Section 3, Section 3 - Federal Financial Accounting And Reporting Foundations

Question 1

What does the Financial Managers Financial Integrity Act of 1982 require?

Answer 1

• agencies to establish and maintain effective internal control and financial management systems in compliance with government wide requirements

Question 2

What are the internal control requirements that resulted from the Financial Managers Financial Integrity Act of 1982?

Answer 2

Controls over:
- the effectiveness and efficiency of operations
- the reliability of financial reporting
- compliance with applicable laws and regulations

Question 3

What does the Financial Management Improvement Act (FFMIA) of 1996 require?

Answer 3

• Requires the head of each agency to provide annual assurance statements to the president and Congress, on the basis of testing and evaluations
• Corrective action plans are required for any material weaknesses identified

Question 4

What does the OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, contain?

Answer 4

• It contains guidance for implementing the FMFIA and for integrating these efforts with broader enterprise risk management requirements
• detailed guidance is found in appendices to the OMB circular. Example: appendix a focuses on management of reporting and data integrity risk

Question 5

What did Congress find in 1990 that led to change?

Answer 5

• fraud, waste, abuse, and mismanagement is widespread and costly
• Improved central coordination of internal controls, and financial accounting can produce these costs by providing complete, consistent, reliable, and timely information

Question 6

What is the purpose of the CFO act?

Answer 6

• Bring more effective general and financial management practices to the federal government through statutory provisions, which would establish a deputy Director for management in an office of federal financial management, headed by a controller in OMB and designate CFO in each executive department, and each major executive agency within the government
• Provide for more improvement systems of accounting, financial management, and internal controls to ensure the issuance of reliable, financial information and term fraud waste, and abuse of government resources
• provide for the production of complete, reliable, and timely and consistent financial information for the use of the executive branch of the government and Congress, in the financing, management and evaluation of federal programs

Question 7

What does the CFO act require?

Answer 7

• the enactment of the management functions by OMB
• giving OMB duties
• The appointment of CFO’s in at least 24 largest agencies
• The preparation and submission of audited financial statements that reflected the overall financial position, results of operations, cash flows and changes in financial position of specified entities, including departments and agencies
• Annual independent financial statements and/or agencies

Question 8

The CFO act required OMB to report to Congress, three years after enactment, on the benefits and costs of audited financial statements. What did the audits reveal?

Answer 8

• revolving funds which were intended to be self-supporting, were losing millions of dollars a year
• billions of dollars of taxes, recorded, as when collectible, were either not valid receivables, or were not likely to be collected
• Trust funds, expected, sufficient resources, would run out of funds considerably earlier than projected
• The initial cost of audits but dropped significantly after the first year

Question 9

What did GAO GAO’s Comptroller General state about financial audits?

Answer 9

• improved cost and performance information for use in making key decisions
• Identified in efficiencies and highlighted gaps and safeguards over assets
• uncovered actual and potential savings of hundreds of millions of dollars through the recovery of funds due to the government and more efficient uses of funds

Question 10

What did GAO GAO’s Comptroller General recommend as a result of audits?

Answer 10

• The CFO act provisions be made permanent
• expand beyond the initial covered activities
• audited government wide financial reports to be issued

Question 11

What does the Government Management Reform Act of 1994 require?

Answer 11

• The head of each department and large agencies covered by the CFO act to prepare and submit an agency wide audited financial statement to OMB by March 1 for the proceeding fiscal year (this expanded the limited requirements for audited financial statements in the CFO and accelerated the required due date)
• requires the secretary of treasury to prepare consolidated financial statement for the US government must submit it to the presidential Congress by March 31
• Requires that the comptroller general of the US audit this consolidated financial statement

Question 12

What does the Government Management Reform Act of 1994 authorize?

Answer 12

Authorizes agencies to combine, on a pilot basis, all of the legislatively required financial management reports into a single accountability report

Question 13

What is the purpose of the Federal Financial Management Improvement Act of 1996?

Answer 13

• provide for consistency of accounting by an agency from one fiscal year to the next uniform accounting standards throughout the federal government
• federal financial management systems to support full disclosure of federal financial data, including the full cost of the federal programs and activities to citizens; Congress; the president and agency management; so programs and activities can be considered based on their cost and merits
• Increase accountability, incredibility of federal financial management
  -Improve performance, productivity and efficiency of the federal government financial management
• establish financial management systems to support controlling the cost of federal government
• build upon and contemplate the CFO act of 1990, the GPRA of 1993 and GMRA of 1994
• Increase the capacity of agencies to monitor the execution of the budget by more readily permitting reports that compare spending of resources to results of activities

Question 14

What did the Federal Financial Management Improvement Act of 1996 require?

