CGFM Exam Overview

Examination 1 -- The Governmental Environment

Approximately 100 questions
Two Hours and 15 minutes

  1. Organization and Structure of Government (10%)
    1. Levels of Government - The three levels of government (federal, state, local); the interrelationships among the three levels; and the components of each level (departments, agencies, special-purpose governments).
    2. Branches of Government - The roles of the three branches (legislative, executive and judicial) of government; the interrelationships among the three levels; and the checks and balances among the three branches.
    3. Authorities and Responsibilities of Government - The basis for the authorities and responsibilities of each level of government (constitutions, laws, and rules and regulations); the hierarchy within the basis; and the limitations placed on the responsibilities and authorities of each level of government.
    4. Special-Purpose Governments/Quasi-Governmental Entities - Distinction between general and special-purpose governments; the purposes, sources of authority and the powers of special-purpose governments/quasi-governmental entities.
  2. Legal and Other Environmental Aspects of Government (15%)
    1. Implications of Sovereignty - The concept of separation of powers in government; the meaning and implications of sovereign authority, including the power to tax and borrow and the ability of the federal government to create money; the constraints or controls on the exercise of power, such as checks and balances and the political process.
    2. Central Role of the Budget Process - The role and significance of the governmental budget; objectives of the budget process (define priorities, debate policy, allocate resources) and of the budget itself (as a policy document, operations guide, financial plan, and communications device); legal implications of the budget; the principle of legislative control over governmental finance; how the budget controls spending; integration of budgeting with planning, accounting and reporting.
    3. Other Legal Aspects - Use of special funds and earmarking of funds as a means of fulfilling legal requirements.
  3. Interrelationships Among Planning, Programming, Budgeting, Operations, Accounting, Reporting and Auditing (10%)
    1. The Management Cycle - The roles of planning, programming, budgeting, accounting, reporting, and auditing in the management cycle.
    2. Interrelationship Among the Elements - The relationship of each element in the management cycle to each of the other elements in the cycle (e.g., planning the goals and objectives, budgeting resources based on established goals and objectives, using the accounting system to control the budget by encumbering and vacancy control, reporting to monitor and improve operations and auditing to improve operations and fulfill accountability).
    3. Other Aspects - The elements of planning and the role of economic assumptions in the planning process; types of reporting and use of performance measures to improve operations, achieve accountability and assess accomplishment of program goals and objectives.
  4. Governmental Financing Process (25%)
    1. Taxation - Tax policies (what to tax, who to tax, how much to tax, why to tax); types of taxes (income, property, sales, and estate) and the roles and advantages of each; tax expenditures; tax limitations; assessment and equalization process.
    2. Intergovernmental Grants and Shared Revenues - Differentiation among contracts, grants and shared revenues; types of grants; requirements and expectations of the grantor and the recipient.
    3. Other Forms of Revenue - User fees, licenses and lotteries; rationale for user fees, such as recovering costs, encouraging use of a service, or limiting use of a service.
    4. Debt - Purposes of debt; factors considered before entering into debt (ability to pay, purpose of the debt, interest rate, and tax base); factors affecting debt policy (such as available tax base and debt repayment period); types of debt (bonds, notes, certificates of participation); debt limitations (statutory, bond covenants); sources and methods of repaying debt (earmarked taxes, general taxes, user fees); role of credit-rating agencies.
    5. Financing of Governmental Colleges, Hospitals, Special Districts, Public Authorities, School Districts and Other Special-Purpose Governmental Entities - Methods of financing these entities, including appropriations from the primary government and other levels of government, user charges and fees, donations and trust fund income.
  5. Public Accountability (10%)
    1. Concepts, Definitions, Notions of Accountability - Meaning and purpose of accountability in government; key attributes of accountability (disclosure, organization structure, reporting); role and interrelationships among those attributes.
    2. Those to Whom the Government is Accountable - The primary beneficiaries of accountability (e.g., legislators, taxpayers, other governments, investors, creditors, underwriters, analysts, future generations) and how they are benefited; groups that help maintain accountability (legislative bodies, media, management, employees).
    3. That for Which Accountability is Demonstrated - Matters for which government should be accountable (financial, compliance, performance for efficiency, performance for effectiveness).
    4. How Accountability is Demonstrated and Assessed - Methods to demonstrate accountability (financial reporting, internal control reports, performance reports); methods used to assess accountability (audit reports, performance reports).
  6. Ethics in Government (20%)
    1. General Responsibilities as a Professional - Nature of professional and ethical responsibilities to public, governing organizations, taxpayers, constituents, service recipients, peers, subordinates; appropriate courses of action in situations involving potentially conflicting professional or moral concerns.
    2. Acting in the Public Interest - The concepts of independence and objectivity; relationship between independence and fairly representing the public interest.
    3. Maintaining Professional Integrity - Professional integrity and its impact on the public trust; professional integrity regarding the public trust over personal gain and advantage; appropriate courses of action involving professional integrity in the absence of guidance or in the face of conflicting opinions.
    4. Applying Objectivity and Independence - Avoiding conflict of interest; assuring objectivity and independence; appropriate courses of action where there are potential conflicts with objectivity and independence.
    5. Observing Due Care in the Performance of Duties - The concept of due care as a factor in ethical behavior; relationship of competence in education, knowledge and experience to the practice of due care in performing professional duties; the need for consultation or referral when there are limitations on a person's competence.
    6. Behaving to Avoid Improper Use of One's Office for Personal Gain - Recognizing actions that are inconsistent with responsibilities of public officials and employees; recognizing actions that would adversely affect public perception of particular activities; behaving to avoid reality or public perception of improper use of one's office for personal gain.
    7. Maintaining Professional Competencies and Performance Standards - CGFM continuing professional education requirements.
  7. Financial Management Responsibilities and Skills (10%)
    1. Financial Management Responsibilities and Skills - Functions, responsibilities of the chief financial officer; team-building and group dynamics techniques; conflict resolution methods and applications; motivating and developing staff; assigning and monitoring workload to maximize results; effective communication; organizing information in a coherent and logical manner; maintaining personal networks; keeping legislature and management informed and interested in agency activities.

