The CGFM (Certified Government Financial Manager) credential is recognized as the standard by which financial management professionals in the government sector are measured. The high standards of ethics, education, and experience required by this designation serve to assure potential employers of the value of candidates who have earned it.
Candidates who have already earned a four-year (bachelor’s) degree with 24 units in financial management or related topics are eligible to apply for the CGFM program. The 24 units must come from one or more of the following areas: accounting, auditing, budgeting, economics, electronic data processing, finance, information resources management, public administration, or other financial management or related topics.
To achieve CGFM certification, a candidate must pass three comprehensive, computerized examinations, as follows:
Examination 1: Governmental Environment
This CGFM exam has 115 multiple-choice items and lasts two hours and 15 minutes. It covers the organization, structure, and authority of government (15%), legal and other aspects of the government environment (25%), the government management system (15%), governmental financing process (25%), public accountability (5%), ethics in government and ethical practice as a government financial manager (5%), and financial management responsibilities and skills (10%).
Examination 2: Governmental Accounting, Financial Reporting, and Budgeting
This CGFM exam has 115 multiple-choice items and lasts two hours and 15 minutes. It covers general knowledge about governmental financial accounting, reporting, and budgeting (40%), state and local financial accounting and reporting (30%), and federal financial accounting and reporting (30%).
Examination 3: Government Financial Management and Control
This CGFM exam has 115 questions and lasts two hours and 15 minutes. It covers internal controls (25%), internal and external auditing (25%), performance measurement reporting (13%), financial and managerial analysis techniques (7%), and financial and managerial concepts, controls, and techniques (30%).
Each of these exams is designed to allow a candidate to demonstrate his or her general familiarity with, appreciation for, and understanding of the subject area. In addition, portions of each exam (especially Examination 2) require more detailed and specific knowledge of the procedures and practices unique to either state and local governments or the federal government.
CGFM Exam (Governmental Environment) Practice Questions
1. Bond covenants requiring or forbidding certain actions of the issuer are specified…
A. in the bond indenture
B. in the bond underwriting agreement
C. on the bond issuer’s website
D. in the prospectus
2. What is the purpose of the Chief Financial Officers Act of 1990?
A. Effective general and financial management of the Federal government
B. Improve accounting systems, financial management and internal control of the Federal government
C. Provide complete, reliable, timely, and consistent financial information regarding the Federal government
D. All of the above
3. Which federal government agency was given greater financial management authority by the Chief Financial Officers Act of 1990?
A. The Council of Economic Advisers
B. The Office of Management and Budget
C. The Secretary of Commerce
D. The Secretary of the Treasury
4. Which is one of the responsibilities of the Office of Federal Financial Management?
A. Establishing government financial management policies
B. Providing performance measurement and performance audits
C. Providing financial reporting to the executive branch
D. Providing financial reporting to the legislative branch
5. What set of standards is used when performing financial and performance audits of government agencies?
A. AICPA audit standards
B. Institute of Internal Auditors
D. INTOSAI Auditing Standards
1. A: In the bond indenture. The bond indenture is a contract that specifies the terms of the bond, the coupon rate, the period to maturity, and special features of the bond. The indenture is summarized in the bond prospectus. The indenture contains a bond covenant, an agreement between the bond’s issuer and holder that can either require or forbid specified actions. A positive bond covenant requires the issuer to perform certain actions. A negative bond covenant forbids the issuer from performing specific actions.
2. D: All of the above. The purpose of the Chief Financial Officers Act of 1990 includes:
Effective general and financial management practices of the federal government by establishing a Deputy Director for Management in the Office of Management and Budget, establishing an Office of Federal Financial Management headed by a Controller, and designating a Chief Financial Officer in each executive department and in each major executive agency in the federal government
Improvement in accounting systems, financial management, and internal controls in each agency of the Federal Government, assuring reliable financial information and the deterrence of fraud, waste, and abuse of government resources
Producing complete, reliable, timely, and consistent financial information for use by the executive branch of the government and the Congress in the financing, management, and evaluation of Federal programs
3. B: The Office of Management and Budget. The Chief Financial Officers Act of 1990 was established to improve the financial management of the federal government. The Act also set standards for financial performance and financial disclosure, and requires each federal agency to employ a Chief Financial Officer. The Office of Management and Budget is charged with overseeing these Chief Financial Officers through the Deputy Director for Management, which is the chief financial management official for the federal government.
4. A: Establishing government financial management policies. The Office of Federal Financial Management is a part of the Office of Management and Budget. The Office of Federal Financial Management is responsible for the financial management policy of the federal government. Responsibilities include implementing the financial management improvement priorities of the president, establishing financial management policies of executive agencies, and carrying out the financial management functions of the Chief Financial Officers Act. The Office of Federal Financial Management ensures that the government spends taxpayers’ money responsibly, and that financial information is communicated accurately and effectively so that informed decisions are made about the management of government programs and policy implementation.
5. C: GAGAS. Generally Accepted Government Auditing Standards (GAGAS), or the Yellow Book, are the rules and processes for the financial and performance audits of government agencies, established by the U.S. Government Accountability Office. The GAGAS standards include independence, due care, continuing professional education, supervision, and quality control. The GAGAS standards are used for federal government audits, local government performance audits, and local government financial audits performed by Certified Public Accountants. Performance audits evaluate the performance of a government program or project compared to the objectives of the project or program. The AICPA (American Institute of Certified Public Accountants), Institute of Internal Auditors, and INTOSAI are autonomous, non-governmental professional organizations.