Answer 14

Each other departments and large agencies covered by the CFO act to
- conformant to applicable accounting standards
- meet federal financial system requirements
- Use the US standard general ledger at the transaction level

Question 15

What did the Federal Financial Management Improvement Act of 1996 require of auditors?

Answer 15

Federal auditors were directed to report on compliance with act

Not complaint, entities were required to develop plans for future compliance

Question 16

In January 2000, congress provided permanent authority for the accountability reports permitted on a pilot basis by the government management reform act. What did congress find?

Answer 16

• existing law imposes numerous financial and performance management reporting requirements on agencies
• these separate requirements can cause a duplication of effort on the part of agencies and result in uncoordinated reports containing information in a form that is not completely useful to congress
• Pilot project conducted by agencies under the direction of the OMB demonstrates single consolidated reports, providing an analysis of verifiable financial and performance management information, produce more useful reports with greater efficiency

Question 17

What is the purpose of the Reports Consolidation Act of 2000?

Answer 17

• To authorize and encourage the consolidation of financial and performance management reports
• to provide a financial and performance management information, and a more meaningful and useful format for congress, the president, and the public
• To improve the quality of agency financial and performance management information
• to enhance coordination and efficiency on the part of agencies in reporting financial and performance management information

Question 18

What can agencies issue instead of publishing separate Accountability Reports and Annual Performance Reports (APR), as required by the government performance and results act?

Answer 18

Performance and accountability report (PAR)

Question 19

OMB conducted a pilot in which agencies were permitted to produce an alternative to the PAR for FY 2007 and 2008. What three separate reports did the pilot require to be issued?

Answer 19

1. An agency financial report (AFR) to be issued by November 15 following the fiscal year end
2. An annual performance report (APR) with detailed performance information to be submitted with the congressional budget justification (CBJ) the first week in February
3. A summary of performance and financial information (SPFI) (previously the citizens report) summarizing the AR and APR in a brief, user-friendly format, to be posted on the agencies website in February

Question 20

OMB conducted a pilot in which agencies were permitted to produce an alternative to the PAR for FY 2007 and 2008. What were the goals of the pilot?

Answer 20

• To allow agencies to explore different formats to enhance the presentation of financial and performance information
• make this information, more meaningful and transparent to the public
• Allow Congress, stakeholders, and the public to make informed decisions about agencies performance

Question 21

OMB conducted a pilot in which agencies were permitted to produce an alternative to the PAR for FY 2007 and 2008. What did OMB identify from the pilot?

Answer 21

• including the APR, along with the annual performance plan, in the CBJ allowed agencies to discuss future, programmatic resources directed at improving performance more fully
• a SPFI increase the focus on the public as a stakeholder in program outcomes, providing an easy to read summarization of agencies, performance, and financial information
• Some agencies achieve enhanced presentation of financial and performance information in the consolidated PAR. For example, PAR, facilitates, integration of financial and non-financial information.

Question 22

Since fiscal year 2009, what reports have agencies been permitted to produce?

Answer 22

Either a consolidated PAR or a separate AFR and APR

Question 23

What did the Accountability of Tax Dollars Act of 2002 require?

Answer 23

• it extended the requirement to produce annual audited, financial statements to all executive branch entities
• Provided waiver authority to OMB (OMB may exempt executive branch entities with budget authority available for the fiscal year of less than $25 million. Before granting the waiver, the Director must determined that requiring an annual audited, financial statement is not warranted due to the absence of risks, associated with agency operations, agency demonstrated performance, and other factors, the director considered relevant)

Question 24

What did the Improper Payments Elimination and Recovery Act of 2010 require?

Answer 24

This act provided requirements relating to prevention, recovery, and reporting on improper payments

Question 25

What provisions did the Improper Payments Elimination and Recovery Act of 2010 include?

Answer 25

• Agency annual risk assessments. A measurement of improper payments in that program if the program is found to be susceptible to significant improper payments.
• Types of programs required to conduct payment recovery audits were expanded from contracts to all types of programs and activities, including grants, benefits, loans, contract payments. The threshold for program and activities must conduct these reviews if cost-effective was lowered from 500,000,000 to 1,000,000 annual outlays
• Agency heads are authorized to use, recovered funds for additional uses, then currently allowed, including to improve their financial management, support OIG
• There are no repercussions if an agency does not reduce improper payments, or implement the existing law. IPERA List actions that an agency must take to be in compliance with a lot and agency IG is responsible for determining whether the agency isn’t compliance. It contains a series of actions that agency must take to improve its error reduction efforts
• A study of the CFO act

Question 26

The CFO council and the council of inspector general on integrity and efficiency were required to jointly exam. The lessons learned during the first 20 years of implementing the CFO act. The resulting report was to identify reforms and improvements that would optimize the federal efforts to do what?

