Best Quality AGA CGFM Exam Questions TestValid Realistic Practice Exams [2025]
Critical Information To Certified Government Financial Manager (CGFM) Pass the First Time
To achieve the AGA CGFM certification, a candidate must pass three exams that cover three key areas of the government's financial management. These areas include governmental accounting, financial reporting and analysis, and government financial management and control. Certified Government Financial Manager (CGFM) certification is awarded by the Association of Government Accountants (AGA), which is an organization comprised of professionals who are experts in government financial management.
The Certified Government Financial Manager (CGFM) Exam is an important certification for professionals working in government financial management. The CGFM credential is awarded by the Association of Government Accountants (AGA), a professional organization dedicated to promoting excellence in government financial management.
NEW QUESTION # 47
Gas, taxes restricted for road maintenance and repair, property taxes restricted for downtown development, property taxes restricted for fire tax districts and state tobacco settlement funds restricted for smoking reduction and economic development are settled by Government with the help of:
- A. Special revenue funds
- B. Financial sector Funds
- C. None of these
- D. Major Federal Government Funds
Answer: A
NEW QUESTION # 48
If the $20,000 is loaned at a stated interest rate of 10%with the requirement that an 18% minimum compensating balance be kept, the APR (annual percentage rate) is:
- A. 12.07%
- B. 12.2%
- C. 13%
- D. 12.00%
Answer: B
NEW QUESTION # 49
Other factors being equal, when the cost of inventory has increased over several financial statement periods, an agency using LIFO will:
- A. need to restate their financial statements after five years of cost increases.
- B. need to increase the audit frequency.
- C. reflect lower net income than an agency that uses the average cost inventory method.
- D. show a higher value of ending inventory than a similar agency that uses FIFO.
Answer: C
NEW QUESTION # 50
Which of the following statements from an audit finding is the condition?
- A. Government policy requires a cardholder to submit receipts for all purchases.
- B. Finance Department personnel did not regularly review purchases to ensure compliance.
- C. We identified multiple credit card purchases without receipts to support them.
- D. We recommend that the government implements a timely review of all credit card purchases.
Answer: C
Explanation:
* Definition of the Condition in an Audit Finding:
* The "condition" describes the actual state observed during the audit. It highlights what occurred in practice, serving as the factual basis for the finding.
* In this case, the condition is theabsence of receiptsfor multiple credit card purchases.
* Explanation of Answer Choices:
* A. We identified multiple credit card purchases without receipts to support them: Correct.
This is the observed issue (condition).
* B. Government policy requires a cardholder to submit receipts for all purchases: This is the
"criteria," which defines the standard or rule being audited against.
* C. Finance Department personnel did not regularly review purchases to ensure compliance:
This is the "cause," explaining why the condition occurred.
* D. We recommend that the government implements a timely review of all credit card purchases: This is the "recommendation," not the condition.
References:
* GAO,Government Auditing Standards (Yellow Book).
* AICPA,Elements of an Audit Finding Guidance.
NEW QUESTION # 51
Which of the following is NOT a type of risk?
- A. Damage to property caused by carelessness, fire, natural causes, or faulty equipment
- B. Loss of property (e.g. money, tools, or furniture) caused by dishonest acts of employers or citizens
- C. Excessive employee health risks due to alcoholism, obesity, or smoking
- D. None of these
Answer: D
NEW QUESTION # 52
The financial adviser gives advice regarding the financial feasibility of a bond. Thus, the financial adviser's fee should not be contingent on a bond's sale because of:
- A. The potential conflict of interest
- B. None of these
- C. The nonequilibrium of market prices
- D. Unavailability of large local units
Answer: A
NEW QUESTION # 53
Under the ___________ arrangement, governments completely outsource the reconciliation to the bank, which reports items issued and paid, issued but not paid, and not yet issued.
- A. Partial reconciliation
- B. Reverse positive pay
- C. None of these
- D. Full reconciliation
Answer: D
NEW QUESTION # 54
The government finance association recommends public sale, but under which of the following condition:
I. The issue has on uninsured credit rating of A or above
II. The issue is not so large that it cannot be absorbed by the market.
III. The issue is not so small as to attract too few investors
IV. Interest rates are stable and market demand is strong
V. The market view the issue as warily complex or innovation.
VI. The issue is backed by full faith and credit or by a strong revenue system.
- A. I, II, III
- B. I, II, III, IV, V
- C. All EXCEPT V
- D. I, II, III
Answer: C
NEW QUESTION # 55
The first step in the internal control evaluation process is
- A. assessing the adequacy of controls.
