AGA CGFM Exam Questions

What Is GPRA? The Government Performance and Results Act (GPRA) of 1993 was designed to improve the performance of federal programs by requiring federal agencies to establish goals, measure performance, and report on their progress.

Stated Purposes of GPRA:

Improve Service Delivery (Option A): GPRA helps agencies align performance goals with customer needs, improving service delivery.

Improve Internal Management Practices (Option B): By requiring performance metrics and evaluations, GPRA enhances internal management and decision-making processes.

Improve Program Effectiveness (Option D): GPRA aims to make federal programs more effective by fostering accountability and linking resources to results.

Why Option C Is Incorrect:

GPRA does not provide detailed instructions on program reporting. While it requires agencies to report on their performance, it does not dictate the specific steps or instructions for reporting. Instead, agencies design their own reporting processes within the GPRA framework.

Reference and Documents:

Government Performance and Results Act of 1993: Stipulates the law's objectives but does not mention program reporting instructions.

GAO Report on GPRA Implementation: Highlights GPRA's purpose to improve performance management and accountability without prescribing reporting instructions.

What Is the Current Ratio?

The current ratio measures an entity's ability to cover its short-term liabilities with its short-term assets. The formula is: CurrentRatio=TotalCurrentAssetsTotalCurrentLiabilities\text{Current Ratio} = \frac{\text{Total Current Assets}}{\text{Total Current Liabilities}}CurrentRatio=TotalCurrentLiabilitiesTotalCurrentAssets

Calculation:

Total Current Assets = $1,320

Total Current Liabilities = $810

CurrentRatio=1,320810\text{Current Ratio} = \frac{1,320}{810}CurrentRatio=8101,320 CurrentRatio1.63\text{Current Ratio} 1.63CurrentRatio1.63

Why the Current Ratio Matters:

A current ratio above 1 indicates that the entity has more current assets than current liabilities, suggesting good short-term liquidity.

Why Other Options Are Incorrect:

A . 0.61, B. 0.98, C. 1.14: These values result from incorrect calculations or misinterpretations of the formula.

Reference and Documents:

GAO Financial Analysis Guide: Provides guidance on using the current ratio to assess liquidity.

GASB Financial Reporting Requirements: Highlights the importance of liquidity measures in government financial statements.

Antideficiency Act Overview:

The Antideficiency Act (31 U.S.C. 1341, 1342, 1517) prohibits federal agencies from:

Obligating or expending funds in excess of their appropriations.

Entering into contracts without sufficient appropriated funds.

Violating the Act is a serious matter, and agencies are required to report such violations to Congress and the President.

Explanation of Answer Choices:

A . Federal Managers' Financial Integrity Act: Incorrect. This Act requires agencies to assess internal controls, not monitor appropriations.

B . Federal Financial Management Improvement Act: Incorrect. This Act focuses on improving financial systems, not budgetary compliance.

C . Antideficiency Act: Correct. This Act directly prohibits expenditures beyond appropriations.

D . Sarbanes-Oxley Act: Incorrect. This Act applies to corporate financial reporting, not federal appropriations.

Antideficiency Act (31 U.S.C. 1341, 1342, 1517).

GAO, Principles of Federal Appropriations Law.

What Is Efficient Inventory Management?

Efficient inventory management ensures that an organization has the right amount of inventory at the right time to meet operational needs without overstocking or understocking.

Proper inventory management minimizes disruptions to operations, including work stoppages due to lack of necessary materials or supplies.

Why Is Fewer Instances of Work Stoppage the Correct Answer?

Efficient inventory management ensures that required inventory is available when needed, reducing the risk of work delays or stoppages caused by inventory shortages.

Why Other Options Are Incorrect:

A . A low inventory turnover ratio: A low turnover ratio often indicates overstocking or slow-moving inventory, which is not a sign of efficiency.

B . High write-offs of obsolete inventory: Efficient management reduces obsolete inventory, leading to fewer write-offs, not more.

D . High total asset turnover: While efficient inventory management may contribute to overall asset efficiency, it does not directly result in a high total asset turnover ratio.

Reference and Documents:

GAO Guide on Inventory Management: Emphasizes the role of inventory management in avoiding operational disruptions.

Best Practices for Inventory Management (AGA): Highlights reduced work stoppages as a key benefit of effective inventory control.

Why Select the Lowest Qualified Bidder?

Procurement rules in government require selecting the lowest qualified bidder to ensure fairness, cost-efficiency, and compliance with procurement regulations.

If the mayor's high school classmate's company meets the qualification criteria and provides the lowest bid, there is no conflict of interest unless favoritism or improper influence is proven.

Why Other Options Are Incorrect:

B . Second lowest priced qualified bidder: Selecting the second lowest bidder without justification violates the principle of fairness and cost-efficiency.

C . Third lowest bidder pending state disbarment: This vendor is not a qualified bidder due to pending disbarment.

D . Highest priced qualified bidder with the highest quality products: If quality specifications are already met by lower bidders, selecting the highest-priced bidder is unjustifiable.

Reference and Documents:

Federal Acquisition Regulation (FAR): Requires selecting the lowest qualified bidder.

GAO Guide on Procurement Standards: Emphasizes fairness and cost-effectiveness in vendor selection.