Examination 2 -- Governmental Accounting, Financial Reporting and Budgeting

Approximately 100 questions
Two Hours and 15 minutes

  1. General Knowledge Section (60%)
    1. Influences, Objectives, and Standards Setting:
      1. Influences and objectives - Characteristics of governmental environment, particularly those that differ from private sector, such as profit vs. service, importance of budget, and sovereignty; external users of financial reporting (legislature, citizenry, investment community); major uses of financial reporting; objectives of financial reporting (financial, budgetary, and program accountability); characteristics of information in financial reporting; meaning of interperiod equity;
      2. Standards setting - Roles of the GASB and the FASAB; how GASB and FASAB roles differ from the FASB; due process in setting accounting standards; hierarchy of generally accepted accounting principles (GAAP) for federal, state, and local governments
    2. General Principles of Governmental Financial Accounting:
      1. Basis of accounting - Differences among the various bases of governmental accounting (e.g., cash, modified accrual, accrual); how a particular basis of accounting facilitates accomplishing a specific measurement focus; effect of applying specific bases of accounting to specific revenue and expenditure/expense transactions; distinction between modified accrual basis and budgetary basis of accounting; effect of applying different bases of accounting to different phases of the materials cycle, including ordering, receiving, and paying; financial reporting implications of the distinction between financial accounting and budgetary accounting.
      2. Fund accounting - Definition of a fund; fund categories/classifications and fund types within each category; purposes for which various funds are established. < ol claims and judgments legal for liability determining situations; specific in depreciation average); weighted LIFO, (FIFO, inventory valuing of methods receivables); percent sales, (percent various under accounts doubtful allowance Methods - events transactions certain>
    3. Financial Reporting:
      1. General - Users and uses of various types of reports, such as general purpose reports, budget reports, and project reports; when to prepare each type of report; basis of accounting to be used for each type of report.
      2. Reporting entity - Definition of the financial reporting entity at the federal level and state and local levels (criteria for being an entity or part of an entity); criteria for whether an entity is a primary government or a component unit.
      3. Content of financial reports - Purpose, form, and content of general purpose financial statements; purpose, form, and content of notes to the statements; purpose and content of management discussion and analysis and letter of transmittal; purpose and alternative contents of popular reporting.
    4. Cost Accounting and Performance Reporting:
      1. Cost accounting - Purposes of accumulating and reporting cost data; concept of full cost of outputs and incorporation of inter-entity costs; determination of allowable cost under a grant after considering unallowable costs; appropriate methods for allocating indirect costs; determination of user fees using cost data.
      2. Performance reporting - Purposes of performance/service efforts and accomplishments (SEA) reporting; elements of performance/SEA reporting (inputs, outputs, outcomes).
    5. Budgeting:
      1. Budgeting approaches - Purposes of budgeting (resource allocation, setting spending priorities, identifying needs); structure of the budget (organizational unit, program, function); features of different budgetary approaches (baseline, line item, program, zero-base, etc.); how the budgetary approaches differ; use of different approaches to achieve particular policy objectives; financing and appropriating the capital budget.