- B. identifying the effectiveness of management activities.
- C. documenting how transactions of events are processed.
- D. identifying potential risks.
Answer: D
Explanation:
What Is Internal Control Evaluation?Internal control evaluation is the process of assessing an organization' s internal controls to ensure they are adequate and effective in mitigating risks, ensuring compliance, and achieving objectives.
Why Is Identifying Potential Risks the First Step?
* The entire purpose of internal controls is to mitigate risks. Therefore, before evaluating the controls, you need to identify the risks they are meant to address.
* Once risks are identified, the organization can evaluate whether the existing controls are adequate and effective in mitigating those risks.
* This approach aligns with risk-based frameworks like theCOSO Internal Control Framework, which emphasizes risk identification as the foundation for effective controls.
Why Other Options Are Incorrect:
* A. Identifying the effectiveness of management activities:This is part of control evaluation but occurs after risks and controls are identified.
* B. Assessing the adequacy of controls:Controls cannot be assessed until the risks they address are identified.
* C. Documenting how transactions or events are processed:While this step is important, it comes later in the process, after risks and controls are identified.
References and Documents:
* COSO Internal Control Framework:Identifies risk assessment as the foundation for designing and evaluating controls.
* GAO Standards for Internal Control (Green Book):Highlights risk identification as the first step in the control process.
NEW QUESTION # 56
What type of analygis should a finance director use to determine if there will be enough funds available to cover bills due within the next 30 days?
- A. budgetary cushion ratio
- B. quick/current ratio
- C. debt burden ratio
- D. receivables turnover ratio
Answer: B
Explanation:
* Purpose of the Analysis:A finance director needs to assess whether the organization has enough funds available to cover short-term obligations (bills due within 30 days). This requires evaluating liquidity.
* Explanation of Key Ratios:
* Quick/Current Ratio: Measures an entity's ability to pay its short-term liabilities using liquid assets.
* Current Ratio= Current Assets ÷ Current Liabilities.
* Quick Ratioexcludes less liquid assets (e.g., inventory), focusing on assets that can quickly convert to cash.This is the appropriate measure for assessing immediate liquidity.
* Receivables Turnover Ratio: Measures how efficiently receivables are collected but doesn't directly evaluate liquidity for bills due within 30 days.
* Budgetary Cushion Ratio: Refers to financial reserves relative to annual spending, not short- term liquidity.
* Debt Burden Ratio: Evaluates debt relative to revenues but does not address immediate cash flow needs.
References:
* Government Finance Officers Association (GFOA),Liquidity Management Best Practices.
* Association of Government Accountants (AGA),Financial Statement Analysis for Government Finance Officers.
NEW QUESTION # 57
Fund-level financial statements are prepared to present:
- A. a detailed short term view of government services.
- B. both a short and long term perspective on governmental finances.
- C. information that is more narrowly focused than mandated by government standards.
- D. information on financing activities.
Answer: A
Explanation:
Explanation
NEW QUESTION # 58
Governments and non-profits obtain services from Three Types of banks. Which one of the following id not out those banks?
- A. Federal Tier
- B. National Tier
- C. Regional Tier
- D. Local Tier
Answer: A
NEW QUESTION # 59
Number of students enrolled, cost per student enrolled, year-end state test score and critical thinking and application of knowledge. This is an example of measures in education sector. Match these steps with the following appropriate list of types of measures.
- A. Efficiency Measures, Intermediate Outcome, End Outcome, Output
- B. Output, Intermediate Outcome, End Outcome, Efficiency Measures
- C. Output, Intermediate Outcome, Efficiency Measures, End Outcome
- D. Output, Efficiency Measures, Intermediate Outcome, End Outcome
Answer: D
NEW QUESTION # 60
Federal and local Governments raise funds from respectively.
- A. Bank Loans and Bonds
- B. International Market Investments and MNCs Capital Funding
- C. Foreign Reserves, Local Reserves
- D. Tax-exempt Bonds and Bank Loans
Answer: D
NEW QUESTION # 61
Which of the following opinions is not expressed by auditors as to whether financial statements are expressed fairly in all material respects with respect to generally accepted accounting principles?