Answer 26

• published, relevant, timely, and reliable reports on government finances
• Implement internal controls that mitigate the risk of fraud, waste, and error and government programs

Question 27

What two recommendations were made as a result of the study on the CFO act?

Answer 27

1. Congress should consider enhancing the role of the CFO by standardizing the CFO portfolio to include leadership responsibility for budget formulation and execution, planning and performance, risk management and internal controls, financial systems, accounting. To provide continuity during the sometimes lengthy. Between appointments of agency CFOs, should also consider providing deputy CFO’s with the same breath of responsibility as the respective CFO
2. Congress should consider directing OMB, GAO, and FASAB with CIGIE, to evolve the financial reporting model by examining the entire process with an eye toward how to further improve and streamline current reporting requirements, and to better meet the needs of all stakeholders holders

Question 28

What did the improper payments and elimination and recovery improvement act of 2012 do? IPERIA

Answer 28

• enacted to further enhance improper payments requirements and give agencies additional tools to address improper payments
• Improved IPIA requiring OMB to provide an annual list of high priority federal programs for greater oversight, and review by agency inspector generals
• Established do not pay initiative

Question 29

What does the do not pay initiative require?

Answer 29

Federal agencies to determine the program and award eligibility prior to the release of funds and includes a thorough review of available databases to assist in determining eligibility

Question 30

In May 2014, Public Law 113-101, Digital Accountability and Transparency Act of 2014 was signed into law to do what?

Answer 30

• To establish government wide financial data standards, and increase the availability, accuracy, and usefulness of the federal spending information
• expand the federal funding accountability and transparency act of 2006 (FFATA)

Question 31

Why was the federal funding accountability and transparency act up 2006 initially established?

Answer 31

• Established the requirement for a government spending website to be maintained by the US treasury
• The website was intended to make federal spending data, more accessible, searchable, and reliable to make it easier to understand how the federal government spend tax tax per dollars, and to provide a tool for better oversight, data centric decision making and innovation

Question 32

How often do agencies provide spending data updates to the treasury for posting on USA spending.gov?

Answer 32

Quarterly

Question 33

How can agencies review data on US spending.gov?

Answer 33

By agency, budget function, and object class and review data and a variety of formats. For example, users can select the award search option, allowing them to query data for a specific timeframe and/or place and reviewing information at the contract level. Users can also query contract recipient, such as a university or private sector contractor. Users can also download data in a variety of formats for individual analysis or review.

Question 34

On May 8, 2015, OMB issued a memorandum (M-15-12) Increasing Transparency of Federal Spending by Making Federal Spending Dara Accessible, Searchable, and Reliable to do what?

Answer 34

Provides DATA act implementation requirements and identifies agencies. Ongoing reporting responsibilities for USA spending.gov.

Question 35

What did the DATA act called for OMB to implement?

Answer 35

A pilot program that offers recommendations to eliminate unnecessary duplication in financial reporting, and reduce compliance costs for recipients of federal awards

OMB in partnership with HHS, the chief acquisition officers counsel and GSA implemented the pilot to focus on standardized grants data elements , in the context of the grants, lifecycle and associated recipient business processes. In conjunction with the pilot, recent work was done to expand grants.gov to allow click and access to a full range of grant related resources. another area of work related to the pilot was on online repository of approved data elements of which there are more than 400 currently listed

Question 36

What is the DATA Act Information Model Schema (DAIMS)?

Answer 36

The authoritative source for the terms, definitions, formats, and structures for hundreds of distinct data elements that tell the story of how federal dollars are spent

It gives federal agencies guidance about what data to report to treasury, where to get that data, and how to submit it

Question 37

What is the Modernizing Government Technology (MGT) Act of 2007?

Answer 37

• A key component of continued efforts to improve federal technology by providing financial resources and technical expertise to agencies
• allows agencies to invest in modern technology solutions to improve service delivery to the public, secure sensitive systems and data, and save taxpayer dollars

Question 38

What does OMB memorandum M-18-12 do?

Answer 38

• Provides implementation guidance for the MGT act
• Set for administration, objectives and necessary. Actions agencies should take in order to implement the MGT act.

Question 39

How was the MGT act enacted?

Answer 39

As part of the FY 2018 NDAA on December 12, 2017

Question 40

What are the two primary provisions of the MGT act?