      2. The budget process - Forecasting short-term and long-term revenues/receipts (taxes, user fees, intergovernmental grants); forecasting short-term and long-term expenditures/outlays; tensions in the budgetary process as between political desires and public desires vs. sound fiscal management and administration; key elements of the budget process from provision of initial guidance through preparation, review and adoption; means of central control of budgets (encumbrance/obligation control, vacancy control, revenue monitoring; means of agency control of budgets).
  2. Detailed Knowledge Section (40%)
    1. State and Local Financial Accounting and Reporting:
      1. Fund financial accounting - Purposes of each fund type; measuring and recording transactions in the appropriate fund; measurement focus and basis of accounting for (1) governmental funds/certain fiduciary funds and (2) proprietary funds/certain fiduciary funds; measuring, recording and reporting revenue, expenditure/expense, other financing source/use transactions using (1) the modified accrual basis of accounting and (2) the accrual basis of accounting.
      2. Budgetary accounting - Purposes of budgetary accounting; recording and modifying the budget; recording encumbrances and expenditures; effect of encumbrance and expenditure transactions on available appropriation balances.
      3. Classification - Interfund transactions (operating transfers, residual equity transfers, quasi-external transactions, reimbursements); revenue and expenditure classification (function, character, object); reservations and designations of fund balance.
      4. Recognition, measurement, and disclosures for specific transactions and events - Various taxes and other revenues; claims and judgments; compensated absences; cash deposits and investments, including repurchase agreements; measuring, recording, and reporting the incurrence and repayment of (1) general long-term debt and (2) long-term obligations from governmental fund operating transactions; measuring, recording, and reporting (1) acquisition and disposition of general fixed assets and (2) capital lease transactions; grants, entitlements and shared revenues.
      5. Financial reporting - Whether a potential component unit is part of a financial reporting entity; purpose, form, and content of the Comprehensive Annual Financial Report.
    2. Federal Accounting and Financial Reporting:
      1. Budgetary and Proprietary Accounting - Components of the budgetary equation "Budgetary Resources = Status of Authority; relationship and difference between budgetary and proprietary accounts; fund types and accounting basis for each fund type (general, trust, revolving, deposit); significance and use of the general ledger and the meaning of "under general ledger control"; key budgetary terms, such as appropriations, budgetary resources, outlays, receipts, offsetting collections.
      2. Recording and reporting specific transactions - Budgetary entries for receipt of appropriation through apportionment, allotment, commitment, obligation and expenditure; effect of transactions on status of authority accounts; receipt of appropriation authority and receipt of appropriation warrant; recording in the budgetary and proprietary accounts of (1) receipt of materials for inventory, (2) payment of payroll, (3) utility expenses not previously obligated, and (4) year-end accrual for salaries and other liabilities.
      3. Financial reporting - Purpose of financial reports required by OMB Circular A-34; purposes, form, and content of the financial statements under SFFAC No. 2 "Entity and Display".
      4. Measurement, recognition criteria and disclosures for specific transactions, events, and balances - Funds held with the treasury; cash, receivables, and similar assets; direct loans and loan guarantees (including subsidy costs, default costs and write-offs); inventory and related property (such as inventory, operating materials and supplies, stockpile materials, etc.); property, plant and equipment (such as general property, mission property, heritage property, land); supplementary stewardship reporting for property, land and equipment.

