Examination Three—Governmental Financial Management and Control

115 questions
Two hours and 15 minutes

I: Financial Management Functions (25%)

A. Demonstrate an understanding 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, e-Collections).
  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. Demonstrate an understanding of investment management, including:

  1. Concepts and relationships among risk, liquidity and yield, and the associated tradeoffs. 
  2. Types of investments for operating funds and pensions.
  3. The concept of 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. Demonstrate an understanding 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. Demonstrate an understanding 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. Demonstrate an understanding 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. Demonstrate an understanding of financial management systems, including:

  1. The concept of an integrated financial management system.
  2. User needs for real-time access to data across the enterprise (e.g., use of dashboards, data visualization).
  3. Business process re-engineering in the development and implementation of information systems. 
  4. The concept of enterprise resource planning (ERP) systems.
  5. The various approaches to meeting system needs (e.g., off-the-shelf, cross-servicing, outsourcing, custom design, shared services).
  6. The elements of a disciplined development process (e.g., requirements management, testing, data conversion, systems interfaces, configuration management, risk management, project management, quality assurance).
  7. Techniques for project management (e.g., defining interrelationships and tasks; resource management; cost, schedule and performance monitoring; independent verification and validation; change management).
  8. Methods for assuring the reliability and completeness of data.
  9. The concept of the continuity of operations plan (COOP).
  10. The use of cloud computing.

H. Demonstrate an understanding of shared services, including:

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

II: Demonstrate an Understanding of Financial and Managerial Analysis Techniques, Including: (15%)

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

B. Identification of 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. The use of forensic techniques, such as data mining. 

D. The use of advanced data analytics.

III: Internal Control (25%)

A. Demonstrate an understanding of internal control, including:

  1. The objectives of internal control.
  2. The concepts of cost-benefit and reasonable assurance.
  3. The components and principles of internal control, as specified by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Integrated Framework: control environment, risk assessment, control activities, information and communication, and monitoring.
  4. Cyber security (e.g., general and application controls).
  5. Identification and correction of internal control deficiencies.
  6. Involvement of shared service providers.

B. Demonstrate an understanding of the application of internal control to:

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

C. Demonstrate an understanding of 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. The independent auditor's responsibility regarding internal control.
  4. The roles of the internal auditor in the internal control process.

D. Demonstrate an understanding of 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. Demonstrate an understanding of 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. Demonstrate an understanding of Enterprise Risk Management (ERM), including:

  1. Relationship to internal control.
  2. Application of ERM.

IV: Demonstrate an Understanding of Performance Measurement/Metrics/Service Efforts and Accomplishments (SEA), Including: (15%)

A. The objectives of financial and non-financial performance measures. 

B. How performance measures relate to organizational goals and objectives. 

C. How financial and non-financial performance measures are linked.

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

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

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

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

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

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

J. Baselines and benchmarks.

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

L. The legal requirement and guidance for performance measurement.

V: Auditing (20%)

A. Demonstrate an understanding 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. Demonstrate an understanding of 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), American Institute of Certified Public Accountants (AICPA) Auditing Standards Board and the Public Company Accounting Oversight Board (PCAOB)).
  3. The concept of general standards (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 activities 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. Demonstrate an understanding of 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. Demonstrate an understanding of the components of the Single Audit Act and the role of the Office of Management and Budget (OMB), including:

  1. The scope and purpose. 
  2. The required reports.