- A. Reversal opinion
- B. Qualified opinion
- C. Unqualified opinion
- D. Disclaimer
Answer: A
NEW QUESTION # 62
Perils, losses, property, source of liability, and people, Indemnity, Exclusions, Definitions and conditions are:
- A. Insurance policies
- B. Insurance declarations
- C. Insuring agreements
- D. None of these
Answer: C
NEW QUESTION # 63
A STRIP (Separate individual interest and principal payments) is known as:
- A. Floaters
- B. Zero-coupon
- C. Individual-coupon
- D. Callable
Answer: B
NEW QUESTION # 64
One of the five components of COSO ERM is
- A. complex calculations.
- B. accepting risk.
- C. changing environment.
- D. performance.
Answer: D
Explanation:
What Is COSO ERM?TheCOSO Enterprise Risk Management (ERM) Frameworkis a widely accepted framework that helps organizations identify, assess, and manage risks while creating value. The five components of COSO ERM are:
* Governance and Culture
* Strategy and Objective-Setting
* Performance
* Review and Revision
* Information, Communication, and Reporting
Why Is Performance a Key Component?
* ThePerformancecomponent focuses on identifying, assessing, and prioritizing risks to achieving an organization's objectives. It includes implementing risk responses (e.g., avoiding, reducing, sharing, or accepting risks) and monitoring their effectiveness.
Why Other Options Are Incorrect:
* B. Changing Environment:This is not a COSO ERM component but a general factor influencing risk management.
* C. Complex Calculations:This is not relevant to COSO ERM.
* D. Accepting Risk:While accepting risk is part of risk responses, it is not one of the five COSO ERM components.
References and Documents:
* COSO ERM Framework (2017):Details the five components of ERM and their application in managing risks.
NEW QUESTION # 65
A local government is reviewing the performance of a contractor that is collecting trash for the county.
Performance can be measured based upon the cost
- A. per employee.
- B. per mile travelled.
- C. per ton of trash collected.
- D. comparison with closest comparable jurisdiction.
Answer: C
Explanation:
Why Measure Performance Based on Cost per Ton of Trash Collected?
* Costper ton of trash collectedis a direct, objective, and quantifiable measure of the contractor's performance. It reflects how efficiently the contractor is operating relative to the amount of trash being managed.
* This measure aligns with the principle of output-based performance evaluation, which focuses on results (e.g., tons of trash collected) rather than inputs or unrelated factors.
Why Other Options Are Incorrect:
* A. Per mile traveled:Mileage is not directly tied to performance; it depends on the route structure and geography, not the quantity of trash collected.
* C. Comparison with closest comparable jurisdiction:While this may provide context, it is not a specific performance measure.
* D. Per employee:Employee count does not directly measure performance or efficiency in trash collection operations.
References and Documents:
* GAO Guide on Contract Performance Evaluation:Recommends using measurable and outcome- based metrics like cost per ton collected for performance reviews.
* Best Practices in Local Government Contracting (AGA):Highlights output-based measures for evaluating contractor performance.
NEW QUESTION # 66
According to the AGA Code of Ethics, a government agency contract manager using a vendor as a personal reference would constitute:
- A. nepotism.
- B. professional incompetence.
- C. a conflict of interest.
- D. fraud.
Answer: C
NEW QUESTION # 67
Federal entities primarily assess internal controls to
- A. determine what legislation is not applicable to the entity.
- B. identify program areas where efficiencies may be gained.
- C. ensure there is no fraud, waste or abuse within the entity.
- D. confirm that all management objectives will be met.
Answer: B
Explanation:
* Federal Entities and Internal Controls:
* Federal entities assess internal controls to ensure efficient, effective, and economical use of resources while achieving program objectives.
* Internal control assessments often identify areas for improvement, such as reducing waste or increasing operational efficiency.
* Explanation of Answer Choices:
* A. Confirm that all management objectives will be met: Internal controls reduce risk but do not guarantee all objectives will be achieved.
* B. Identify program areas where efficiencies may be gained: Correct. Internal controls are assessed to optimize operations and identify improvements.
* C. Ensure there is no fraud, waste, or abuse within the entity: While controls mitigate risks of fraud, waste, or abuse, assessments aim to identify opportunities for efficiency.
* D. Determine what legislation is not applicable to the entity: This is unrelated to internal control assessments.
References:
* GAO,Standards for Internal Control in the Federal Government (Green Book).
* Office of Management and Budget (OMB),Circular A-123, Internal Control Systems.
NEW QUESTION # 68
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The Certified Government Financial Manager (CGFM) certification program is administered by the Association of Government Accountants (AGA), a professional organization that represents the interests of government financial management professionals. The AGA has been a leading advocate for government financial management since its establishment in 1950.
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