GFMC Exam Dumps - Examination 3: Governmental Financial Management and Control (GFMC)

ï‚· 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.

ï‚· 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.

ï‚· 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.

ï‚· 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.

ï‚· Why Shared Services Agreements Are Cost-Effective:

A shared services agreement allows multiple school districts to pool resources and share the costs of special education services, such as specialized staff, transportation, or facilities.

This reduces duplication of services, increases efficiency, and helps lower costs without reducing the quality of education provided.

ï‚· Why Federal Maintenance of Effort (MOE) Requirements Matter:

Under federal law, schools must maintain a certain level of funding for special education services to receive federal grants. Cutting budgets or shifting costs directly to parents would likely violate MOE requirements.

ï‚· Why Other Options Are Incorrect:

A. Shift a portion of the costs in the form of a fee to parents:This violates federal regulations, as public schools cannot charge parents for special education services.

B. Decrease budget allocation for special education services:This would also violate MOE requirements and reduce services for students with special needs.

D. Outsource special needs services to a private contractor:While outsourcing can be an option, it may not always reduce costs and could introduce additional risks (e.g., quality concerns or compliance issues).

ï‚· References and Documents:

Individuals with Disabilities Education Act (IDEA):Mandates federal MOE requirements for special education funding.

GAO Report on Shared Services in Education:Highlights cost-saving benefits of shared services agreements.

ï‚· What Is Earned Value Management (EVM)?

EVMis a project management methodology that integrates scope, cost, and schedule to measure project performance. It provides a comprehensive view of progress by combining information about deliverables (work completed), funds (budget spent), and time (schedule adherence).

ï‚· Why Is EVM Preferred Over Traditional Project Management?

EVM offers a holistic view of project performance by quantifying progress and comparing it to planned performance, allowing for proactive decision-making.

Traditional project management often focuses on individual aspects (e.g., timelines or budgets) without integrating them as effectively as EVM.

ï‚· Why Other Options Are Incorrect:

A. EVM monitors smaller projects:EVM is not restricted to small projects; it is widely used for complex, large-scale projects.

C. Traditional project management is used for larger projects:This is incorrect—both methodologies can be used for projects of any size.

D. Traditional project management provides status on deliverables, funds, and time:This is inaccurate; traditional methods often lack the integrated performance tracking provided by EVM.

ï‚· References and Documents:

GAO Guide to Project Management:Recommends EVM for comprehensive performance tracking.

PMBOK (Project Management Body of Knowledge):Details the advantages of EVM over traditional project management.

ï‚· What Do Generally Accepted Auditing Standards (GAAS) Require for Financial Audits?

GAAS outlines specific requirements for auditors conducting financial audits, including:

Adequately Planning the Work (Option A):Proper planning ensures that audits are efficient and thorough.

Obtaining Sufficient, Appropriate Audit Evidence (Option C):This is critical to support the auditor’s opinion on the financial statements.

Supervising Assistants (Option D):Supervising any audit staff ensures that work is performed in accordance with standards.

ï‚· What Does GAAS Not Require?

GAAS does not specifically require auditors to make the audit report available to the public (Option B). While making reports available to the public may be required by other laws, regulations, or organizational policies, it is not a standard requirement under GAAS. The decision to make the report public often lies with the audited entity or governing bodies.

ï‚· References and Documents:

AICPA Statements on Auditing Standards (SAS):The foundational standards that define GAAS requirements.

GAGAS (Yellow Book):While GAGAS may have additional reporting requirements, it does not mandate public access to the audit report unless stipulated by law.