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NEW QUESTION # 60
Which of the following includes the aggregate level and types of risks that the organization is willing to assume in order to achieve its Strategic objectives?
- A. risk profile
- B. risk and control evaluation matrix
- C. risk and control assessment tool
- D. risk register
Answer: A
Explanation:
What Is a Risk Profile?
* Arisk profilerepresents the aggregate level and types of risks that an organization is willing to accept in pursuit of its strategic objectives. It aligns with the organization's risk appetite and tolerance and helps prioritize and manage risks effectively.
* This profile typically includes key risks, their likelihood, and potential impact, as well as how those risks align with the organization's mission and strategy.
Why Is Risk Profile the Correct Answer?
* The risk profile provides an enterprise-wide view of risks and their potential influence on achieving strategic goals. It aggregates risks across all levels of the organization and ensures that management considers them when making decisions.
Why Other Options Are Incorrect:
* A. Risk Register:While a risk register includes detailed descriptions of individual risks, it does not aggregate risk levels or types across the organization.
* B. Risk and Control Evaluation Matrix:This tool evaluates specific risks and controls but does not capture the organization's overall risk appetite or profile.
* D. Risk and Control Assessment Tool:This is a generic tool for assessing risks and controls, not for aggregating the overall risk picture.
References and Documents:
* OMB Circular A-123:Specifies the need for agencies to maintain a risk profile as part of enterprise risk management.
* COSO ERM Framework (2017):Defines a risk profile as central to managing risks in alignment with strategic objectives.
NEW QUESTION # 61
A county fire department receives property tax revenue on a 55% (December), 40% (April), 5% (June) basis.
The uncollectible portion is .05%. If the department received $5.1 million in December, the annual property tax revenues will be:
- A. $ 8,809,091.
- B. $10,200,000.
- C. $ 9,268,091.
- D. $ 9,272,727.
Answer: C
NEW QUESTION # 62
Assume that the bank's monthly costs are $12,520, the 30-day Treasury bill rate is
10.4%, and the bank is subject to a 15% reserve requirement. What is the MCB?
- A. $144,629
- B. $142,629
- C. $140,629
- D. $141,629
Answer: D
NEW QUESTION # 63
If a government or nonprofit annually collects $ 2 million, what is the per occurrence deductibles?
- A. 2,000
- B. 2,200
- C. None of these
- D. 2,300
Answer: A
NEW QUESTION # 64
General obligation (Go) bonds are typically repaid over 20 years and are usually sold:
- A. Publicly to the lowest bidder
- B. Privately to the highest bidder
- C. Privately to the lowest bidder
- D. Publicly to the highest bidder
Answer: A
NEW QUESTION # 65
A Stabile economy is defined as?
I. An equilibrium in the international balance of payments
II. Full employment
III. Economist growth
IV. Frequent changes in Price
- A. All of there
- B. Only I, II
- C. All EXCEPT IV
- D. I, III, IV
Answer: C
NEW QUESTION # 66
Which action represents an internal control deficiency in an agency responsible for building and maintaining dams?
- A. The agency inspects the completed work to assure compliance with the contract specifications.
- B. The agency releases the contractor's bond only after assuring that all work is performed satisfactorily.
- C. The agency responds to the maintenance needs only as complaints are received or as employees report problems.
- D. The agency checks the references of bidders.
Answer: C
Explanation:
What Is an Internal Control Deficiency?
* Aninternal control deficiencyoccurs when an organization fails to implement controls to prevent or detect risks effectively.
* In this case, responding only to maintenance needs when complaints are received demonstrates a lack of proactive controls, increasing the risk of issues going unnoticed or escalating over time.
Why Is Option C Correct?
* Proactive maintenance schedules and inspections are essential for ensuring the safety and functionality of critical infrastructure like dams. Relying solely on complaints or employee reports is a reactive approach and represents a deficiency in internal controls.
Why Other Options Are Incorrect:
* A. Inspecting completed work:This is a proper control to ensure compliance with contract specifications.
* B. Releasing the bond after work completion:This ensures contractual obligations are met and is a good control practice.
* D. Checking bidder references:This is part of the procurement process and a valid internal control.
References and Documents:
* GAO Standards for Internal Control (Green Book):Emphasizes proactive controls and monitoring for critical operations.
* Federal Infrastructure Maintenance Best Practices:Highlights proactive inspections and maintenance as essential controls.
NEW QUESTION # 67
The city of Mudville uses 1600 oil filters annually. The cost of placing an order is $5.00. The unit cost is $3.50.
The carrying cost is 20 percent, and the carrying cost per unit is &0.70(0.20x$3.50). What is the economic order quantity?
- A. 150 oil filters
- B. 130 oil filters
- C. None of these
- D. 155 oil filters
Answer: A
NEW QUESTION # 68
Eleven different types of funds, issued by Government Authorities, are classified into three major groups. Which one of the following statements represents those three groups?
