QUESTION: 11

The goal of shared gervices is to

reduce current staffing levels.
transfer responsibilities to another entity.
efficiently aggregate resources.
provide private business opportunities.

Answer(s): C

Explanation:

Understanding Shared Services:
Shared services involve consolidating and centralizing resources, personnel, or processes to achieve efficiency and cost savings. This is common in government organizations looking to optimize operations.
Explanation of Answer Choices:
A . Reduce current staffing levels: While staff reductions may occur as a result, this is not the primary goal.
B . Transfer responsibilities to another entity: This describes outsourcing, not shared services. C . Efficiently aggregate resources: Correct, as shared services aim to centralize resources for improved efficiency.
D . Provide private business opportunities: This is unrelated to shared services, which focus on internal government operations.

Reference:

Association of Government Accountants (AGA), Shared Services in Government.

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QUESTION: 12

A state transfers cagh to a broker and the broker transfers securities to the state, promising to repay the cash plus interest in exchange for the return of the same securities. This transaction is an example of

an arbitrage agreement.
a repurchase agreement.
a mutual buy-sell agreement.
a reverse repurchase agreement.

Answer(s): B

Explanation:

Definition of a Repurchase Agreement (Repo):
A repurchase agreement is a short-term financial transaction where one party sells securities to another with an agreement to repurchase them at a later date for a specified price, which includes interest. It functions as a secured loan.
Transaction Description:
The state transfers cash to a broker.
The broker provides securities as collateral and agrees to repay the cash plus interest in exchange for the return of the same securities.
This arrangement matches the definition of a repurchase agreement.
Explanation of Answer Choices:
A . Arbitrage agreement: Arbitrage involves exploiting price differences in markets, unrelated to this transaction.
B . Repurchase agreement: Correct, as it fits the definition.
C . Mutual buy-sell agreement: This involves agreements to buy and sell assets, unrelated to this financial transaction.
D . Reverse repurchase agreement: Incorrect, as the state would be the borrower, not the lender, in a reverse repo.

Reference:

(U.S. )Department of the Treasury, Guide to Federal Investments.

Financial Accounting Standards Board (FASB), Accounting for Repurchase Agreements.

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QUESTION: 13

The Federal Credit Reform Act of 1990 prescribes a special budget treatment for direct loans and loan guarantees that measures cash flows to and from the government using which financial analytical technique?

future value
net present value
current value
regression analysis

Answer(s): B

Explanation:

Federal Credit Reform Act of 1990:
This Act established a new accounting framework for federal credit programs, such as direct loans and loan guarantees. It requires using the net present value (NPV) method to measure the costs of loans and guarantees by discounting future cash flows (e.g., loan repayments, defaults) to their present value.
Explanation of Financial Analytical Technique:
Net Present Value (NPV): Accounts for the time value of money by discounting future cash flows to the present. It provides an accurate measure of the economic cost to the government.
Other options:
A . Future value: Focuses on future cash flows, not their present cost. C . Current value: Not a recognized technique for analyzing long-term cash flows. D . Regression analysis: A statistical method, unrelated to calculating loan program costs.

Reference:

Federal Credit Reform Act of 1990, Section 502.
Congressional Budget Office (CBO), Federal Credit Program Cost Analysis. Office of Management and Budget (OMB), Circular A-11: Credit Reform Accounting.

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QUESTION: 14

In an attestation engagement, which party would make an assertion about a subject matter?

management
auditor
practitioner
user

Answer(s): A

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.
Reference 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.

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QUESTION: 15

All of the following ae among the stated purposes of GPRA EXCEPT to

help managers improve service delivery.
improve internal management practices.
provide instructions on program reporting.
improve program effectiveness.

Answer(s): C

Explanation:

What Is GPRA?
The Government Performance and Results Act (GPRA) of 1993 was designed to improve the performance of federal programs by requiring federal agencies to establish goals, measure performance, and report on their progress.
Stated Purposes of GPRA:
Improve Service Delivery (Option A): GPRA helps agencies align performance goals with customer needs, improving service delivery.
Improve Internal Management Practices (Option B): By requiring performance metrics and evaluations, GPRA enhances internal management and decision-making processes. Improve Program Effectiveness (Option D): GPRA aims to make federal programs more effective by fostering accountability and linking resources to results.
Why Option C Is Incorrect:
GPRA does not provide detailed instructions on program reporting.
While it requires agencies to report on their performance, it does not dictate the specific steps or instructions for reporting. Instead, agencies design their own reporting processes within the GPRA framework.
Reference and Documents:

Government Performance and Results Act of 1993: Stipulates the law's objectives but does not mention program reporting instructions.
GAO Report on GPRA Implementation: Highlights GPRA's purpose to improve performance management and accountability without prescribing reporting instructions.

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Free Financial GFMC Exam Questions (page: 12)

QUESTION: 11

Explanation:

Reference:

QUESTION: 12

Explanation:

Reference:

QUESTION: 13

Explanation:

Reference:

QUESTION: 14

Explanation:

QUESTION: 15

Explanation:

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