Pass the AGA Government Financial Manager GAFRB Questions and answers with CertsForce

The Government Management Reform Act (GMRA) of 1994 amended the Chief Financial Officers (CFO) Act of 1990 to require each executive agency to prepare and submit audited financial statements covering all accounts and associated activities.

This extended the audit requirement beyond the pilot CFO agencies and laid the groundwork for the Financial Report of the U.S. Government.

Relevant References:

Government Management Reform Act of 1994 (Public Law 103-356)

CFO Act of 1990

OMB Circular A-136 – Financial Reporting Requirements

Answer: B. audited financial statements of the executive departments

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In an Annual Comprehensive Financial Report (ACFR), the Independent Auditor’s Report is part of the Financial Section. It is placed immediately before the basic financial statements and after the Management’s Discussion and Analysis (MD&A), not before it.

The proper sequence within the Financial Section of the ACFR is:

Independent Auditor’s Report

Management’s Discussion and Analysis (MD&A)

Basic Financial Statements

Required Supplementary Information (RSI)

Other Supplementary Information (as applicable)

Relevant References:

GASB Statement No. 34 – Basic Financial Statements and MD&A

GFOA’s Governmental Accounting, Auditing, and Financial Reporting (GAAFR)

GFOA Checklist for ACFR Preparation

Answer: B. financial section before the basic financial statements

The Summary of Significant Accounting Policies (SSAP), included in the notes to the financial statements, typically includes:

Description of the reporting entity

Basis of presentation and accounting principles

Methods used to apply those principles

Policy changes from prior years

However, disclosures regarding receipt or use of budget authority are not included in the SSAP. Budget authority and execution are typically addressed in the Required Supplementary Information (RSI) or other budgetary sections of federal financial reports.

Relevant References:

FASAB SFFAS No. 34 – Notes to the Financial Statements

OMB Circular A-136 – Section II.4.4: Summary of Significant Accounting Policies

GAO Federal Accounting Handbook

Answer: C. disclosure of receipt of budget authority from the entity

Federal principal financial statements are required under OMB Circular A-136 and FASAB standards. They include:

Statement of Budgetary Resources (SBR)

Balance Sheet

Statement of Net Cost

Statement of Changes in Net Position

Statement of Custodial Activity (if applicable)

There is no “Statement of Cash Flows” or “Statement of Net Income” in federal accounting — those are private-sector financial statements.

Relevant References:

OMB Circular A-136

FASAB SFFAS No. 53 – Principal Financial Statements

Treasury Financial Manual (TFM) Volume I

Answer: B. Statement of Budgetary Resources