AGA GFMC Exam - Topic 5 Question 1 Discussion

Actual exam question for AGA's GFMC exam

Question #: 1
Topic #: 5

[All GFMC Questions]

Internal control over financial reporting means that management can reasonably make which of the following assertions?

ASufficient spending authority and financial resources exist to support reported expenditures.

BA physical inventory has been conducted of all assets meeting the jurisdiction's capitalization threshold.

CAll assets and liabilities have been properly valued and, where applicable, all costs have been properly
allocated.

DManagement has met its legislatively directed program goals.

Show Suggested Answer

Suggested Answer: C

What Is Internal Control Over Financial Reporting? Internal control over financial reporting (ICFR) ensures the reliability of an entity's financial statements. It focuses on maintaining accurate, complete, and properly valued financial information that complies with accounting standards and meets the needs of users.

Why Is Option C Correct?

Proper valuation of assets and liabilities is a critical component of ICFR. It ensures that financial statements fairly represent the entity's financial position.

Cost allocation is also essential where applicable, such as assigning costs to programs or projects.

Why Other Options Are Incorrect:

A . Sufficient spending authority and financial resources exist: This relates to budgetary control, not financial reporting.

B . Physical inventory of capitalized assets: Conducting a physical inventory is part of asset management, not financial reporting assertions.

D . Legislatively directed program goals: Meeting program goals is related to performance reporting, not ICFR.

Reference and Documents:

GAO Standards for Internal Control (Green Book): Stresses the importance of proper valuation and cost allocation for accurate financial reporting.

COSO Framework: Emphasizes ICFR's role in ensuring reliable and accurate financial statements.

by Keneth at Jul 14, 2025, 02:53 PM

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Benton

2 months ago

A seems relevant too, but C is the strongest assertion here.

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Paris

2 months ago

Definitely agree with C, it’s all about proper valuation!

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Lou

3 months ago

D feels a bit off, not really about financial reporting, right?

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Glenna

3 months ago

Wait, are we sure about B? How often do companies really do a full inventory?

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Chaya

3 months ago

I think option C is spot on for internal control assertions.

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Lai

3 months ago

I vaguely remember something about management goals, but I don't think that's the main focus of internal control over financial reporting.

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Ryan

4 months ago

I feel like spending authority is important too, but I can't recall if that's directly related to internal controls.

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Aja

4 months ago

I remember a practice question that focused on asset valuation, so maybe option C is the right choice?

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Robt

4 months ago

I think internal control is about ensuring accurate financial reporting, but I'm not sure which assertion fits best here.

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Dannette

4 months ago

I'm a little confused by this question. The options seem to cover a range of management assertions, not just financial reporting. I'll have to think this through carefully before selecting an answer.

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Nina

4 months ago

Okay, I've got this. Internal control over financial reporting means management can assert that the financial information is accurate, complete, and properly valued. So I'm going with option C as the best answer.

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Delbert

4 months ago

Hmm, this is a tricky one. I'm not totally sure about the difference between the options, but I think C sounds the most comprehensive in terms of valuation and cost allocation for assets and liabilities.

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Rolland

5 months ago

This question is asking about the management assertions that can be made with internal control over financial reporting. I think the key is to focus on the financial reporting aspects, so options A, B, and C seem more relevant than D.

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Luke

6 months ago

I think the answer is A, because having sufficient spending authority is important for financial control.

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Ammie

6 months ago

I believe the answer is B, as conducting a physical inventory is essential for accurate reporting.

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Dana

6 months ago

C is the way to go. Although I'm tempted to choose D just to see if management has actually met their goals. That would be the real test of internal controls!

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