IMPORTANT INFORMATION FOR CGFM CANDIDATES
AGA makes every effort to keep the CGFM Examinations up-to-date, reflecting developments in the government financial management field (for example, changes to accounting and auditing standards). In support of these efforts, we have made some revisions to questions in Examination 2. The exam questions reflect changes in response to Governmental Accounting Standards Board (GASB) Statements that were issued and were effective before December 11, 2012, specifically GASB Statement 63. More information on GASB Statements can be found on www.gasb.org/st/index.html. The overall CGFM Examination 2 content outline (found below) has not changed. The revised questions appear on the CGFM Examination 2 starting on February 25, 2013.
As with this revision, if any future changes in accounting and auditing standards affect the CGFM Examinations questions, AGA will notify all registered candidates prior to the revised questions appearing on the CGFM Examinations. The information will also be posted on the respective CGFM Examinations content outline web pages.
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I.
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Governmental Financial Accounting, Reporting and Budgeting: General Knowledge (40%)
| A. |
Demonstrate an understanding of the influences, objectives and role of standards including:
- The unique financial aspects of the governmental environment that differ from the private sector (for example, profit versus service, importance of budget).
- The major uses of governmental financial reporting (for example, budgetary comparisons, compliance with laws, assessing financial position, assessing results of operations).
- The objectives of governmental financial reporting (for example, financial accountability, budgetary accountability, program accountability).
- The characteristics of information in governmental financial reporting (for example, understandability, reliability, relevance, timeliness, consistency, comparability).
- Interperiod equity.
- The roles of the Governmental Accounting Standards Board (GASB) and the Federal Accounting Standards Advisory Board (FASAB).
- Due process in the setting of accounting standards (for example, discussion memorandum, invitation to comment, preliminary views, exposure draft, public hearing, task forces).
- The purpose of the hierarchy of generally accepted accounting principles for state/local and federal accounting and financial reporting.
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| B. |
Demonstrate an understanding of the general principles of governmental financial accounting including:
- The differences among the various bases of accounting (for example, cash, modified accrual, accrual).
- The effect of applying the various bases of accounting to specific transactions.
- Exchange versus non-exchange transactions.
- The amount needed to adjust the allowance for doubtful accounts under alternative methods (for example, percentage of sales, or percentage of accounts receivable).
- The difference between various methods of valuing inventory (for example, FIFO, LIFO, average cost).
- Situations that require recording depreciation and calculation of same.
- The amount to be recorded as the liability for judgments or claims.
- The concept of the reporting entity.
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| C. |
Demonstrate an understanding of the concepts of managerial cost accounting including:
- The purposes for accumulating and reporting cost information.
- The concept of full cost of outputs, incorporating inter-entity costs.
- The objectives of FASAB SFFAS 4: Managerial Cost Accounting Concepts and Standards.
- Identification of the allowable costs under an intergovernmental contract or grant (as outlined in the OMB Circular A-87).
- Identification of the most appropriate method for allocating indirect costs in a given situation.
- Computation of the fee to be charged to a user of a service using fully burdened costs.
- Various cost recovery objectives (total direct costs, operating costs, full costs, incremental costs).
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| D. |
Demonstrate an understanding of the concepts of budgeting including:
- The structure of the budget (for example, organizational unit, program, function, category, character, fund, line item, object).
- The features of various budgetary approaches (for example, baseline, line item, program, zero-base, performance).
- The various means of financing capital needs for capital budgeting purposes.
- The methods of forecasting revenues and expenditures.
- The key elements of the budget process, from provision of initial guidance through preparation, review, adoption, execution, and accounting.
- The various means of budgetary control (for example, revenue monitoring, encumbrance/obligation control, vacancy controls, allotment and apportionment).
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II.
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Demonstrate an Understanding of State and Local Financial Accounting and Reporting including: (30%)
| A. |
The application of the GASB standards for determining component units. |
| B. |
The purpose of each fund type within each fund category, and its related basis of accounting. |
| C. |
The form and content of the Comprehensive Annual Financial Report. |
| D. |
The form and content of the basic financial statements. |
| E. |
The form and content of the fund level financial statements. |
| F. |
The form and content of the government-wide financial statements and reports. |
| G. |
How to measure, record, and report the incurrence and repayment of general long-term obligations in a governmental fund. |
| H. |
How to measure, record and report the purchase of capital assets, including assets acquired through a capital lease. |
| I. |
How to reconcile fund balances to net assets for government activities at the government-wide reporting level. |
| J. |
How to reconcile the budgetary basis of accounting to the modified accrual basis of accounting. |
| K. |
How to consolidate or eliminate transactions between the fund level and the government-wide level for governmental activities. |
| L. |
The requirements to use the modified approach for infrastructure. |
| M. |
How to measure, record, and report revenue, expenditures, other financing sources, and other financing uses transactions using the modified accrual basis of accounting. |
| N. |
How to measure, record, and report revenue and expense transactions using the accrual basis of accounting. |
| O. |
The entries for recording the budget, modifying the budget, and recording encumbrances and expenditures. |
| P. |
The types of interfund transactions, and how they are accounted for. |
| Q. |
The reporting of fund balance in governmental funds. |
| R. |
When various taxes and other revenues are recognized and measured, and the required disclosures. |
| S. |
The required disclosures for cash deposits with financial institutions and investments, including repurchase agreements. |
| T. |
Revenue recognition and financial reporting of grants, entitlements, and shared revenues. |
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III.
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Demonstrate an Understanding of Federal Financial Accounting and Reporting including: (30%)
| A. |
The role and relationships of the OMB, Treasury, and GAO to the FASAB. |
| B. |
Key budgetary terms (e.g., appropriations, budget authority, budgetary resources, outlays, receipts, offsetting, collections, deficit). |
| C. |
The components of the budgetary equation. |
| D. |
The relationship and differences between budgetary and proprietary accounting. |
| E. |
Types of Treasury funds (for example, general, trust and revolving funds). |
| F. |
The components and use of the U.S. Standard General Ledger. |
| G. |
Transactions used for recording budgetary entries within the US SGL (for example, appropriation, apportionment, allotment, commitment, obligation, expenditure). |
| H. |
Transactions used for recording proprietary entries within the US SGL (for example, warrants, accruals, accounts payable, payroll, accounts receivable, disbursements, depreciation). |
| I. |
The purposes, form and content of the basic financial statements. |
| J. |
The purposes, and form of the notes to the financial statements. |
| K. |
The concept of fund balance with the Treasury and its related reconciliation requirements. |
| L. |
The form and content of the Performance and Accountability Report (PAR). |
| M. |
The concepts behind accounting for loans and loan guarantees (Credit Reform Act). |
| N. |
Stewardship reporting requirements. |
| O. |
The concepts of consolidation and intragovernmental transactions. |
| P. |
The basic requirements for the compilation of the U.S. Consolidated Financial Report. |
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