Answer 40

It has two primary provisions the address agency IT modernization needs:
1. The establishment of centralized technology modernization fund (TMF) and technology modernization board
2. The authorization for all CFO agencies to establish IT working capital funds.

Question 41

What guidance does the OMB memorandum M-18-12 provide?

Answer 41

Provide guidance to all agencies regarding the necessary planning for upcoming TMF activities, including the initial process for submitting project proposals to the board; additional guidance for CFO act agencies regarding the administration and funding of IT working funds; and where to find additional information on topics such as disbursement and repayment process for the TMF funds

Question 42

How much appropriations does MGT act authorize?

Answer 42

The act authorizes up to 250 million in appropriations for the TMF for each of the fiscal years 2018 and 2019

In fiscal year 2021, $1 billion was appropriated to the TMF through the American rescue plan

Question 43

Where legally possible what can the TMF fund be used for?

Answer 43

Used to accelerate monetization efforts already ongoing going

Under the MGT act, all CFO act agencies are authorized to use a working capital fund for services and capability development that include improving, retiring, or replacing existing IT systems to enhance cyber security of existing systems, and to improve efficiency and effectiveness of the life of a given workload. Agencies are also authorized to transition legacy systems to a cloud computing environment in addition to other related services

Question 44

Why was the FASAB developed?

Answer 44

• Developed the applicable accounting principles for the newly required financial statements
• To provide a cooperative means for each of the three agencies (treasury, OMB, GAO) to meet its responsibilities, FASAB was created as an advisory board

Question 45

Who created the FASAB and when?

Answer 45

• Created in 1990
• the treasury, Director of OMB, and comptroller general of the United States, signed a memorandum of understanding establishing FASAB

Question 46

Where does FASAB derive its authorities?

Answer 46

From its sponsors, while the sponsors retain both the actual authority and the responsibility for establishing accounting standards

Question 47

The sponsors meet their responsibilities by requiring any concepts or standards developed by FASAB to be submitted to them for a 90 day review. During this review, if OMB or GAO objects to the concept or standard, what happens?

Answer 47

FASAB is not permitted to issue the concept or standard

Question 48

Since advisory boards cannot direct agencies to act on their recommendations, who establishes the advisory board that must direct the agencies?

Answer 48

The agencies

For example, OMB instructs agencies to ensure the information in the financial statements is presented in accordance with GAAP

Question 49

What is the mission of the FASAB?

Answer 49

To develop accounting standards, after considering the financial and budgetary information needs of congressional oversight, groups, executive agencies, and the need of other users of federal financial information

Other users include citizens, analysts, journalists

Question 50

What are accounting and financial reporting standards essential for?

Answer 50

• Public Accountability
• And efficient and effective functioning of our democratic system of government

Thus, federal accounting standards, and financial reporting play a major role in fulfilling the government duty to be publicly accountable

Question 51

What can financial reports be used to do?

Answer 51

1. Assess the government accountability and its efficiency and effectiveness
2. Contribute to the understanding of the economic, political, and social consequences of the allocation and various uses of federal resources.

Question 52

What should accounting standards do?

Answer 52

• result in the federal government and its agencies, providing users of financial reports with understandable, relevant, and reliable information about the financial position, activities, and results of the operations of the United States government and its components
• foster the improvement of accounting systems and effective internal controls that will help provide reasonable assurance that governmental activities can be conducted, economically, efficiently, and effectively and in compliance with the applicable laws and regulations

Question 53

Who provides funding for FASAB’s budget?

Answer 53

Each sponsoring agency (treasury, OMB, GAO)

Question 54

Who is responsible for FASAB administrative matters?

Answer 54

The boards steering committee, comprising, the FASAB chairperson, and the board members from treasury, OMB, and GAO

Question 55

Bodies designated by the AICPA to promulgate GAAP must be established criteria. A 1999 task force of the AICPA reviewed the boards, policies and procedures to assess their performance with these criteria. What is the criteria?

Answer 55

• Independence
• Due process and standards
• Domain and authority
• Human and financial resources
• Comprehensiveness and consistency

Question 56

What did treasury, OMB, GAO make changes in procedures to better conform to independence criteria?

Answer 56

• adoption of a veto period rather than affirmative independence of FASAB recommendations (prior to this, anyone of the board sponsors could prevent a standard from taking affect by simply not authorizing it a pocket veto)

All the other requirements for an actual detail, attention would be focused on the sponsors rejection of the standard develop through due process. Following this and other changes, the AICPA council designated ASAP as the body that promulgates GAAP for a federal government and it entities in October 1999

Question 57

Prior to June 30 of 2002, what was the original composition of the FASAB board?

