Free AGA CGFM Practice Exams - Page 3 of 6

Question #21

The first step in investment management is to

A . ensure all employees understand their investment options.
B . develop a consensus among managers of the investment objectives.
C . develop an investment policy manual.
D . establish criteria for divesting.

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Question #21

The first step in investment management is to

A . ensure all employees understand their investment options.
B . develop a consensus among managers of the investment objectives.
C . develop an investment policy manual.
D . establish criteria for divesting.

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Question #23

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

A . pressure.
B . opportunity.
C . rationalization.
D . detection.

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Question #23

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

A . pressure.
B . opportunity.
C . rationalization.
D . detection.

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Question #25

Which of the following acts requires federal agencies to pay interest to state government funds for entitlements that are not provided in a timely manner?

A . Debt Collection Improvement Act
B . CFO Act
C . Accountability for Tax Dollars Act
D . Cash Management Improvement Act

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Question #26

What type of analygis should a finance director use to determine if there will be enough funds available to cover bills

due within the next 30 days?

A . quick/current ratio
B . receivables turnover ratio
C . budgetary cushion ratio
D . debt burden ratio

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Question #27

The goal of shared gervices is to

A . reduce current staffing levels.
B . transfer responsibilities to another entity.
C . efficiently aggregate resources.
D . provide private business opportunities.

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Question #28

In the context of audit risk, which type of risk is primarily influenced by the effectiveness of an organization’s internal controls?

A . inherent risk
B . control risk
C . detection risk
D . audit risk

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Question #29

Based on the data below, what can be concluded about outsourcing print job?

A . It is better to keep the printing in-house.
B . Outsourcing printing is feasible.
C . Outsourcing printing is necessary.
D . ABC Printing should be awarded the outsourcing contract.

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Correct Answer: B
B

Explanation:

Understanding the Scenario:

The table compares the costs of four printing jobs performed by an "Internal Print Shop" versus three

external vendors (Ace Printing, ABC Printing, and Printing, Inc.). Each vendor’s pricing varies by print

job type. The task is to evaluate whether outsourcing (hiring external vendors) is a reasonable

alternative to keeping the work in-house.

Key Considerations in Outsourcing:

According to governmental accounting principles and budgeting practices outlined by the Association of Government Accountants (AGA), the decision to outsource should consider: Cost-effectiveness: Does outsourcing reduce costs without compromising quality or service delivery?

Operational efficiency: Can outsourcing free up internal resources for other priorities?

Comparative pricing: How do external vendor rates compare to internal costs for identical services?

Analysis of the Print Jobs:

Let’s break down the cost comparison for each print job:

Zone Map:

Internal cost = $4.23.

Cheapest vendor = Printing, Inc., at $4.00.

Outsourcing is cheaper for this job.

Agenda Packet:

Internal cost = $23.18.

Cheapest vendor = Printing, Inc., at $22.00.

Outsourcing is cheaper for this job.

Budget Cover:

Internal cost = $840.00.

Cheapest vendor = ABC Printing, at $624.30.

Outsourcing is significantly cheaper for this job.

Employee Benefit Brochure:

Internal cost = $6.14.

Cheapest vendor = ABC Printing, at $4.90.

Outsourcing is cheaper for this job.

Conclusion Based on Analysis:

Across all four print jobs, the lowest-cost external vendor always beats the Internal Print Shop’s costs.

From a budgetary perspective, outsourcing is feasible as it offers cost savings across all jobs.

Why Not A, C, or D?:

Option A (Keep printing in-house): Incorrect, as in-house costs are consistently higher than the cheapest external vendor.

Option C (Outsourcing is necessary): Incorrect, as feasibility doesn’t mean necessity; internal printing is still an option if other factors (like quality or control) outweigh costs.

Option D (Award contract to ABC Printing): Incorrect, since the best vendor depends on the job (e.g., Printing, Inc. is cheaper for Zone Map and Agenda Packet).

Reference: Association of Government Accountants (AGA), Government Financial Manager Certification Study Guide: Budgeting, Cost Accounting, and Auditing Principles.

Government Finance Officers Association (GFOA), Best Practices in Outsourcing and Procurement. Federal Accounting Standards Advisory Board (FASAB), Cost Accounting Standards for Governmental Operations.

Question #30

Simplified acquisition processes assist an agency by

A . maintaining the competitive bid requirement and allowing credit card purchases.
B . providing access to bulk purchase discounts and reducing administrative costs.
C . increasing the number of requisitions processed.
D . reducing acquisition staff and managerial oversight.

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