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Answer : B

* 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.

Answer : C

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.

Answer : D

Importance of Prior Audit Findings:

When planning a local government financial statement audit, auditors should first review previous audit findings to identify recurring issues, control weaknesses, or non-compliance areas. This helps auditors focus on areas of higher risk and guides the development of an effective audit strategy.

Explanation of Answer Choices:

A . Government-wide financial statements: Important, but these are reviewed after identifying risk areas from prior findings.

B . Fund financial statements: These are part of the audit process but not the starting point for planning.

C . Reconciliations between fund financial statements: These are analyzed during the audit but come later in the process.

D . Previous audit findings: Correct. Reviewing past findings ensures the auditor addresses previously identified risks and compliance issues.

GAO, Government Auditing Standards (Yellow Book).

AICPA, Audit Planning and Risk Assessment Best Practices.

Answer : B

Federal Credit Reform Act of 1990:

This Act established a new accounting framework for federal credit programs, such as direct loans and loan guarantees. It requires using the net present value (NPV) method to measure the costs of loans and guarantees by discounting future cash flows (e.g., loan repayments, defaults) to their present value.

Explanation of Financial Analytical Technique:

Net Present Value (NPV): Accounts for the time value of money by discounting future cash flows to the present. It provides an accurate measure of the economic cost to the government.

Other options:

A . Future value: Focuses on future cash flows, not their present cost.

C . Current value: Not a recognized technique for analyzing long-term cash flows.

D . Regression analysis: A statistical method, unrelated to calculating loan program costs.

Federal Credit Reform Act of 1990, Section 502.

Congressional Budget Office (CBO), Federal Credit Program Cost Analysis.

Office of Management and Budget (OMB), Circular A-11: Credit Reform Accounting.

Answer : C

Assumptions in Disaster Planning:

Financial continuity planning for natural disasters must account for scenarios where the event occurs suddenly and without warning.

This assumption ensures that governments are prepared to quickly resume critical financial operations even under challenging and unpredictable circumstances.

Explanation of Answer Choices:

A . Leadership and staff will reconvene at an alternate location: While this is part of disaster planning, it is not the primary assumption.

B . A fully redundant infrastructure will be available to staff at an alternate location: This may not always be realistic or feasible.

C . There may be no warning of the potential emergency: Correct. Disaster planning assumes that emergencies can occur without prior notice.

D . Government agencies will need to operate as standalone organizations: This is not a standard assumption in disaster planning.

FEMA, Continuity Guidance Circular.

GAO, Disaster Resilience and Continuity Planning.