Answer 57

• three members from FASAB sponsors
• The Congressional Budget Office
• defense/international agency
• A civilian agency
• three non-federal numbers, selected from general financial community, the accounting and auditing community, and academia

Question 58

What was the make up of the FASAB board after June 30, 2002?

Answer 58

• three members from FASAB sponsors
• 6 non-federal members were selected from the general financial community, the accounting and auditing community, and academia

This Enhanced independence

Question 59

What was the make up of the FASAB board after October 1, 2003?

Answer 59

• Federal members from the treasury, OMB, GAO, and CBO
• six non-federal members selected from the general financial community, the accounting and auditing community, and academia

This balanced legislative and executive branch membership

Question 60

What happened to the FAFAB in 2009? What was the make up of the board after October 1, 2009?

Answer 60

CBO withdraw from the board

• Federal members from OMB, treasury, and GAO
• 6 federal members selected from the general financial community, the accounting and auditing community, and academia

Question 61

In January 2002, treasury, OMB, NGO agreed that affected June 30, 2002, the composition of the board which each from six federal and three non-federal members to three federal and six non-federal members. How was this accomplished?

Answer 61

By restricting of federal membership to the sponsoring agencies— treasury, OMB, GAO

Question 62

In mid 2003, why was the CBO provided membership on the FASAB board?

Answer 62

Congress was concerned about the balance of representation between the executive and legislative branches

CBO provided a funding for the boards operations

Question 63

In order to ensure continued involvement in the federal financial management community, what did the FASAB board begin doing?

Answer 63

1. Holding agenda hearings to obtain input on its project. Priorities.
2. Posting it pre-materials on its website to increase access to it deliberations
3. Taking additional steps at the staff level to gain input.

Question 64

What was the result of the 2010 review of FASAB?

Answer 64

• permanent recognition FASAB as a standard setting body condition upon certain improvements in the FASAB governance process

Question 65

What improvements was FASAB required to make after 2010?

Answer 65

The improvements were intended to:
- allow AICPA and the professional, to monitor FSB performance with the criteria members to report on influence and identify opportunities for improved performance,
- require greater involvement of the panel and monitoring governance and performance
- Produce an annual report

Question 66

What does the annual report do?

Answer 66

• presents and solicit comments on FASAB three year plan

The three airplane provides constituents with an opportunity of input on the FASAB agenda decisions

Question 67

What does FASAB act to do?

Answer 67

• determine the primary users of federal financial information and their needs
• develop the accounting standards, and principles that improve the usefulness of financial reports, based on the needs of users, and on the primary characteristics of understandability, relevance, and reliability
• Provide advice to central financial management agencies on implementing standards
• Improve the common understanding of information contained in financial reports
• develop standards and principles that take into account expected benefits, and perceived costs
• Review the effects of current standards and develop amendments or new standards when appropriate
• Use thoughtful, open, neutral, and fair deliberative process and considered the accountability and decision making needs of users
• the rules of procedures designed to remit timely, thorough and open study of financial accounting and reporting issues, and to encourage broad publication in all phases of accounting standard setting process
• be objective and neutral, and as much as possible that the information resulting from the standards is a peaceful representation of the effects of federal government activities

Question 68

What does objective and neutral mean?

Answer 68

Free from bias precluding, the FASAB placing any particular interest above the interest of many rely on the information contained in the financial reports

Question 69

FASAB board is subject to the federal advisory committee act and follow rules of procedures meet requirements of the act. The board to follow an open process for considering accounting standards, which includes what of the following steps?

Answer 69

1. Identification of accounting issues, and agenda decisions.
2. Preliminary deliberations.
3. Preparation of initial documents. (issues, papers, and/or discussion memorandums)
4. Release of documents (exposure draft) to the public, public hearings when necessary and consideration of comments
5. Further deliberation,, and consideration of comments.
6. Approval by at least 2/3 majority affirmative vote
7. Submission of proposed statement to the principles for 90 day review (45 days for interpretations)
8. Publication of the final statement or interpretation.

Question 70

As I jump into the deliberation process, the board appoint task forces as necessary to advise on a variety of accounting matters. What role do task forces play?

Answer 70

They provide an expert view and recommend solutions to issues or problems

Question 71

OGAAP standard setters all follow a similar to process procedure. what is the difference for FASAB?

Answer 71

Immediately before any concept or standard, is issued, an advisory board reviews all concepts or standards by FASAB sponsors prior to issuance

Question 72

What is the federal accounting standards advisory board?

Answer 72

The body designed by AICPA as a source of generally accepted accounting and procedures (GAAP) for federal reporting entities

Question 73

Who is responsible for identifying the GAAP hierarchy of federal reporting entities?

