CDFM Module 3.3 Exam Questions and Answers

The Budget and Accounting Act of 1921 established the GAO- Legislative Branch- to audit financial transactions of which branch of the Government? - ANSWER Executive Branch The GPRA requires agencies to define goals, s ...

The Budget and Accounting Act of 1921 established the GAO- Legislative Branch- to audit financial transactions of which branch of the Government? - ANSWER Executive Branch The GPRA requires agencies to define goals, set performance targets, and report what? - ANSWER Actual Performance Any enforceable agreement between an agency and a business concern for the acquisition of property of services is called what? - ANSWER contract What term is used to describe Federal Government funds that have been paid but have not yet been identified to a specific organization? - ANSWER Undistributed Disbursements What term is used in SFFAS #4 to describe the process of accumulating, measuring, analyzing, interpreting, and reporting cost? - ANSWER Managerial Cost Accounting What are the two self-balancing set of accounts the U.S. Government Standard General Ledger - USGSGL? - ANSWER Budgetary and Propriety In proprietary accounting, assets equal liabilities plus? - ANSWER Net position PP&E defines tangible assets with an estimated useful life of more than what number of years? - ANSWER Two years What is the statement of Budgetary Resources equation? - ANSWER Budgetary Resources = Status of Budgetary Resources Which financial statement shows the components of the net cost of the reporting entity's operation for the period? - ANSWER Statement of Net Cost What DoD accounting entity maintains a central general ledger? - ANSWER DFAS Which three Federal Agencies established FASAB? - ANSWER Comptroller General Department of Treasury OMB What are the three accounting systems that make up the Federal accounting framework? - ANSWER Budgetary Accounting Financial Accounting Managerial Cost Accounting Federal accounting must satisfy two sets of users of accounting information/reports which are? - ANSWER External users Internal users Required audited financial statements for the business activities of the 24 designated CFO agencies. - ANSWER CFO Act Where do the statutory requirements come from? - ANSWER The Constitution No money shall be drawn from the Treasury but in Consequence of Appropriations and a regular statement of Account of the Receipts and Expenditures of all public Money shall be published from time to time. - ANSWER Article 1, Section 9, Clause 7 Where can we see the products of all accounting transactions? - ANSWER Balance Sheets, Statement of Net Cost, and Statements of Operations and Changes in Net position Established the GAO to audit the Executive Branch. - ANSWER 1921 Budget and Accounting Act Established the GSA - ANSWER 1949 Federal Property and Administrative Services Act 1. required apportionment, allocation systems 2. expanded anti-deficiency, required reporting 3. mandated principles/standards and 4. established Joint Financial Management Improvement Program (JFMIP) - ANSWER 1950 Accounting and Auditing Procedures Act Required agencies to pay bills when due or pay interest and to not pay in advance unless advantageous to the governments. - ANSWER 1982 Prompt Payment Act As amended by the Debt Collection Improvement Act of 1996, strengthened ability to collect receivables from people who owe the government - ANSWER 1982 Debt Collection Act Required agencies to set up an Internal Control Program and report annually any aspects of their accounting systems not conforming to GAO's principles/standards. - ANSWER 1982 Federal Managers' Financial Integrity Act Required appointment of a Chief Financial Officer in 24 major Federal Agencies and required financial reports for business operations. - ANSWER 1990 CFO Act Required agencies to: 1. Define long term goals 2. Set performance targets 3. Report actual performance - ANSWER 1993 GPRA 1. required systems to support the control of cost of Government 2. required application of accounting standards to produce consistency in financial reporting 3. required financial management systems to support full-cost reporting and full disclosure of financial data - ANSWER 1996 FFMIA 1. required direct deposit of Federal wages, salary and retirement payments 2. amended the CFO act to require a consolidated financial statement for the entire Executive Branch- prepared by the Treasury Department and audited by the GAO 3. Required 24 Agencies to submit audited financial statements - ANSWER 1994 Government Management Reform Act Required each covered Executive Branch Agency to prepare and submit audited financial statements - ANSWER 2002 Accountability of Tax Dollars Act Required that DoD financial statement be validated as ready for audit by 30 September 2017. - ANSWER 2009 National Defense Authorization Act The government organizations that most affect the decisions of DoD Financial Managers are? - ANSWER OMB GAO Department of Treasury FASAB Conducts a continuous program for