, accurate reporting, and effective financial management, a government financial manager is responsible to the public. Acting in the public interest, the financial manager is first and foremost concerned with the collective well-being of the community of people and institutions he serves. The public depends on the financial manager to be objective and to have integrity, contributing to the confidence on the part of the public that government is functioning in an orderly fashion.

3. B: The GASB carefully weighs the views of its constituents when developing concepts and standards. The Governmental Accounting Standards Board (GASB) begins due process when a project is considered for addition to the GASB's technical agenda. The process for adding a project to the agenda begins with research, identification of scope issues and issues to be addressed, and the preparation of a prospectus for discussion at a public meeting. Other due process documents may be prepared, depending on the alternatives or proposals to be reported. These may include a discussion memorandum, invitation to comment, preliminary views, and exposure draft.

4. A: First-in First-out. There are four types of inventory valuation methods:

  • First-in First-out uses the first goods that were purchased, or used, as the cost of production. These are the first goods to be sold and are considered the cost of sales. The ending inventory consists of those items that were purchased last and still remain in inventory
  • Last-in First-out uses the last goods that were purchased, or used, as the cost of production. These are the first goods to be sold and are considered the cost of sales. The ending inventory consists of those items that were purchased first and still remain in inventory
  • Average cost calculates the average unit cost of goods by adding the beginning inventory to the purchases made during the period. The ending inventory amount is the average cost multiplied by the number of items remaining in inventory
  • Specific identification bases inventory figures on the actual cost of those items remaining in inventory

5. A: Providing discipline and structure. Management and employees are responsible for establishing and maintaining an environment that nurtures a positive, supportive attitude toward internal control. The positive support provides the benefits of discipline and structure, and fosters a work culture that augments the quality of internal control. Agency management plays a key role in providing leadership in setting and maintaining the organization's ethical tone, providing guidance for proper behavior, removing temptations for unethical behavior and implementing discipline when appropriate.

6. D: Knowledge of information processing systems and information technology control measures. When an auditing agency assigns auditors, the agency needs to ensure that the auditors:

  • Possess adequate professional knowledge and competence in applicable auditing standards such as GAGAS, GAO and AICPA standards
  • Obtain overall and general knowledge regarding the operations of the federal agency or corporation being audited
  • Possess adequate communication skills in addition to the skills necessary to complete all audit tasks
  • Possess adequate knowledge regarding the fieldwork standards for various audits
  • Know GAAP

An individual auditor may not be required to possess all of the skills described above, however, the auditing agency staff should possess these skills as a collective whole.

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Last Updated: 03/01/2017


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