Answer 73

FASAB is responsible for identifying the GAAP hierarchy for federal reporting entities

Question 74

What does the GAAP hierarchy consist of?

Answer 74

The sources of accounting principles and the framework for selecting the principles used in the preparation of general purpose, financial reports

Historically the GAAP hierarchy was provided in AICPA statement on auditing standards (SAS) no 91 federal GAAP hierarchy rather than in the authoritative literature of the FASAB. Because it is responsible for establishing GAAP, the FASA now guides prepares facing matters not explicitly addressed in a standard, and in resolving matters where sources of accounting guidance differ.

Question 75

What four categories does FASAB believe users of financial information about the federal government can be classified?

Answer 75

1. Citizens.
2. Congress.
3. Executives
4. Program managers

Question 76

What do citizens consist of?

Answer 76

Individual citizens, including non-taxpayers, voters or service recipients

Includes the general news, media and more specialized users, such as trade journals, public interest and other advocacy groups, state, and local government, legislators and executives, and analyst from corporations, academia and elsewhere

Question 77

What is Congress consist of?

Answer 77

• Elected members of Congress and their staff
• congressional Budget Office
• Government accountability office

Question 78

What do executives consist of?

Answer 78

The president and those acting as is agent (i.e. program agency and their deputy and assistant agency heads; heads of agency, bureaus, administrators, services, agencies; central agency officials in OMB, and in the treasury

Question 79

What do you program managers consist of?

Answer 79

Individuals who manage government programs and are concerned about the operating plans, program operations, and budget execution

Question 80

Where does FASAB address federal financial reporting objectives?

Answer 80

And it’s first concepts, statement: federal financial reporting objectives, chapter 4

Question 81

What is included in SFFAC one chapter 4: objectives of federal financial reporting

Answer 81

105. The federal government drives its just powers from the consent of governed. A special responsibility to report, its actions and results of those actions. The reports must accurately reflected nature of federal government, and provide information. Useful to the people, they elected representatives and federal executives. Providing this information to the public, news, media, and elected officials is essential to government accountability. Providing this information to program, managers, executives and members of Congress is essential for planning, and the governments, functions, economically, efficiently, and effectively for the benefit of society.
     106 - financial reporting is not the only source of information to support decision-making and accountability. Financial reporting by itself cannot ensure that the government operates as they should but I can’t be useful contributing to those objectives
     110 - current evidential users of federal financial information to help them assess while the government is doing but answering questions

Question 82

What questions to current and potential users of federal financial information want to know? What are the four topics?

Answer 82

1. Budget integrity: what legal authority was provided for financing government activities and spending money? Or the financing and spending in accordance with these authorities? How much was left?
2. Operating performance: how much do various programs cost and were they financed? What outputs/outcomes were achieved? What and where are the important assets and how effectively are the managed? What liabilities arose from operating the program and how are the provided for?
3. stewardship: did the governments, financial improve or deteriorate? What provisions were made for the future.?
4. Systems and control: does the government have cost-effective systems and controls to safeguard its assets? Is it able to detect likely problems? Is it correcting deficiencies when detected?

Question 83

What is the objective of budgetary integrity?

Answer 83

Federal financial reporting should assist in fulfilling the governments duty to be publicly accountable for monies raised through taxes, and other means, and for their expenditure in accordance with the appropriation laws that establish the government budget for a particular fiscal year and related laws and regulations

Question 84

Where does the budgetary integrity objective arise from?

Answer 84

• The responsibility of the representative governments to be accountable, for the monies that are raised in spent, and for compliance with law
• The requirement in article 1, section 9 of the constitution that “ no money shall be drawn from the treasury, but in consequence of the preparations made by law and a regular statement and account of the recipients and expenditures of all public money, should be published from time to time”

Question 85

What does the budget area? Integrity objective focus on?

Answer 85

• The budget of the United States government
• The president’s annual budget submission to Congress (which is the government principal financial report)
• laws enacting budget authority for a given fiscal year

Question 86

What is the initial frame of reference within which Congress in the president and act the laws that require the payment of taxes, and provide the authority to obligate and spend money?

Answer 86

The budget of the United States government

Question 87

federal financial reporting information should help the reader determine what?

Answer 87

1. How budgetary resources have been obtained, and used and whether their acquisition and use or accordance with the legal authorization.
2. The status of budgetary resources.
3. How information on the use of budgetary resources relates to information on the cost of program operations, and whether information on the status of budgetary resources is consistent with other accounting information on assets and liabilities.

