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Examination Three—Governmental Financial Management and Control

115 questions
Two hours and 15 minutes

I: Financial Management Functions (22%)

A. Recognize concepts of cash management, including:

  1. Legislation that affects governmental cash management.
  2. Controls appropriate for governmental cash management.
  3. Considerations in establishing banking relationships (e.g., competition, servicing, compensating balance).
  4. Techniques for accelerating collections (e.g., electronic fund transfer (EFT), centralized
    collections, lockboxes, eCollections).
  5. Techniques for timely payment (e.g., warehousing payments, EFT, credit cards, electronic invoicing).
  6. The role and control of electronic payments (e.g., smart cards, benefit cards, EFT).
  7. The existence of and the need to identify, prevent and recover improper payments.

B. Recognize concepts of investment management, including:

  1. Relationships among risk, liquidity and yield, and the associated tradeoffs. 
  2. Types of investments for operating funds and pensions.
  3. Fiduciary responsibility, including the duty of loyalty and duties to care, act in a prudent manner and diversify plan assets. 
  4. The components of an investment policy, including standards of care, objectives, conflicts of interest and authorization.
  5. Investment management considerations (e.g., selection of money managers, role of prudent experts, understanding of markets, monitoring and evaluating performance, risk assessment/avoidance, internal controls).

C. Recognize concepts of loan and loan guarantee programs and debt collection, including:

  1. The components of loan and loan guarantee programs (e.g., rationale, credit extension, account servicing, debt write-off, performance measurement).
  2. The components of delinquent debt collection (e.g., salary and refund offsets, collection agencies, delinquency rates, aging, reporting requirements).

D. Demonstrate an understanding of procurement management, including:

  1. The elements in the public procurement process (e.g., authorized procurement officials, compiling a bidders list, public advertising, preparing and issuing an invitation to bid (ITB) or a request for proposal (RFP), evaluating proposals, awarding the contract, writing the contract).
  2. Techniques for assuring full and fair competition (e.g., advertising, direct contact to likely vendors, registries).
  3. Contract efficiencies (e.g., purchase cards, bulk purchasing, inter-agency procurements).
  4. Evaluation selection criteria (e.g., past performance, delivery time, price).
  5. The monitoring and acceptance process to ensure that contract specifications are met. 

E. Recognize concepts of property management, including:

  1. The elements of a property management system (e.g., record keeping, safeguarding, maintenance, reporting).
  2. The procedures for property disposal (e.g., identifying surplus, disposition methods).

F. Recognize concepts of operating materials and supplies/inventory management, including:

  1. The elements of an operating materials and supplies/inventory management system (e.g., policies, classifications, controls, reorder decisions).
  2. Ways to safeguard operating materials and supplies/inventory (e.g., physical control, tagging, periodic inventory, stewardship, radio-frequency identification (RFID).

G. Recognize concepts of financial and other information systems, system development, and technical tools, including:

  1. Types of financial systems (e.g., integrated and stand-alone systems, and mixed financial systems).
  2. System requirements (e.g., technical, functional, user).
  3. Types of financial system software (e.g., enterprise resource planning (ERP), customer relationship management (CRM), enterprise performance management (EPM) and financial planning & analysis (FP&A)).
  4. System sourcing options (e.g., shared services, commercial-off-the-shelf (COTS), cross-servicing, outsourcing, custom designed).
  5. Business process re-engineering (BPR) and development methodologies (e.g., development, testing and deployment).
  6. Data management (roles and responsibilities, availability, quality and security).
  7. System hosting: on-premise, hybrid and cloud service offerings (i.e., software as a service (SaaS), platform as a service (PaaS), infrastructure as a service (IaaS)).
  8. Technical tools (e.g., robotics process automation (RPA), machine learning (ML), artificial intelligence (AI), business intelligence).

H. Recognize concepts of shared services, including:

  1. Service offerings, planning, transition steps and costs of shared support services.
  2. Importance, advantages and disadvantages of shared services.

I. Recognize concepts of project management, including:

  1. Phases of project management.
  2. The constraints of project management.
  3. The impact of project management on governmental financial management objectives.

II: Financial and Managerial Analysis Techniques (20%)

A. Conduct the following analyses: present value, future value, cash flow, pay-back, trend, ratio analysis, strategic sourcing, regression analysis, earned value management and flowcharting.