- A. Governmental, Proprietary and Fiduciary
- B. Governmental, State/Provincial, Local
- C. Governmental, Fixed, Temporary
- D. Yearly, Semi annually and Quarterly
Answer: A
NEW QUESTION # 69
Debt refunding proceeds would be reported as:
- A. an other financial use on the operating statement.
- B. a liability.
- C. a revenue.
- D. an other financing source on the operating statement.
Answer: D
NEW QUESTION # 70
The financial adviser:
- A. prepares the overall financing plan
- B. helps to obtain a rating and market the bonds when the financial adviser also acts as the underwriter
- C. Only A&B
- D. Secure and assess the property owners
Answer: C
NEW QUESTION # 71
FASAB has established_ accounting Standards.
- A. 0
- B. 1
- C. 2
- D. 3
Answer: B
NEW QUESTION # 72
Which of the following acts requires federal agencies to pay interest to state government funds for entitlements that are not provided in a timely manner?
- A. Accountability for Tax Dollars Act
- B. Debt Collection Improvement Act
- C. Cash Management Improvement Act
- D. CFO Act
Answer: C
Explanation:
What Does the Cash Management Improvement Act (CMIA) Do?
* CMIA governs the transfer of federal funds to state governments and ensures timely and efficient use of these funds.
* If federal agencies fail to provide funds for entitlements (e.g., Medicaid) in a timely manner, CMIA requires them to payinterestto state governments for the delays.
* This ensures states are compensated for any financial burden caused by delayed federal transfers.
Why Other Options Are Incorrect:
* A. Debt Collection Improvement Act:Focuses on improving debt collection practices for the federal government, not entitlements or interest payments to states.
* B. CFO Act:Improves federal financial management but does not address payment timeliness or interest.
* C. Accountability for Tax Dollars Act:Expands audit requirements but does not involve compensation for delays.
References and Documents:
* CMIA (1990):Requires federal agencies to pay interest on late entitlement payments to states.
* Treasury Financial Manual:Details CMIA interest payment provisions.
NEW QUESTION # 73
One of the minimum components of a government financial system is
- A. debt-reduction analysis.
- B. performance management reporting.
- C. automated transaction processing.
- D. general ledger account definition.
Answer: D
Explanation:
* Minimum Components of a Government Financial System:
* A general ledger is the foundation of any financial system, providing a complete record of all financial transactions.
* The definition ofgeneral ledger accountsensures proper classification, tracking, and reporting of financial activities.
* Explanation of Answer Choices:
* A. Automated transaction processing: Incorrect. While automation is beneficial, it is not a
"minimum" requirement. Manual systems can still exist.
* B. Debt-reduction analysis: Incorrect. This is a financial management activity, not a core component of the financial system.
* C. Performance management reporting: Incorrect. Performance reporting is separate from the foundational financial system.
* D. General ledger account definition: Correct. This is a fundamental element of any government financial system.
References:
* GAO,Standards for Internal Control in the Federal Government (Green Book).
* GASB,Codification of Governmental Accounting and Financial Reporting Standards.
NEW QUESTION # 74
Management segregates duties among staff in order to reduce the risk of fraud
- A. pressure.
- B. detection.
- C. opportunity.
- D. rationalization.
Answer: C
Explanation:
Segregation of Duties and the Fraud Triangle:
* TheFraud Triangleidentifies three conditions that contribute to fraud:pressure,opportunity, and rationalization.
* Segregating duties (e.g., separating authorization, recordkeeping, and asset custody) is specifically designed to reduceopportunity, which is the chance for an employee to commit fraud without detection.
Why Opportunity Is Key:
* If one person has too much control over a process, they may exploit it for personal gain. Segregating duties creates checks and balances, making it harder for fraudulent activities to go unnoticed.
Why Other Options Are Incorrect:
* A. Pressure:Pressure refers to personal or financial stresses that drive someone to commit fraud, but segregation of duties does not address this directly.
* C. Rationalization:Rationalization involves justifying fraudulent behavior, which segregation does not prevent.
* D. Detection:While segregation can aid in fraud detection, its primary role is to reduce opportunities for fraud.
References and Documents:
* GAO Standards for Internal Control (Green Book):Emphasizes segregation of duties as a control to mitigate opportunities for fraud.
* COSO Internal Control Framework:Identifies segregation of duties as a key tool to reduce fraud risk.
NEW QUESTION # 75
Which one of the following strategy is NOT employed by Local governments to collect delinquent taxes?
- A. None of these
- B. Sell the parcel, using the proceeds to pay back taxes giving the remainder, if any, to the taxpayer.
- C. Put, a lien on a delinquent taxpayer's paycheck if his or her place of work is known.
