Exam Two—Governmental Accounting, Financial Reporting and Budgeting
115 questions
Two Hours and 15 minutes
1. Governmental Financial
Accounting, Reporting and Budgeting: General Knowledge
(40%)
A. Demonstrate an
understanding of the Influences, Objectives, and Role of Standards
including:
1. The unique
financial aspects of the governmental environment that differ from the
private sector
(e.g., profit vs. service, importance of budget).
2. The major
uses of governmental financial reporting (e.g., budgetary comparisons,
compliance
with laws, assessing financial position, assessing results of
operations).
3. The
objectives of governmental financial reporting (e.g., financial
accountability, budgetary
accountability, program accountability).
4. The
characteristics of information in governmental financial reporting
(e.g., understandability,
reliability, relevance, timeliness, consistency, comparability).
5. Interperiod
equity.
6. The roles of
the Governmental Accounting Standards Board (GASB) and the Federal
Accounting
Standards Advisory Board (FASAB).
7. Due process
in the setting of accounting standards (e.g., discussion memorandum,
invitation to
comment, preliminary views, exposure draft, public hearing, task
forces).
8. The purpose
of the hierarchy of generally accepted accounting principles for
state/local and
federal accounting and financial reporting.
B. Demonstrate an
understanding of the General Principles of Governmental Financial
Accounting
including:
1. The
differences among the various bases of accounting (e.g., cash, modified
accrual, accrual).
2. The effect of applying the various
bases of accounting to specific transactions.
3. Exchange vs. non-exchange transactions.
4. The amount needed to adjust the allowance for doubtful
accounts under alternative methods (e.g.,
percentage of sales, or percentage of accounts receivable).
5. The difference between various methods of valuing
inventory (e.g., FIFO, LIFO, average cost).
6. Situations that require recording depreciation and
calculation of same.
7. The amount to be recorded as the liability for judgments or
claims.
8. The concept of the reporting entity.
C. Demonstrate an
understanding of the concepts of Managerial Cost Accounting including:
1. The purposes
for accumulating and reporting cost information.
2. The concept of full cost of outputs, incorporating
inter-entity costs.
3. The objectives of FASAB SFFAS 4: Managerial Cost
Accounting Concepts and Standards.
4. Identification of the allowable costs under an
intergovernmental contract or grant (as outlined in
the OMB Circular A-87).
5. Identification of the most appropriate method for
allocating indirect costs in a given situation.
6.
Computation of the fee to be charged to a user of a service using fully
burdened costs.
7. Various cost recovery objectives (total direct costs,
operating costs, full costs, incremental costs).
D. Demonstrate an
understanding of the concepts of Budgeting including:
1. The structure
of the budget (e.g., organizational unit, program, function, category,
character, fund,
line item, object).
2. The features of various budgetary approaches (e.g.,
baseline, line item, program, zero-base,
performance).
3. The various means of financing capital needs for capital
budgeting purposes.
4. The methods of forecasting revenues and expenditures.
5. The key elements of the budget process, from provision
of initial guidance through preparation,
review, adoption, execution, and accounting.
6. The various means of budgetary control (e.g., revenue
monitoring, encumbrance/obligation
control, vacancy controls, allotment and apportionment).
2. 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.
3. 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 (e.g., general, trust, and revolving funds).
F. The
components and use of the US Standard General Ledger.
G.
Transactions used for recording budgetary entries within the US SGL
(e.g., appropriation,
apportionment, allotment, commitment, obligation, expenditure).
H.
Transactions used for recording proprietary entries within the US SGL
(e.g., 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 US Consolidated Financial
Report.