Under the control environment component of internal control, management should
A. demonstrate a commitment to integrity and ethical values.
B. implement control activities through policies.
C. communicate quality information to achieve the entity's objectives.
D. establish and operate activities to monitor the internal control system.
Which of the following is an example of an internal control weakness?
A. The contract department staff awards contracts and maintains a database for vendor information.
B. Management policy allows project managers to oversee controls of companies in which they have a material interest.
C. The budget department staff is responsible for preparing the budget and for reporting on budget cost variances.
D. The accounting department has one clerk prepare vendor payments and another clerk reconcile bank accounts.
Explanation:
Definition of Internal Control Weakness: Internal control weaknesses occur when
controls fail to prevent or detect errors, fraud, or conflicts of interest. Allowing
project managers to oversee companies in which they have a material interest
introduces a conflict of interest, undermining internal controls.
Entity management's appointment of a senior official to ensure the resolution of audit recommendations is a demonstration of management's
A. agreement with the audit findings.
B. disagreement with the audit findings.
C. delegation of authority.
D. support for the audit process.
When planning for local government financial statement audit, what data source should the auditor consider first?
A. government-wide financial statements
B. fund financial statements
C. reconciliations between fund financial statements
D. previous audit findings
Who holds primary responsibility for establishing internal controls?
A. ccountants
B. internal auditors
C. management
D. audit committee
Management should consider the cost of internal controls in relationship to
A. the available budget.
B. inherent risks.
C. benefits provided.
D. risk of collusion
Explanation:
Why Should Management Consider the Cost of Internal Controls in
Relation to Benefits?
The cost-benefit principle states that the cost of implementing and maintaining
internal controls should not exceed the benefits derived from those controls.
Effective internal controls help mitigate risks, improve efficiency, and ensure
compliance, but their implementation comes with costs (e.g., time, resources,
systems).
Management must evaluate whether the benefits of preventing or detecting
potential issues (e.g., fraud, errors) justify the associated costs.
A performance measurement that is measured the same way over several periods is
A. timely.
B. relevant.
C. reliable.
D. consistent.
What Is Consistency in Performance Measurement?
A consistent performance measure is one that is calculated and reported in the same way
over several periods. Consistency allows for meaningful comparisons and trend analysis,
making it easier to evaluate performance over time.
Why Consistency Is the Correct Answer:
Performance metrics must remain consistent in methodology, definitions, and scope to
ensure the results are comparable across time periods. Without consistency, the reliability
and usefulness of the data are diminished.
Why Other Options Are Incorrect:
Answer: Timely: Timeliness refers to how quickly the information is reported, not whether it
is measured consistently.
Answer: Relevant: Relevance ensures the measure is meaningful to the decision-making
process, but it does not address consistency.
Answer: Reliable: Reliability refers to the accuracy and trustworthiness of the data, not its
consistency over time.
References and Documents:
GAO Performance Measurement Guide: Stresses the importance of consistency in
tracking and reporting metrics over time.
An agency uses pavement rating scores as a key indicator for a street maintenance program. If the legislature provided the agency with an additional $5 million the new resources should be allocated based upon
A. the number of intersections.
B. historical budgeted amounts.
C. lane miles rated as acceptable by the citizens.
D. lane miles with unmet needs.
Explanation:
Understanding Resource Allocation in Street Maintenance: When additional
resources are provided for street maintenance, their allocation should address the
most pressing infrastructure needs to maximize impact and public benefit.
Key Indicator (Pavement Rating Scores): Pavement rating scores are used to
evaluate the condition of roads. Areas with the lowest scores (representing unmet
needs) require prioritized funding to bring the infrastructure to acceptable levels.
How may a city parks and recreation director meaningfully assess the performance of the department's grounds maintenance division?
A. use a single measure of citizen satisfaction with parks and recreation
B. evaluate funds spent on grounds maintenance
C. analyze grounds maintenance staffing levels
D. compare cost per acre maintained to cost per acre maintained in another jurisdiction
Explanation: Why Is This the Best Measure for Performance?
Comparing the cost per acre maintained to that of another jurisdiction provides a
meaningful benchmark for performance evaluation. It allows the director to assess
how efficiently the department is operating relative to similar organizations.
This comparison ensures that the department is managing resources effectively
and identifies potential areas for improvement.
Why Other Options Are Incorrect:
A. Use a single measure of citizen satisfaction: While citizen satisfaction is
important, it is subjective and does not provide insight into operational efficiency.
B. Evaluate funds spent on grounds maintenance: Total spending does not
measure efficiency or productivity; it merely reflects the amount allocated.
C. Analyze staffing levels: Staffing levels do not directly measure performance;
they are only one factor in determining efficiency.
One of the minimum components of a government financial system is
A. automated transaction processing.
B. debt-reduction analysis.
C. performance management reporting.
D. general ledger account definition.
The first step when gathering data for making strategic sourcing decisions is
A. contacting vendors to submit bids under the request for bid process.
B. researching spend data by category for each business unit.
C. contacting business units to find out if there are existing purchasing contracts in place.
D. developing supplier performance measures to add into the purchase agreements.
Explanation: What Is Strategic Sourcing?
Strategic sourcing is a systematic process
aimed at optimizing an organization’s purchasing activities to maximize value and minimize
costs. It involves analyzing spending, selecting suppliers, and negotiating contracts
strategically rather than reactively.
Business process re-engineering typically addresses all of the following EXCEPT the
A. key processes.
B. human environment.
C. organizational mission.
D. technical environment.
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