Examination 3-- Governmental Financial Management and Control

Approximately 100 questions
Two Hours and 15 minutes

  1. Internal/Management Control (25%)
    1. Internal Control Objectives - Objectives as defined by Committee of Sponsoring Organizations, GAO "Yellow Book," Federal Managers Financial Integrity Act and similar state/local statutes or directives, Foreign Corrupt Practices Act.
    2. Considerations - Elements of cost-benefit considerations and risk management considerations.
    3. Applications - Application of internal control to operations, financial reporting (including safeguarding of assets), and compliance.
    4. Responsibilities - Responsibilities of management for establishing and maintaining, ongoing monitoring and periodic reporting of internal controls; responsibilities of the auditor regarding establishing, ongoing monitoring, and periodic reporting of internal controls; responsibilities of auditor for consulting with management on design of internal control systems; responsibilities of Chief Internal Auditor (Inspector General, legislative auditor).
    5. Components of Internal Control - Control environment, risk assessment, control activities, information and communication, monitoring.
    6. Evaluation Process - Understanding and assessing internal control for effectiveness and efficiency of operations, reliability of financial reporting, compliance with applicable laws and regulations; understanding and assessing the components of internal control (control environment, risk, control activities, information and communication, and monitoring; roles of management and independent reviewer in evaluation process).
    7. Reporting Process - Types of management assertions in reporting on controls and criteria applicable to those assertions; management reporting on internal control, particularly on reporting material weaknesses; auditor reporting on internal controls; work needed to support reporting or attesting on internal controls; identification of internal control deficiencies.
  2. Auditing (25%)
    1. Types and Objectives - Objectives of the various types of audit (financial statement audit; financial related audit - including contract, grant, compliance, and internal controls; economy and efficiency audit - including review of management control systems; and program audit - including evaluating results and reviewing management control systems ); role of materiality/significance in the audit process.
    2. Standards - Sources of audit standards (GAO Yellow Book, AICPA Statements on Auditing Standards and Statement on Standards for Attestation Engagements, and standards of the Institute of Internal Auditors) and interrelationship among those standards; general standards, field work and reporting standards for financial audits, and field work and reporting standards for performance audits.
    3. Responsibilities - Responsibilities of auditee in the conduct of audit (such as preparing statements and providing documents) and in coordinating audit matters; responsibilities of auditor in conducting the audit (such as independent verification, observation and comparative analysis), in audit follow-up, in coordinating audit matters, and when computer-based processes are significant to audit findings.
    4. Phases - Planning, conducting and reporting on the audit.
    5. Coordination and Cooperation - Mechanisms for coordination among audit organizations to eliminate duplication and rely on each other's work; purpose of the single audit process and how the scope of single audit supports its purpose; kinds of information available through the single audit (financial, compliance, control, material weaknesses).
    6. Contracting - Responsibilities of the various parties associated with contracting for audit services; phases in the contracting process (developing request for proposals, evaluating proposals, monitoring and evaluating auditor); criteria for selecting auditor (experience, qualifications, price).
    7. Audit Follow-Up - Steps in implementing audit follow-up program; steps in ensuring that audits are closed on a timely basis; methods to ensure that monetary and non-monetary findings are acted upon.
    8. General - Users of audits and how they use the results; types of activities that are considered sensitive in a government audit (taxpayer information, payments to informers, travel and entertainment); aspects of government audit that require considerations of public accountability and how they differ from private sector (selection of auditor, materiality, distribution of audit report); audit quality control (internal quality control and external assurance).
  3. Performance Measurement and Reporting (15%)
    1. Objectives and Uses of Performance Measurement and Reporting - To improve internal management, to demonstrate public accountability, and to improve oversight and allocation of resources.
    2. Elements, Characteristics and Other Aspects - Elements of performance measurement (financial and non-financial measures of efforts, measures of accomplishments - outputs and outcomes, and measures that relate efforts to accomplishments); characteristics of performance measurement data (relevance, understandability, comparability, reliability, timeliness, verifiability); baseline and benchmarking; role of the "customer" in evaluation of performance; how performance measures relate to goals and objectives in strategic plan.
  4. Financial and Managerial Analysis Techniques (5%)
    1. Financial and Managerial Analysis Techniques - Types of analysis and applications of the analysis techniques - present value, future value, cash flow, pay-back, trend, significant ratios, comparisons to competitors, regression analysis and flowcharting; sources of information for financial and managerial analysis, such as accounting records, performance records, financial statements; appropriate timing for financial and managerial analysis.
  5. Financial and Managerial Concepts, Controls and Techniques as Applied to Specific Activities (30%)
    1. Cash Management - Considerations in establishing banking relationships (competition, servicing, compensating balances); techniques for accelerating collection (electronic funds transfer (EFT), centralized collections, lockboxes); techniques for timely payment (warehousing payments, EFT, credit cards); role of electronics in managing cash.
    2. Investment Management - Elements of investment management (objectives, selecting money managers, evaluation); objectives of investment management (safety, liquidity, yield); factors that make investment of government funds different from investment of private funds (statutory limitations, risk avoidance, competitive bidding); types of investments; constraints on investing government funds; techniques for managing investment advisors, such as periodic evaluation, monitoring and benchmarking.
    3. Credit Management/Debt Collection - Criteria for participating in a credit program; process for extending credit and controls over the process; elements of the account servicing process; debt collection techniques (collection agencies, salary offset, tax refund offset); process and controls over debt write-off (policy and second approval); credit management and debt collection performance measures (delinquency and collection rates, aging).
    4. Procurement Management - Elements of public procurement process (e.g., bidders list, public advertising, issuing RFP, evaluating proposals); techniques for assuring adequate competition; criteria for selecting suppliers (past performance, delivery time, price); process to insure that contract specifications are met.
    5. Inventory/Supply Management - Elements of an inventory/supply acquisition system; elements of an inventory/supply control system (location, condition, value, date of last inventory); means of safeguarding inventory/supplies.
    6. Financial Management Systems - Concept of a single integrated financial management system; determination of system requirements; elements of implementing a new system; approaches to system development; business process re-engineering in the development and implementation of information systems; techniques for planning, implementing and monitoring to ensure new or updated systems are on time and within budget; methods for assuring reliability of data processed by financial management systems; concepts in selecting, controlling and evaluating financial management information systems.

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