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AGA GFMC Exam Questions
- Topic 1: Financial Management Functions: This section of the exam measures the competencies of public sector finance officers and treasury analysts in managing financial operations in government environments. It covers essential areas such as cash flow practices, investment strategy, debt recovery, and procurement processes. Candidates are expected to understand property and inventory systems, evaluate IT-based financial systems, and apply emerging technologies. Shared services and project management principles are also included as foundational knowledge areas.
- Topic 2: Financial and Managerial Analysis Techniques: This section of the exam measures the skills of budget analysts and financial managers in using quantitative tools and data to assess financial decisions. It includes techniques like trend and ratio analysis, forecasting, regression, and data analytics. It also tests understanding of data sources, reliability, and how forensic auditing can be used for deeper insight into financial activities.
- Topic 3: Internal Control: This section of the exam measures the capabilities of compliance officers and internal auditors in implementing and evaluating internal control systems. It includes knowledge of COSO frameworks, OMB standards, and audit procedures aimed at fraud prevention and legal compliance. Candidates must understand roles and responsibilities related to internal control, risk assessment, reporting mechanisms, and enterprise risk management frameworks.
- Topic 4: Performance Measurement/Metrics/Service Efforts and Accomplishments: This section of the exam measures the ability of program managers and strategic planners to align performance indicators with organizational outcomes. It covers the integration of financial and non-financial metrics with strategic goals, the importance of transparency and accountability, and how performance data informs budgetary decisions. Candidates must understand stakeholder engagement, baseline setting, legal compliance, and benchmark creation.
- Topic 5: Auditing: This section of the exam measures the auditing knowledge of financial controllers and government auditors. It focuses on audit standards, types of audits, the audit process, and the responsibilities of both auditors and auditees. Key topics include audit preparation, follow-up, independence, materiality, and the scope of the Single Audit Act. Candidates are also expected to be familiar with fieldwork, reporting, and confidentiality concerns relevant to public sector audits.
Free AGA GFMC Exam Actual Questions
Note: Premium Questions for GFMC were last updated On Jul. 23, 2025 (see below)
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 local government is reviewing the performance of a contractor that is collecting trash for the county. Performance can be measured based upon the cost
Why Measure Performance Based on Cost per Ton of Trash Collected?
Cost per ton of trash collected is a direct, objective, and quantifiable measure of the contractor's performance. It reflects how efficiently the contractor is operating relative to the amount of trash being managed.
This measure aligns with the principle of output-based performance evaluation, which focuses on results (e.g., tons of trash collected) rather than inputs or unrelated factors.
Why Other Options Are Incorrect:
A . Per mile traveled: Mileage is not directly tied to performance; it depends on the route structure and geography, not the quantity of trash collected.
C . Comparison with closest comparable jurisdiction: While this may provide context, it is not a specific performance measure.
D . Per employee: Employee count does not directly measure performance or efficiency in trash collection operations.
Reference and Documents:
GAO Guide on Contract Performance Evaluation: Recommends using measurable and outcome-based metrics like cost per ton collected for performance reviews.
Best Practices in Local Government Contracting (AGA): Highlights output-based measures for evaluating contractor performance.
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?
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.
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.
A single audit report will include an opinion or disclaimer of opinion that the financial statements are
Single Audit Report Requirements:
A single audit evaluates the financial statements and compliance with federal award requirements.
The financial statement opinion must state whether the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP).
Explanation of Answer Choices:
A . Free from fraud: Incorrect. Auditors do not provide an opinion on fraud; they assess for material misstatements.
B . Fairly presented in accordance with GAAP: Correct. The financial statement opinion is issued based on compliance with GAAP.
C . Fairly presented in accordance with GASB: Incorrect. GASB (Governmental Accounting Standards Board) provides guidance for state and local governments, but financial statements must comply with GAAP as the overarching standard.
D . Fairly presented in accordance with GAO: Incorrect. The GAO (Government Accountability Office) issues auditing standards, not financial reporting standards.
OMB Uniform Guidance (2 CFR Part 200), Subpart F - Audit Requirements.
GAO, Government Auditing Standards (Yellow Book).
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