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AGA CGFM Exam Questions
- Topic 1: Governmental Financial Accounting
- Topic 2: Reporting and Budgeting: General Knowledge
- Topic 3: Demonstrate an Understanding of State and Local Financial Accounting and Reporting
- Topic 4: Demonstrate an Understanding of Federal Financial Accounting and Reporting.
Free AGA CGFM Exam Actual Questions
Note: Premium Questions for CGFM were last updated On Feb. 22, 2026 (see below)
A capital asset transferred to another department within the same government should be
* Capital Asset Transfers Within the Same Government:
When a capital asset is transferred between departments within the same government, the asset's book value (its original cost minus accumulated depreciation) should remain in the fixed asset tracking system.
The transfer does not change the overall value of the asset for the government as a whole, but it should reflect that the asset is now under the responsibility of the receiving department.
* Why This Is Important:
Accurate tracking ensures the fixed asset system reflects the current custodian of the asset and allows for proper asset management and accountability.
* Why Other Options Are Incorrect:
A . Recorded with the original department to maximize receipts: This is incorrect because it ignores the asset's transfer and would misrepresent which department is responsible for it.
B . Recorded with the second department to minimize costs: Cost minimization is irrelevant here; the transfer should reflect the book value.
C . Retained with no change in book value to either department: While the book value doesn't change overall, the system must reflect the transfer to the receiving department.
* Reference and Documents:
GAAP (Governmental Accounting Standards Board - GASB): Requires accurate fixed asset tracking to reflect departmental transfers.
GASB Statement No. 34: Discusses fixed asset tracking and reporting requirements.
A primary deterrent to fraud is
Deterrence of Fraud:
A primary deterrent to fraud is the fear of being caught. When individuals believe there is a high likelihood of detection, they are less likely to commit fraudulent acts.
Strong internal controls, monitoring, and audits increase this fear and serve as effective deterrents.
Explanation of Answer Choices:
A . Delegation of responsibility without oversight: Incorrect. Lack of oversight increases the risk of fraud rather than deterring it.
B . The fear of detection: Correct. The fear of being caught is one of the most effective fraud deterrents.
C . Job satisfaction and sense of 'team': While these contribute to a positive work environment, they do not directly deter fraud.
D . Performance of employee background checks: Background checks are a preventive measure but are less effective as a fraud deterrent compared to detection risk.
Association of Certified Fraud Examiners (ACFE), Fraud Prevention Guidance.
GAO, Fraud Risk Management Framework.
A sound investment category for pension funds that can be easily valued is
* What Are Open-Ended Mutual Funds?
Open-ended mutual funds are investment vehicles that allow investors to buy and sell shares at the current net asset value (NAV), which is determined daily.
These funds are highly liquid and can be easily valued, making them a sound investment option for pension funds.
* Why Are They Suitable for Pension Funds?
Pension funds require investments that are easily valued, transparent, and provide liquidity to meet benefit obligations. Open-ended mutual funds meet all these criteria.
* Why Other Options Are Incorrect:
B . Reverse repurchase agreements: While they can be part of investment strategies, they are not easily valued compared to open-ended mutual funds.
C . Derivative instruments: Derivatives can be complex and difficult to value, making them less suitable for pension funds that prioritize transparency and simplicity.
D . Internal investment pools: These are investment vehicles used by governments, but their valuation may not be as straightforward or frequent as mutual funds.
* Reference and Documents:
GAO Guide to Investment Management for Pension Funds: Recommends transparent, easily valued investments like mutual funds.
AICPA Pension Plan Audit Guidelines: Emphasizes liquidity and valuation in pension fund investments.
Which of the following is a forensic technique used to quantify the impact of fraud?
* What Are Computer-Assisted Audit Techniques (CAATs)?
CAATs are specialized tools used in forensic accounting and auditing to analyze large volumes of data for patterns, anomalies, and irregularities that may indicate fraud.
These techniques help quantify the impact of fraud by identifying discrepancies, overpayments, or unaccounted transactions.
* Why Are CAATs Used for Quantifying Fraud?
CAATs can efficiently analyze transactional data, calculate losses, and determine the extent of financial damage caused by fraud.
Examples include using software to detect duplicate payments, inflated invoices, or unauthorized transactions.
* Why Other Options Are Incorrect:
A . Test of controls: Tests of controls evaluate the effectiveness of internal controls but do not quantify the impact of fraud.
C . Data integrity: Ensuring data integrity is important, but it does not specifically address quantifying fraud.
D . Benchmarking: Benchmarking compares performance metrics but does not analyze or quantify fraud.
* Reference and Documents:
GAO Fraud Prevention Framework: Highlights the use of CAATs in forensic accounting.
AICPA Forensic Accounting Guidelines: Recommends CAATs for fraud detection and quantification.
Auditors may limit their public reporting in attestation engagements when the
GAO, Government Auditing Standards (Yellow Book).
AICPA, Attestation Standards and Public Reporting Guidance.
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