Maine CGFM Test Overview
Certified Governmental Financial Manager
Examination 1 -- The Governmental Environment
Approximately 100 questions
Two Hours and 15 minutes
- Organization and Structure of Government (10%)
- 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).
- 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.
- 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.
- 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.
- Legal and Other Environmental Aspects of Government (15%)
- 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.
- 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.
- Other Legal Aspects - Use of special funds and earmarking
of funds as a means of fulfilling legal requirements.
- Interrelationships Among Planning, Programming, Budgeting,
Operations, Accounting, Reporting and Auditing (10%)
- The Management Cycle - The roles of planning, programming,
budgeting, accounting, reporting, and auditing in
the management cycle.
- 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).
- 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.
- Governmental Financing Process (25%)
- 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.
- Intergovernmental Grants and Shared Revenues - Differentiation
among contracts, grants and shared revenues; types
of grants; requirements and expectations of the grantor
and the recipient.
- 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.
- 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.
- 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.
- Public Accountability (10%)
- 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.
- 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).
- That for Which Accountability is Demonstrated - Matters
for which government should be accountable (financial,
compliance, performance for efficiency, performance
for effectiveness).
- 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).
- Ethics in Government (20%)
- 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.
- Acting in the Public Interest - The concepts of independence
and objectivity; relationship between independence
and fairly representing the public interest.
- 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.
- 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.
- 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.
- 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.
- Maintaining Professional Competencies and Performance
Standards - CGFM continuing professional education
requirements.
- Financial Management Responsibilities and Skills (10%)
- 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
- General Knowledge Section (60%)
- Influences, Objectives, and Standards Setting:
- 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;
- 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
- General Principles of Governmental Financial Accounting:
- 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.
- 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>
- Financial Reporting:
- 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.
- 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.
- 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.
- Cost Accounting and Performance Reporting:
- 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.
- Performance reporting - Purposes of performance/service
efforts and accomplishments (SEA) reporting; elements
of performance/SEA reporting (inputs, outputs,
outcomes).
- Budgeting:
- 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.
- 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).
- Detailed Knowledge Section (40%)
- State and Local Financial Accounting and Reporting:
- 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.
- 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.
- 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.
- 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.
- Financial reporting - Whether a potential component
unit is part of a financial reporting entity;
purpose, form, and content of the Comprehensive
Annual Financial Report.
- Federal Accounting and Financial Reporting:
- 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.
- 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.
- 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".
- 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
- Internal/Management Control (25%)
- 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.
- Considerations - Elements of cost-benefit considerations
and risk management considerations.
- Applications - Application of internal control to
operations, financial reporting (including safeguarding
of assets), and compliance.
- 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).
- Components of Internal Control - Control environment,
risk assessment, control activities, information and
communication, monitoring.
- 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).
- 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.
- Auditing (25%)
- 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.
- 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.
- 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.
- Phases - Planning, conducting and reporting on the
audit.
- 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).
- 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).
- 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.
- 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).
- Performance Measurement and Reporting (15%)
- Objectives and Uses of Performance Measurement
and Reporting - To improve internal management, to
demonstrate public accountability, and to improve
oversight and allocation of resources.
- 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.
- Financial and Managerial Analysis Techniques (5%)
- 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.
- Financial and Managerial Concepts, Controls and Techniques
as Applied to Specific Activities (30%)
- 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.
- 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.
- 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).
- 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.
- 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.
- 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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