Question 88

What are some examples of information that might help meet the objective of how budgetary resource have been obtained, and used and whether their acquisition and use or in accordance with the legal authorization?

Answer 88

• Government receipts and offsetting collections reported in total and by composition
• Obligations according to the nature of services or items procured
• Information about the extent of compliance with the budget and laws, and whether money was expended as intended by the federal government and it’s grantees
• Valid data on budgetary Authority, obligations and outlays program, and for all appropriation and fund accounts (summarized appropriately to the intended audience)

Question 89

What are some examples of information that can help me the objective of the status of budgetary resources?

Answer 89

• information about the sufficiency of budget authority for covering commitments and the status of obligated and unobligated balances of budgetary resources
• assurance that funds authorized for a given purpose were actually spent for that purpose

Question 90

How did the sub objective arise: how information on the use of budgetary resources relates to information on the costs of program operations, and whether information on the status of budgetary resources, is consistent with other accounting information, information on assets and liabilities

Answer 90

It arises from the fact that accrual basis measures of the cost of government programs, functions, and activities may differ from the amounts used in the budget for a variety of valid reasons

Question 91

What is the primary objective of operating performance?

Answer 91

Federal financial reporting should assist report users in evaluating the service efforts, costs and accomplishments of the reporting entity; the manner in which these efforts and accomplishments have been financed; and the management of the entity’s assets and liabilities

Question 92

What does the objective arise from?

Answer 92

arises from a democratic government’s duty to be accountable to its citizens for managing resources and providing services economically and efficiently and for effectiveness in attaining planned goals. Also, the government should be accountable for raising resources efficiently.

Because government services are not usually provided in exchange for voluntary payments or fees, expenses cannot be matched against revenue to measure “earnings” or “net income” as would be done in business accounting. Moreover, directly measuring the value added to society’s welfare by government actions is difficult. Nonetheless, expenses can be matched against the provision of services year by year. The resulting cost can then be analyzed in relationship to a variety of measures of the achievement of results.

Question 93

What federal financial information information should be provided to better help understand operating performance?

Answer 93

1. The costs of providing specific programs and activities and the composition of, and changes in, these costs.
2. The efforts and accomplishments associated with federal programs and the changes over time and in relation to costs
3. The efficiency and effectiveness of the government’s management of its assets and liabilities

Question 94

What are some examples of the sub objective: costs of providing specific programs and activities and the composition of, and changes in, these costs.

Answer 94

• information on the costs of programs and activities;
• cost comparisons with estimates, with similar functions, with targets and over time; and
• relevant analyses of the composition and behavior of costs, such as full and incremental costs, fixed and variable costs, direct and indirect costs, and reimbursable and other costs, where appropriate

Question 95

What are some examples of the sub objective: The efforts and accomplishments associated with federal programs and the changes over time and in relation to costs

Answer 95

financial and nonfinancial indicators of service inputs, outputs and outcomes, including comparisons with goals;
• indicators of program efficiency and effectiveness;
• work load measures and unit costs; and
• total and marginal costs and benefits, the relationship of these to budget requests, and when the benefits will be realized

Question 96

What concerns implied by the sub objective efficiency and effectiveness of the government’s management of its assets and liabilities

Answer 96

implies concern with the management of all federal assets and liabilities used by or under the control of agencies. Users of financial reports focus on the use of these resources in program operations, not solely on their financial value. Reports intended to address this objective would provide information to help users assess the efficiency and effectiveness with which
• cash is used;
• loan, loan guarantee and other receivables programs are conducted;
• inventories of supplies, materials and similar items are maintained; and
• forfeited and other tangible assets are handled.

Question 97

What are some examples of the sub objective: efficiency and effectiveness of the government’s management of its assets and liabilities

Answer 97

• the service life and replacement cost of major systems and equipment;
• backlogs (and budgetary impact) of delayed maintenance, rehabilitation cost or replacement value of assets;
• the market value of forfeited and other assets, particularly those held for sale;
• the extent of unpaid expenses; and
• estimates (and ranges of estimates) of other known liabilities (such as leases or deposit and other insurance liabilities) and other exposures to loss.

Question 98

What is the primary objective of stewardship?

Answer 98

Federal financial reporting should assist report users in assessing the impact on the country of the government’s operations and investments for the period and how, as a result, the government’s and the nation’s financial condition has changed and may change in the future

Question 99

What is stewardship based on?

Answer 99

federal government’s responsibility for the general welfare of the nation in perpetuity.

It focuses not on the provision of specific services but on the requirement that the government report the broad outcomes of its actions.

Question 100

What are the sub objectives of stewardship?