improving accounting and financial reporting in the Federal Government. - ANSWER OMB Audits the financial performance of the Executive Branch and is often referred to as the "watchdog" of Congress. - ANSWER GAO The Federal Governments banker treasury; manages balances and flow of funds and compiles the consolidated Federal financial statements and published the U.S. Standard General Ledger. - ANSWER Department of Treasury Established in 1990 by the Comptroller General is responsible for codifying the Generally - Accepted Accounting Principles - GAAP for the Federal Government - ANSWER FASAB What is the mission statement of the Federal Accounting Standards Advisory Board- FASAB - ANSWER To recommend accounting standards for the Federal Government after considering the financial and budgetary information needs of congressional oversight groups, Executive agencies and the needs for other users of Federal financial information. Once the FASAB recommendation is adopted, where is it published? - ANSWER As a Statement of Federal Financial Accounting Concept or a Statement of Federal Financial Accounting Standard. What are the three approved Accounting Standards Boards? - ANSWER Financial Accounting Standards Board Government Accounting Standards Board Federal Accounting Standards Advisory Board Issues standards of accounting, referred to as the Generally Accepted Accounting Principles- GAAPS for non-governmental, not for profit, entities. - ANSWER Financial Accounting Standards Board Issues Generally Accepted Accounting Principles for state and local government, not for profit entities. - ANSWER Government Accounting Standards Board Was finally recognized as the body designated to establish GAAP for the Federal Government in October 1999 by the American Institute of Certified Public Accountants - AICPA- governing council. - ANSWER Federal Accounting Standards Advisory Board What are the three agencies that share responsibility for implementing the Federal Accounting Standards? - ANSWER OMB GAO Department of Treasury Implements an approved standard by publishing the standard and updating OMB Circular A-136. The published standards become Federal GAAP and must be followed by Federal Executive Branch agencies. - ANSWER OMB Formulated the Generally Accepted Government Auditing Standards that are to be used by Government auditors in performing statement audits. - ANSWER GAO Performs several basic functions associated with implementing a Federal accounting standard. The U.S. General Ledger feeds all financial reports and makes the consolidated financial statements possible. - ANSWER Department of Treasury How many Accounting Standards are there? - ANSWER Seven Focuses on the uses, user need, and objectives of Federal Financial Reporting. Its objectives are Budgetary Integrity, Operating Performance, Systems and Control and the concept of Stewardship which links to the Preamble of the Constitution Requirement of Promoting the General Welfare. - ANSWER SFFAC 1 This concept is implemented by OMB Circular A 136, Federal Financial Reporting Requirements, which includes prescribing the form and content of the financial statements. - ANSWER SFFAC 2 Issued in April 1999, and describes the concepts recommended for Management's Discussion and Analysis reports. - ANSWER SFFAC 3 Was issued in January 2003 and identifies the intended audience for the Consolidated Financial Report. The five audiences for the CFR are: Citizens, Citizen Intermediaries, Congress, Federal Executives, and Program Managers with - ANSWER SFFAC 4 Establishes two basic recognition criteria that an item must meet to be a candidate for recognition in the body of a financial statement: 1. The item must meet the definition of an element 2. The item must be measurable, meaning a monetary amount can be determined with reasonable certainty or is reasonable estimable. - ANSWER SFFAC 5 Amends SFFAC 2 to discuss process and factors the Board considers when deciding whether the information should be considered basic information, required supplementary information or other accompanying information. it. - ANSWER SFFAC 6 Expresses an objective to identify and elucidate the conceptual issues relevant to establish measurement standards in the future for accrual basis financial statements. Applies mainly to assets and liabilities. - ANSWER SFFAC 7 Are essential for public accountability and for an efficient and effective functioning of our democratic system of government. - ANSWER Accounting and financial reporting standards The principle adviser to the Secretary and Deputy Secretary of Defense for budgetary and fiscal matters. - ANSWER USD/C The Managerial Cost Accounting Standards and Concepts was issued on? - ANSWER July 1995 Serves as the CFO of the DoD and is responsible for formulating and promulgating DoD wide Financial Management policies, overseeing accounting and finance operations and systems, implementing initiative for improving financial management, and performing financial management analysis. - ANSWER USD/C Directs