GFMC Exam Questions & Answers

Control Environment Component:

The control environment is the foundation of an internal control system, setting the tone at the top.

Demonstrating integrity and ethical values is the first principle of the control environment, as outlined in the COSO Internal Control Framework.

Explanation of Answer Choices:

A . Demonstrate a commitment to integrity and ethical values: Correct. This is a foundational principle of the control environment.

B . Implement control activities through policies: This relates to the 'Control Activities' component, not the control environment.

C . Communicate quality information to achieve the entity's objectives: This relates to the 'Information and Communication' component.

D . Establish and operate activities to monitor the internal control system: This relates to the 'Monitoring Activities' component.

COSO, Internal Control - Integrated Framework.

GAO, Standards for Internal Control in the Federal Government (Green Book).

Business Process Re-Engineering (BPR):

BPR focuses on redesigning key processes to achieve dramatic improvements in efficiency, effectiveness, and performance.

It typically involves addressing technical systems, human factors, and process workflows, but it does not involve redefining the organization's mission, which is a strategic activity outside the scope of BPR.

Explanation of Answer Choices:

A . Key processes: Incorrect. Key processes are the primary focus of BPR.

B . Human environment: Incorrect. BPR often addresses human factors, such as roles and responsibilities.

C . Organizational mission: Correct. The mission is a strategic element and not typically redefined as part of process re-engineering.

D . Technical environment: Incorrect. BPR often involves rethinking technical systems and workflows.

Hammer & Champy, Reengineering the Corporation: A Manifesto for Business Revolution.

GAO, Business Process Re-Engineering for Government Efficiency.

Federal Entities and Internal Controls:

Federal entities assess internal controls to ensure efficient, effective, and economical use of resources while achieving program objectives.

Internal control assessments often identify areas for improvement, such as reducing waste or increasing operational efficiency.

Explanation of Answer Choices:

GAO, Standards for Internal Control in the Federal Government (Green Book).

Office of Management and Budget (OMB), Circular A-123, Internal Control Systems.

Why Include Permissible and Non-Permissible Investment Securities?

An investment policy outlines the guidelines and restrictions for managing an entity's investments, ensuring compliance with laws and protecting public funds.

Listing permissible (e.g., government bonds, treasury securities) and non-permissible investments ensures clarity about what the entity can and cannot invest in, helping to mitigate risk and maintain fiduciary responsibility.

Why Other Options Are Incorrect:

A . Prices and performance of investment securities: This information is important for monitoring investments but does not belong in the policy itself.

C . Historical allocations of investment securities: Historical data informs decision-making but is not relevant to the rules governing investments.

D . Key and non-key investment security controls: While controls are critical, they are part of the implementation process, not the investment policy.

Reference and Documents:

GAO Investment Policy Guidelines: Recommends specifying permissible investments to ensure fiduciary responsibility.

GFOA Best Practices in Investment Management: Emphasizes clear investment guidelines in the policy.

Why Measure Performance Based on Cost per Ton of Trash Collected?

Cost per ton of trash collected is a direct, objective, and quantifiable measure of the contractor's performance. It reflects how efficiently the contractor is operating relative to the amount of trash being managed.

This measure aligns with the principle of output-based performance evaluation, which focuses on results (e.g., tons of trash collected) rather than inputs or unrelated factors.

Why Other Options Are Incorrect:

A . Per mile traveled: Mileage is not directly tied to performance; it depends on the route structure and geography, not the quantity of trash collected.

C . Comparison with closest comparable jurisdiction: While this may provide context, it is not a specific performance measure.

D . Per employee: Employee count does not directly measure performance or efficiency in trash collection operations.

Reference and Documents:

GAO Guide on Contract Performance Evaluation: Recommends using measurable and outcome-based metrics like cost per ton collected for performance reviews.

Best Practices in Local Government Contracting (AGA): Highlights output-based measures for evaluating contractor performance.