B. Identify the sources of information used and reliability of the data for financial and managerial analysis (e.g., accounting records, performance records, financial statements, census data).

C. Explain the use of forensic auditing techniques. 

D. Recognize the concepts and types of data analytics and data analysis​.

III: Internal Control (25%)

A. Identify concepts of internal control, including:

  1. The objectives of internal control.
  2. Internal Control – Integrated Framework as specified by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
  3. Internal control standards as specified by the Government Accountability Office (GAO) and the Office of Management and Budget (OMB).
  4. The concepts of cost-benefit and reasonable assurance.
  5. Identification and correction of internal control deficiencies.

B. Explain how to apply internal control to:

  1. Programs and operations, including information technology.
  2. Financial reporting.
  3. Compliance.
  4. Fraud, waste and abuse prevention and detection.

C. Recognize internal control responsibilities, including:

  1. Management's responsibility to establish, monitor, remediate and report on internal control.
  2. Management's responsibility for detecting and reporting fraud, waste and abuse.
  3. Management's oversight of shared service providers and the use of System and Organization Controls (SOC) Engagements.
  4. The independent auditor's responsibility regarding internal control.
  5. The roles of the internal auditor in the internal control process.

D. Recognize the internal control evaluation process, including:

  1. The process for documenting and assessing internal control.
  2. The roles of management and the auditor in the evaluations of internal control including the risk of fraud, waste and abuse.

E. Identify the internal control reporting process, including:

  1. How management reports on internal control, including the use of various types of assertions.
  2. The auditor's reporting on internal control.

F. Recognize concepts of enterprise risk management (ERM), including:

  1. Relationship to internal control.
  2. Application of ERM (e.g., continuity of operations plan (COOP), human capital planning).

IV: Performance Measurement/Metrics/Service Efforts and Accomplishments (SEA) (13%)

A. Identify the objectives of financial and non-financial performance measures. 

B. Recognize how performance measures relate to organizational goals and objectives. 

C. Identify how financial and non-financial performance measures are linked.

D. Recognize how financial and non-financial performance measures are integrated with the strategic plan and budget.

E. Describe the uses of performance measurement and reporting to demonstrate public accountability and transparency.

F. Describe the uses of performance measurement and reporting to improve allocation of resources and oversight of performance.

G. Describe uses of performance measurement and reporting to improve effectiveness and efficiency. 

H. Recognize the types of performance measures: inputs, outputs, outcomes and efficiency measures.

I. Distinguish between the characteristics of performance measurement data (e.g., relevant, understandable, comparable, reliable, timely, verifiable, actionable, cost-beneficial).

J. Identify baselines and benchmarks.

K. Identify the role of stakeholder input in the performance process.  

L. Recognize the legal requirement and guidance for performance measurement.

V: Auditing (20%)

A. Recognize the role of auditing, including:

  1. Types of auditors (e.g., external, internal).
  2. Objectives of financial audits.
  3. Objectives of attestation engagements.
  4. Objectives of performance audits.
  5. Uses of audit reports. 
  6. The concept of materiality.

B. Recognize the role of auditing​ standards, including:

  1. The sources of auditing standards for audits of government organizations. 
  2. The interrelationships among various audit standards-setting organizations (e.g., the Government Accountability Office (GAO) and the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board).
  3. Characteristics of auditors (e.g., independence, professional judgement, competence, quality control and assurance).
  4. The concept of auditor independence and the impact of non-audit professional services on independence.
  5. Standards for financial audits.
  6. Standards for attestation engagements.
  7. The responsibilities of the auditor in an audit follow-up program.
  8. Fieldwork and reporting standards for performance audits.
  9. The types of information that are considered sensitive in a government audit (e.g., taxpayer information, payments to informants, the Health Insurance Portability and Accountability Act (HIPAA) data, personally identifiable information (PII)).

C. Recognize the responsibilities of the auditee, including tasks related to:

  1. Preparing for and procuring audit services. 
  2. Supporting the audit process.
  3. Preparation of the management representation letter.
  4. Audit follow-up and corrective action plan based on audit findings.
  5. The role of an audit or audit advisory committee.

D. Recognize the components and requirements of the Single Audit Act, including:

  1. The scope and purpose. 
  2. The required reports.
  3. The role of the Office of Management and Budget (OMB).
  4. The responsibilities of recipients and subrecipients.