AGA Updated GFMC Exam Questions and Answers by eleni

Selection Criteria for Contract Awards:

When awarding contracts, federal, state, and local governments typically evaluate contractors based on objective criteria like staff expertise, past performance, and financial position to ensure the contractor can successfully fulfill the contract requirements.

Union affiliationis irrelevant to the contractor’s ability to meet the contractual obligations and is not a valid selection criterion.

Explanation of Answer Choices:

A. Staff expertise: Correctly used to ensure the contractor has qualified personnel.

B. Past performance records: Correctly used to evaluate the contractor’s historical success in fulfilling similar contracts.

C. Union affiliations: Correct. This is not considered a valid selection criterion for contract awards.

D. Financial position: Correctly used to assess the contractor's financial stability.

 What Does the Cash Management Improvement Act (CMIA) Do?

CMIA governs the transfer of federal funds to state governments and ensures timely and efficient use of these funds.

If federal agencies fail to provide funds for entitlements (e.g., Medicaid) in a timely manner, CMIA requires them to payinterestto state governments for the delays.

This ensures states are compensated for any financial burden caused by delayed federal transfers.

 Why Other Options Are Incorrect:

A. Debt Collection Improvement Act:Focuses on improving debt collection practices for the federal government, not entitlements or interest payments to states.

B. CFO Act:Improves federal financial management but does not address payment timeliness or interest.

C. Accountability for Tax Dollars Act:Expands audit requirements but does not involve compensation for delays.

 References and Documents:

CMIA (1990):Requires federal agencies to pay interest on late entitlement payments to states.

Treasury Financial Manual:Details CMIA interest payment provisions.

 Investment Management Basics:

The first step in investment management is establishing theobjectivesof the investment program. This requires consensus among key stakeholders, such as managers, on what the investment goals are (e.g., risk tolerance, return expectations, liquidity needs).

Without clear objectives, subsequent steps like developing policies or selecting investments cannot be effectively carried out.

 Why Consensus Is Important:

Investment objectives must align with the organization’s mission, risk tolerance, and financial goals.

Consensus ensures that all managers are on the same page before developing specific strategies or policies.

 Why Other Options Are Incorrect:

A. Ensure employees understand their investment options:Employee understanding is not the first step; it comes later when the investment strategy is implemented.

C. Develop an investment policy manual:This happens after the objectives have been established.

D. Establish criteria for divesting:Divestment criteria are part of the investment policy and are determined later.

 References and Documents:

GAO Financial Management Guide:Highlights setting objectives as the first step in investment management.

COSO Framework for Investment Risk Management:Stresses the importance of aligning objectives before policy development.

 Capital Asset Transfers Within the Same Government:

When a capital asset is transferred between departments within the same government, the asset’sbook 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.

 References 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.