the Defense Finance and Accounting Service- DFAS? - ANSWER USD/C Within the office of the USD/C, the Deputy CFO represents? - ANSWER Chief Financial Officers Council. DFAS maintains a central general ledger to: - ANSWER 1. Account for DoD Resources 2. Determine cost of operations and 3. Report DoD financial position and cost of operations. Accounting and Policy procedures - ANSWER Volume 4 Reporting Policy Procedures - ANSWER Volume 6A Travel Policy and Procedures - ANSWER Volume 9 Non Appropriated Funds Policy and Procedures - ANSWER Volume 13 Security Assistance Policy and Procedures - ANSWER Volume 15 Administrative Control of Funds and Anti-deficiency act - ANSWER Volume 14 Accounts that temporarily account for transactions that you know belong to the government but you cannot match to a specific receipt or expenditure account. - ANSWER Clearing Accounts The greater part of the budget and record receipts not earmarked by law for a specific purpose, such as all income tax receipts. - ANSWER General Funds Are revolving funds used for programs authorized by law to conduct a cycle of business type operations, primarily with the public, in which outlays generate collections. - ANSWER Public Enterprise Funds Expenditure accounts authorized by law to facilitate financing transactions primarily within and between federal agencies. - ANSWER Intragovernmental Funds The receipt and expenditure monies held in trust by the Government for carrying out specific purposes and programs in accordance with terms of a statue that designates the fund as a? - ANSWER Trust Funds Credited with collections earmarked by law to carry out a cycle of business type operations. - ANSWER Trust Revolving Funds Funds in which government acts as a true trustee - ANSWER Deposit Funds Receipt accounts for Federal Fund receipts that laws have earmarked for specific purposes and associated appropriations accounts for the expenditure of earmarked receipts. - ANSWER Special Funds What are the categories of appropriations? - ANSWER 1. Annual appropriations 2. Multiyear appropriations 3. No-Year appropriations 4. Permanent appropriations Funds that allow the Secretary of the Treasury to pay without further enactment by Congress. - ANSWER Permanent Appropriations Military and civilian pay are recorded as obligations when? - ANSWER In the month or pay period earned Permanent change of station costs are recorded as obligations when? - ANSWER Orders are issued Are the recovery of excess payments and are credited to the appropriation that made the payment. - ANSWER Refunds Are amounts earned and collected from the selling of goods and services. - ANSWER Reimbursements Include the issuance of checks, disbursement of cash, or electronic transfer of funds made to liquidate a Federal obligation. - ANSWER Outlays T/F? The proprietary and budgetary sets of general ledger accounts are independently self-balancing? - ANSWER True Is concerned primarily with the legal requirement to control and properly manage budget authority provided to entities in appropriations. - ANSWER Budgetary Accounting Resources (Credit) include: - ANSWER 4119 Other Appropriations Realized 4201 Total Actual Resources Collected Resources = Status of Resources - ANSWER Budgetary Accounting Captures costs and revenues and then applies them to the appropriate period. - ANSWER Proprietary Accounting Assets = Liabilities + Net Position - ANSWER Proprietary Accounting Consists of the full cost of the outputs produced by that program plus any non productions costs then can be assigned to the program. - ANSWER Gross Cost of Program Expenses - Exchange Revenue = - ANSWER Net Cost Operations What are the selected Asset Accounts? - ANSWER 1. Fund Balance with Treasury 2. Undistributed disbursements 3. Imprest Fund 4. Accounts Receivable 5. Advances The aggregate amount of funds an entity has at the Treasury to make expenditures and to pay liabilities or to purchase assets, goods, and services. It is similar to a bank balance. - ANSWER Fund Balance with Treasury Are federal government funds that have been paid, but for whatever reason, have not yet been identified to a specific organization. - ANSWER Undistributed disbursements A petty cash fund in the form of currency or coin for specifically authorized cash payments. - ANSWER Imprest Fund Are amounts owed to the entity. - ANSWER Accounts Receivable Occur when an entity has given funds to others in anticipation of receiving a future benefit. - ANSWER Advances When the Federal Government advances funds to a traveler for expenses to official travel. The amount must be recognized as an asset or receivable. - ANSWER Accounting for travel advances Consists of tangible assets that meet all for the following: 1. Estimated life of 2 years or more 2. Not intended for sale Acquired or constructed with the intention of being available for use by entity 3. Have an initial acquisition cost, book value or estimated fair market value that equals or exceeds DoD capitalization threshold - ANSWER General Property, Plant