What is the GAFRB (Examination 2) certification exam?

The GAFRB is the second examination in the AGA's Certified Government Financial Manager (CGFM) program. It focuses on governmental accounting principles, financial reporting standards, and budgeting processes specific to the public sector.

What topics are covered on the GAFRB exam?

The exam covers governmental accounting and financial reporting standards, including GASB standards, fund accounting, financial statement preparation, and budgeting concepts. It also includes revenue recognition, expenditure accounting, and internal controls in governmental entities.

How long is the GAFRB exam and what is the passing score?

The GAFRB exam is typically a 3-hour computer-based test consisting of multiple-choice questions. Candidates must achieve a minimum score of 70% to pass the examination.

What is required to be eligible to sit for the GAFRB exam?

There are no formal prerequisites to take the GAFRB as a standalone exam. However, to earn the full CGFM credential, you must pass all three exams (Exam 1, 2, and 3) and meet specific work experience requirements in governmental accounting or financial management.

How should I prepare for the GAFRB exam?

AGA offers official study materials, including review courses, study guides, and practice exams specifically designed for the GAFRB. Many candidates also review current GASB standards, government accounting textbooks, and participate in AGA study groups or webinars to prepare.

Free AGA GAFRB Exam Questions

Q1 MultipleChoice

A federal entity would record a payment of a payable in which of the following journal entries?

ADebit Undelivered Order-Obligations, Unpaid
Credit Delivered Orders-Obligations, Paid Debit Accounts Payable
Credit Fund Balance with Treasury

BDebit Unapportioned Authorities
Credit Delivered Orders-Obligations, Paid Debit Accounts Payable
Credit Fund Balance with Treasury

CDebit Commitments
Credit Delivered Orders-Obligations, Unpaid Debit Accounts Payable
Credit Fund Balance with Treasury

DDebit Delivered Orders-Obligations. Unpaid
Credit Delivered Orders-Obligations, Paid Debit Accounts Payable
Credit Fund Balance with Treasury
When a federal entity pays off a payable:
Budgetary accounting moves the status of the obligation from unpaid to paid
Proprietary accounting reduces the payable and cash (Fund Balance with Treasury)
The correct journal entry is:
Budgetary:
Debit Delivered Orders -- Obligations, Unpaid
Credit Delivered Orders -- Obligations, Paid
Proprietary:
Debit Accounts Payable
Credit Fund Balance with Treasury
This reflects the transition from an unpaid liability to a disbursed payment, complying with federal financial reporting.
Relevant Reference:
Treasury Financial Manual (TFM) Vol. I, Part 2, Chapter 4700
FASAB SFFAS No. 1 and No. 7 -- Accounting for Liabilities and Budgetary Resources
USSGL (U.S. Standard General Ledger) -- Posting Logic for Obligation Transactions
Answer : D. Debit Delivered Orders -- Obligations, Unpaid; Credit Delivered Orders --
Obligations, Paid; Debit Accounts Payable; Credit Fund Balance with Treasury

Correct Answer: D

Q2 MultipleChoice

When an accounting principle established by GASB conflicts with an accounting principle established by FASB. the preparer of financial statements for a local government should observe

Athe principle established by GASB.

Bthe principle established by FASB.

Ceither the principle established by GASB or FASB, without additional disclosure.

Deither the principle established by GASB or FASB, with additional disclosure required if the FASB principle is observed.
For state and local governments, GASB (Governmental Accounting Standards Board) is the authoritative standard-setting body. If a GASB principle exists, it must be followed, even if a FASB (Financial Accounting Standards Board) principle suggests a different approach.
FASB guidance may only be used in the absence of applicable GASB guidance --- and even then, only when it does not conflict with governmental accounting objectives.
Relevant Reference:
GASB Statement No. 76 -- The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments
GASB Concepts Statements
GAO and GFOA Reporting Manuals
Answer : A. the principle established by GASB

Correct Answer: A

Q3 MultipleChoice

An agency's Fund Balance with Treasury is increased by which of the following events?

Areceipt of a Treasury warrant

Brescission of an appropriation

Ca recovery of prior year obligations

Dcollection of custodial revenue
Fund Balance with Treasury (FBWT) increases when an agency receives a Treasury warrant. A warrant is the official document issued by the U.S. Treasury that provides budgetary authority to the agency and establishes funds available for obligation and disbursement.
Other options:
Rescission of appropriation decreases FBWT
Recovery of prior-year obligations may restore budgetary authority, but not necessarily FBWT
Custodial revenue collected on behalf of others; not retained by the collecting agency
Relevant Reference:
Treasury Financial Manual (TFM), Volume I, Part 2, Chapter 5100
FASAB SFFAS No. 1 -- Fund Balance with Treasury
USSGL Guidance on Fund Balance Transactions
Answer : A. receipt of a Treasury warrant

Correct Answer: A

Q4 MultipleChoice

According to GAAP, all of the following should be addressed in the MD&A EXCEPT

Aa discussion of the basic financial statements.

Ban overall analysis.

Ccomputation of legal debt margins.

Dcondensed comparative data.
Management's Discussion and Analysis (MD&A) is a required part of Required Supplementary Information (RSI) under GASB standards. It includes:
An overview and analysis of financial activities
Condensed comparative financial data
A discussion of the basic financial statements
An explanation of significant changes from the prior year
However, computation of legal debt margins is not required in the MD&A. This type of information is typically included in the statistical section of the ACFR (Annual Comprehensive Financial Report), not in MD&A.
Relevant Reference:
GASB Statement No. 34 -- Basic Financial Statements and Management's Discussion and Analysis
GASB Codification Section 2200 -- MD&A Requirements
GFOA ACFR Checklist
Answer : C. computation of legal debt margins

Correct Answer: C

Q5 MultipleChoice

An idle facility cost is an allowable expense to charge to federal grants when a

Afluctuation in workload is reasonably expected.

Bfacility will sit idle for over one year.

Cfacility cannot be used while it is being repaired.

Dfacility is not currently needed by the agency.
Comprehensive Detailed
Under 2 CFR 200.446 of the OMB Uniform Guidance, idle facilities (or idle capacity) costs are generally unallowable. However, exceptions exist. One allowable condition is when the idleness results from fluctuations in workload that are considered normal for the type of operation.
Other allowable cases include those due to reorganization, restraint, or repair/maintenance needs --- but only within reasonable limits and duration.
Relevant Reference:
2 CFR 200.446 -- Idle Facilities and Idle Capacity
OMB Uniform Guidance (2 CFR Part 200) -- Cost Principles
GAO Red Book -- Allowable Grant Expenditures
Answer : A. fluctuation in workload is reasonably expected

Correct Answer: A

GAFRB Exam Questions & Answers

Sample GAFRB Questions

Frequently Asked Questions

Pass GAFRB First Time