Answer 100

• Whether the government’s financial position improved or deteriorated over the period
• Whether future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due.
• Whether government operations have contributed to the nation’s current and future well-being

Question 101

What is some information relevant to the sub objective: Whether the government’s financial position improved or deteriorated over the period

Answer 101

• the amount of assets, liabilities and net assets (or net position);
• an analysis of government debt, its growth and debt service requirements;
• changes in the amount and service potential of capital assets; and
• the amount of contingent liabilities and unrecognized obligations (such as the probable cost of deposit insurance)

Question 102

Why is assessing whether the governments financial position has improved or deteriorated over the period important?

Answer 102

• because it has financial implications
• also because it has social and political implications.

This is because analysis of why financial position improved or deteriorated helps to explain whether current-year taxpayers passed on financial burdens to future-year taxpayers without related benefits. The latter notion is sometimes referred to as “interperiod equity.”

Viewed in this broader context, providing information to meet objective 3 and its subobjectives will help to satisfy the needs expressed by financial report users. It will also help to explain the issuance of new debt in relation to expenditures for activities with current benefits versus expenditures for investment-type activities that yield future benefits.

Question 103

Why is information about the results of past government operations useful?

Answer 103

It’s useful in assessing the stewardship exercised by the government. Users of financial reports also want help in assessing the likelihood that the government will continue to provide the current level of benefits and services to constituent groups, such as farmers, retirees and the poor

Question 104

What is information relative to the objective of: future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due.

Answer 104

Information relevant to this objective may include disclosures of financial risks that are likely or reasonably possible from sources such as government-sponsored enterprises, deposit insurance and disaster relief programs. It could also include information, such as:
• the long-term financial implications of the budgetary process,
• the status of trust funds, and
• backlogs of deferred maintenance.

Providing information of this kind may require the use of reporting mechanisms other than traditional financial statements. For example, special reports may have to be developed to demonstrate whether the level of a particular year’s maintenance and rehabilitation expenditures resulted in an improvement or a deterioration of capital assets and infrastructure.

Question 105

What does the sub objective: Whether government operations have contributed to the nation’s current and future imply a concern with?

Answer 105

imply a concern with “financial condition,” as well as “financial position.”

Financial condition is a broader and more forward-looking concept than that of financial position.

Indicators of financial position, measured on an accrual basis, are the starting point for reporting on financial condition but must be supplemented in a variety of ways. For example, subobjective 3B might imply reporting, among other things, a current law budget projection under a range of alternative assumptions. Reports intended to achieve subobjective 3C might disclose, among other things, the contribution that the government is making to national wealth by financing assets that are not federally owned, such as research and development, education and training, and state-owned infrastructure. Information on trends in total national wealth and income is also important.

Question 106

What does reporting on financial condition condition require?

Answer 106

requires financial and nonfinancial information about the national economy and society, as well as about the government itself. For example, reports intended to help meet this objective might address users’ needs for information about:
• investments in (or expenditures for) research and development, military readiness and education;
• changes in the service potential of infrastructure assets;
• spending for consumption relative to investments;
• opportunities for growth-stimulating activities; and
• the likelihood of future inflation.

Question 107

What is the primary objective of systems and control?

Answer 107

. Federal financial reporting should assist report users in understanding whether financial management systems and internal accounting and administrative controls are adequate to ensure that:
• transactions are executed in accordance with budgetary and financial laws and other requirements, consistent with the purposes authorized, and are recorded in accordance with federal accounting standards;
• assets are properly safeguarded to deter fraud, waste and abuse; and
• performance measurement information is adequately supported.

Question 108

What does the objective systems and control arise from?

Answer 108

arises from the three preceding objectives, in conjunction with the fact that accounting supports both effective management and control of organizations and the process of reporting useful information. Indeed, accounting processes are an integral part of the management control system.

Answer 109

148. The ability to prepare financial reports that report all transactions, classified in appropriate ways that faithfully represent the underlying events, is itself an indication that certain essential controls are in place and operating effectively. The preparation of reliable financial reports also helps to ensure that reporting entities have early warning systems to indicate potential problems and take actions to correct material weaknesses or problems.

Question 110

Why are sound controls over internal processes essential?

Answer 110

are essential both to safeguard assets and to ensure economy, efficiency and effectiveness in many governmental programs.

Question 111

What does information relative to the objective of systems and control help financial report users do?

Answer 111

determine whether the entity has established reasonable, cost-effective programs to safeguard assets, prevent and detect waste and abuse, and reduce error rates.

Question 112

What is an example of information that would address the objective systems and control?

Answer 112

management’s assertion about the effectiveness of the internal accounting and operational control system.