- D. Put, the names of delinquent taxpayers in the local paper. Surprisingly, prominent citizens might be delinquent. The newspaper notice for them is an embarrassing, but effective, prompt.
Answer: A
NEW QUESTION # 76
The Federal Credit Reform Act requires complex calculations, which are likely to include errors. This is an example of
- A. inherent risk.
- B. audit risk.
- C. detection risk.
- D. control risk.
Answer: A
Explanation:
Definition of Inherent Risk:Inherent risk refers to the risk of material misstatement in financial statements or other reports due to the nature of the subject matter, without considering any controls in place. It arises from the complexity, judgment, or uncertainty involved in the underlying transactions or calculations.
Why This Is Inherent Risk:
* TheFederal Credit Reform Actrequires complex calculations to estimate loan subsidies, interest rates, and cash flows. These calculations inherently involve significant judgment and estimation, making them prone to errors. This is a classic example of inherent risk because the complexity exists regardless of controls.
Why Other Options Are Incorrect:
* A. Audit Risk:This refers to the overall risk that the auditor may issue an incorrect opinion. In this case, the issue is about the inherent complexity of the calculations, not the auditor's procedures.
* B. Control Risk:This is the risk that errors will not be prevented or detected due to weak internal controls. While control risk could contribute to misstatements, it is not the primary issue in this example.
* C. Detection Risk:This is the risk that auditors will not detect a misstatement. This risk relates to audit procedures, not the inherent complexity of the calculations.
References and Documents:
* GAO Yellow Book on Risk Assessment:Explains inherent risk in the context of government financial reporting.
* AICPA Standards on Audit Risk (AU-C 315):Highlights inherent risk as arising from the nature of transactions or subject matter.
NEW QUESTION # 77
"Every employee should have a personnel file that includes authorization for hiring, salary history hours authorized to work, federal and state withholding forms, hospital and retirement information and support for any other payout deductions." There are the procedures of:
- A. Cash Disbursements in payroll department
- B. Separation of duties in a small of government
- C. Federal government payroll system
- D. Both A and B
Answer: D
NEW QUESTION # 78
A sweeps payroll, accounts, payables, and daily collections into a
concentration account daily.
- A. Cash flow and security services
- B. None of these
- C. ZBA
- D. ACH block
Answer: C
NEW QUESTION # 79
The local car dealer in town can provide the 10 new cars the city needs at cost of $150,000. If local preferences were given, what would the preference margin (PM) be, assuming the dealer pays $50,000 in local property and sales taxes and that the total sales by the dealer are $2,000,000?
- A. $380 per vehicle
- B. $375 per vehicle
- C. $370 per vehicle
- D. $325 per vehicle
Answer: B
NEW QUESTION # 80
In an attestation engagement, which party would make an assertion about a subject matter?
- A. user
- B. management
- C. practitioner
- D. auditor
Answer: B
Explanation:
What Is an Attestation Engagement?An attestation engagement is a type of professional service where an independent practitioner (typically an auditor or CPA) evaluates and provides a report on assertions made by another party about a specific subject matter. These engagements follow standards set by organizations like the AICPA or GAO.
Who Makes the Assertion?
* Management's Role:Management is the party responsible for making an assertion about the subject matter under review. For example, management might assert that internal controls are effective or that financial statements are fairly presented.
* Auditor/Practitioner's Role:The auditor or practitioner examines the evidence related to the assertion and provides an opinion or conclusion based on that examination.
* User's Role:The users are the stakeholders (e.g., investors, regulators) who rely on the practitioner's report, but they do not make assertions.
Why Other Options Are Incorrect:
* B. Auditor/Practitioner:The auditor or practitioner evaluates the assertion made by management, not the other way around.
* C. Practitioner:See above-practitioners don't make assertions.
* D. User:Users are the intended audience of the attestation report, not the party making assertions.
References and Documents:
* AICPA Attestation Standards (SSAEs):Clarifies the role of management in making assertions during attestation engagements.
* GAO's Government Auditing Standards (Yellow Book):Provides additional guidance on the roles of parties in attestation engagements.
NEW QUESTION # 81
Assume that the bank's monthly costs are $12,520, the 30-day Treasury bill rate is 10.4%, and the bank is subject to a 15% reserve requirement. What is the MCB?
- A. $144,629
- B. $142,629
- C. $140,629
- D. $141,629
Answer: D
NEW QUESTION # 82
Performance measurement assists management in
- A. identifying weaknesses in disaster response preparedness.
- B. monitoring performance of certified professionals in regulatory fields.
- C. determining allocation of capital appropriations.
- D. tracking actual results against targets.
Answer: D
NEW QUESTION # 83
The auditors provide of the reliability of the financial statements.
- A. Sample
- B. Material misstatement
- C. Reasonable assurance
- D. None of these
Answer: C
NEW QUESTION # 84
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