and Equipment What are the three categories of Property, Plant, and Equipment that have been identified for accounting and reporting purposes? - ANSWER 1. General PP&E 2. Heritage Assets 3. Stewardship Land Examples of General PP&E include: - ANSWER Real property, land buildings and structures. Is included in the financial statements on the Balance Sheet and is depreciated in accordance with the DoD standard recovery periods? - ANSWER General PP&E Consists of the amount paid for the asset plus transportation, installation and other related cost of obtaining the asset and preparing it for use. - ANSWER Acquisition Value of General PP&E Asset Tangible assets classified as either Heritage assets or stewardship land - ANSWER Stewardship PP&E Are unique to one or more of the following reasons: historical, natural, cultural, educational significance, artistic importance, or significant architectural characteristics. - ANSWER Heritage Assets Land and land rights other than that acquired for or in connection with General PP&E. - ANSWER Stewardship Land T/F? The costs of acquiring Heritage Assets and Stewardship Land are not expensed in the period incurred? - ANSWER False, They are DoD Financial Reporting includes: - ANSWER 1. Balance Sheet 2. Statement of Net Cost 3. Statement of Changes in Net Position 4. Statement of Budgetary Resources 5. Statement of Custodial Activity Presents, as of a specific time, amounts of future economic benefits owned or managed by the reporting entity (assets), amounts owed by the entity (liabilities) and the difference (net position). - ANSWER Balance Sheet Statement of Custodial Activity is required for? - ANSWER Entities that collect non exchange revenue for the General Fund of the Treasury. Significant accounting principles and policies used by an organization should be summarized as a? - ANSWER Footnote The Department is committed to having fully auditable financial statements by? - ANSWER By 2017 SECDEF outlined an accelerated goal of achieving an auditable Statement of Budgetary Resources - SBR-? - ANSWER For General Funds in 2014 The Department manages its improvement activities through the? - ANSWER FIAR Plan Reports the beginning net position, the items that caused net position to change during the reporting period and the ending net position - ANSWER Statement of Changes in Net Position Provide information regarding how budgetary resources were made available as well as their status at the end of the period. - ANSWER Statement of Budgetary Resources Required for entities that collect non exchange revenue for the General Fund of the Treasury, a trust fund or other recipient entities. - ANSWER Statement of Custodial Activity Is the gross cost incurred by the reporting entity less any exchange revenue earned from its activities. - ANSWER Net cost of operations Managerial Cost Reporting requirements are: - ANSWER 1. Direct Costs- Direct Labor and Materials. 2. Indirect Costs- Overheard 3. Intra-entity Costs- General and Administrative 4. Inter-entity Costs Cost of good and services received from other entities - ANSWER Inter entity Costs The quotient of two numbers, that, by itself, is almost meaningless. - ANSWER ratio Measure of an entity's ability to meets its current obligations. - ANSWER Current Ratio There are two main ways to use a ratio for performance analysis. - ANSWER Trend analysis Comparative analysis The manager determines how the entity is performing at a single point in time relative to other like entities or to a DoD standard. - ANSWER Comparative Analysis Determining how the ratio has behaved across time. - ANSWER Trend Analysis A test of an entity's immediate solvency is made by comparing the sum of cash and aged accounts receivable, commonly referred to as? - ANSWER Quick Assets- not including inventory The total of the quick assets, when divided by current liabilities, gives the ratio of quick assets to current liabilities? - ANSWER Acid-test Ratio Total current assets divided by total current liabilities gives the ratio of? - ANSWER Current Ratio T/F? An entity with a satisfactory current ratio may be in an unsatisfactory condition in terms of immediate solvency when inventories form a significant part of the current asset total. - ANSWER True Proprietary Accounting Account Codes - ANSWER 1000 Assets 2000 Liabilities 3000 Net Position Expenses Account Code - ANSWER 6000 Budgetary Accounting Account Code - ANSWER 4000 Gains and Loses Account Codes - ANSWER 7000 Budgetary or Proprietary? Congress APPROPRIATES and the President signs the appropriation act for $100M for the year, and Treasury issues the appropriation warrant. - ANSWER Budgetary and Proprietary Budgetary or Proprietary? With the receipt of the allotment the installation/activity may begin its operations. A purchase request and commitment form for supplies estimated cost $2M is issued: - ANSWER Budgetary Budgetary or Proprietary? A purchase order for supplies estimated to cost $2M is issued, Delivery is not expected for at least 30 days, th