AGA CGFM Certified Government Financial Manager Exam Practice Test

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Total 115 questions
Question 1

Which of the following is a forensic technique used to quantify the impact of fraud?



Answer : B

What Are Computer-Assisted Audit Techniques (CAATs)?

CAATs are specialized tools used in forensic accounting and auditing to analyze large volumes of data for patterns, anomalies, and irregularities that may indicate fraud.

These techniques help quantify the impact of fraud by identifying discrepancies, overpayments, or unaccounted transactions.

Why Are CAATs Used for Quantifying Fraud?

CAATs can efficiently analyze transactional data, calculate losses, and determine the extent of financial damage caused by fraud.

Examples include using software to detect duplicate payments, inflated invoices, or unauthorized transactions.

Why Other Options Are Incorrect:

A . Test of controls: Tests of controls evaluate the effectiveness of internal controls but do not quantify the impact of fraud.

C . Data integrity: Ensuring data integrity is important, but it does not specifically address quantifying fraud.

D . Benchmarking: Benchmarking compares performance metrics but does not analyze or quantify fraud.

Reference and Documents:

GAO Fraud Prevention Framework: Highlights the use of CAATs in forensic accounting.

AICPA Forensic Accounting Guidelines: Recommends CAATs for fraud detection and quantification.


Question 2

Business process re-engineering typically addresses all of the following EXCEPT the



Answer : C

Business Process Re-Engineering (BPR):

BPR focuses on redesigning key processes to achieve dramatic improvements in efficiency, effectiveness, and performance.

It typically involves addressing technical systems, human factors, and process workflows, but it does not involve redefining the organization's mission, which is a strategic activity outside the scope of BPR.

Explanation of Answer Choices:

A . Key processes: Incorrect. Key processes are the primary focus of BPR.

B . Human environment: Incorrect. BPR often addresses human factors, such as roles and responsibilities.

C . Organizational mission: Correct. The mission is a strategic element and not typically redefined as part of process re-engineering.

D . Technical environment: Incorrect. BPR often involves rethinking technical systems and workflows.


Hammer & Champy, Reengineering the Corporation: A Manifesto for Business Revolution.

GAO, Business Process Re-Engineering for Government Efficiency.

Question 3

Management's ability to monitor for financial control weakness is most compromised if



Answer : D, D

Collusion as a Threat to Monitoring:

Collusion occurs when two or more individuals work together to circumvent internal controls.

Even with strong controls in place, collusion can undermine monitoring because it allows individuals to bypass controls without detection.

Explanation of Answer Choices:

A . Theft has occurred: Incorrect. While theft is a problem, it is often detected if controls and monitoring are functioning properly.

B Financial data is inaccurate: Incorrect. Inaccurate financial data can compromise decision-making, but strong monitoring can help detect and correct errors.

C . Performance data is inaccurate: Incorrect. While inaccurate performance data is problematic, it does not directly compromise the monitoring of financial control weaknesses.


GAO, Standards for Internal Control in the Federal Government (Green Book).

Association of Certified Fraud Examiners (ACFE), Fraud Risk Management Framework.

Question 4

Performance measures that relate program inputs to program outcomes are called



Answer : C

Definition of Cost-Effectiveness Measures:

Cost-effectiveness measures assess the relationship between inputs (resources used) and outcomes (results achieved) to determine whether a program delivers value for the resources invested.

Explanation of Answer Choices:

A . Efficiency measures: Incorrect. These relate inputs to outputs, focusing on how efficiently resources are used to produce services, but not directly tied to outcomes.

B . Process measures: Incorrect. These measure activities or steps within a program but do not assess outcomes.

C . Cost-effectiveness measures: Correct. These directly link inputs to outcomes, measuring the program's effectiveness in achieving its objectives relative to costs.


GASB, Performance Measurement and Reporting for Government Programs.

GAO, Best Practices in Measuring Program Effectiveness.

Question 5

Government entity SEA reporting provides users of general purpose financial reports with an



Answer : D

Service Efforts and Accomplishments (SEA) Reporting:

SEA reporting is designed to provide non-financial performance information about the efficiency and effectiveness of government programs.

It evaluates how well resources are being used to achieve desired outcomes, helping stakeholders assess program performance and accountability.

Explanation of Answer Choices:

A . Evaluation of the effects of changes in public policy: Incorrect. SEA reporting does not focus on policy changes but on program performance.

B . Assessment of financial condition and results of operations: Incorrect. This is the role of financial statements, not SEA reports.

C . Assessment of the accountability of the public administrators: Incorrect. While SEA reports indirectly support accountability, their main purpose is to assess program efficiency and effectiveness.

D . Evaluation of the efficiency and effectiveness of governmental programs: Correct. This is the primary focus of SEA reporting.


GASB, Concepts Statement No. 2: Service Efforts and Accomplishments Reporting.

GFOA, Performance Reporting in Government.

Question 6

Planning to support ongoing financial operations in the event of a natural disaster is based on the assumption that



Answer : C

Assumptions in Disaster Planning:

Financial continuity planning for natural disasters must account for scenarios where the event occurs suddenly and without warning.

This assumption ensures that governments are prepared to quickly resume critical financial operations even under challenging and unpredictable circumstances.

Explanation of Answer Choices:

A . Leadership and staff will reconvene at an alternate location: While this is part of disaster planning, it is not the primary assumption.

B . A fully redundant infrastructure will be available to staff at an alternate location: This may not always be realistic or feasible.

C . There may be no warning of the potential emergency: Correct. Disaster planning assumes that emergencies can occur without prior notice.

D . Government agencies will need to operate as standalone organizations: This is not a standard assumption in disaster planning.


FEMA, Continuity Guidance Circular.

GAO, Disaster Resilience and Continuity Planning.

Question 7

A single audit report will include an opinion or disclaimer of opinion that the financial statements are



Answer : B

Single Audit Report Requirements:

A single audit evaluates the financial statements and compliance with federal award requirements.

The financial statement opinion must state whether the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP).

Explanation of Answer Choices:

A . Free from fraud: Incorrect. Auditors do not provide an opinion on fraud; they assess for material misstatements.

B . Fairly presented in accordance with GAAP: Correct. The financial statement opinion is issued based on compliance with GAAP.

C . Fairly presented in accordance with GASB: Incorrect. GASB (Governmental Accounting Standards Board) provides guidance for state and local governments, but financial statements must comply with GAAP as the overarching standard.

D . Fairly presented in accordance with GAO: Incorrect. The GAO (Government Accountability Office) issues auditing standards, not financial reporting standards.


OMB Uniform Guidance (2 CFR Part 200), Subpart F - Audit Requirements.

GAO, Government Auditing Standards (Yellow Book).

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Total 115 questions