Examination 3: Governmental Financial Management and Control (GFMC) (GFMC) Free Practice Test

Question 1

The Federal Credit Reform Act requires complex calculations, which are likely to include errors. This is an example of

A. detection risk.

B. control risk.

C. audit risk.

D. inherent risk.

Correct Answer: D

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Question 2

Business process re-engineering typically addresses all of the following EXCEPT the

A. technical environment.

B. human environment.

C. key processes.

D. organizational mission.

Correct Answer: D

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Question 3

Management segregates duties among staff in order to reduce the risk of fraud

A. rationalization.

B. detection.

C. pressure.

D. opportunity.

Correct Answer: D

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Question 4

Which action represents an internal control deficiency in an agency responsible for building and maintaining dams?

A. The agency checks the references of bidders.

B. The agency inspects the completed work to assure compliance with the contract specifications.

C. The agency releases the contractor's bond only after assuring that all work is performed satisfactorily.

D. The agency responds to the maintenance needs only as complaints are received or as employees report problems.

Correct Answer: D

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Question 5

An agency benefit program allows employees who commute by public transit up to 10 free taxi trips home per calendar year. Employees can use the program for personal or family health emergencies. The most appropriate method to check for abuse of this program is

A. using geographic information system data to determine if the destination addresses were hospitals or clinics.

B. using program data to look for instances of individuals using the service more than 10 times per year.

C. requesting records from a random sample of employees to verify they used transit on the day they used the taxi services.

D. using personal data to determine if the destination address matches the employees home address.

Correct Answer: C

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Question 6

The value, in current dollars, of a sum of money to be received in the future describes

A. future value.

B. present value.

C. annuity value.

D. payback value.

Correct Answer: B

Question 7

A program manager at a local agency needs to understand if program participation varies significantly from enrollment. The information changes daily. The best way to quickly analyze this would be to use

A. portable document format.

B. dashboard.

C. text file.

D. crosstab.

Correct Answer: B

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Question 8

A single audit report will include an opinion or disclaimer of opinion that the financial statements are

A. fairly presented in accordance with GAO.

B. fairly presented in accordance with GASB.

C. free from fraud.

D. fairly presented in accordance with GAAP.

Correct Answer: D

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Question 9

In a performance aygit, due professional care is used to

A. obtain sufficient and competent evidence.

B. present the findings in accordance with GAAP.

C. set materiality of financial statements.

D. determine scope.

Correct Answer: A

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Question 10

In an internal control evaluation, what are the roles of management and the auditor regarding the risk of fraud, waste and abuse?

A. Both management and auditors determine risk tolerance levels.

B. Management mitigates risks, auditors monitor compliance with controls.

C. Management identifies risks, auditors assess control effectiveness.

D. Auditors identify risks, management implements control measures.

Correct Answer: C

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AGA Examination 3: Governmental Financial Management and Control (GFMC) (GFMC) Free Practice Test