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GAFRB AGA Examination 2: Governmental Accounting, Financial Reporting and Budgeting

  • AGA
  • 4 free sample questions

About this exam

GAFRB is the AGA exam AGA Examination 2: Governmental Accounting, Financial Reporting and Budgeting. Paid practice material for this exam is not available yet, but you can try its free sample questions.

Exam code
GAFRB
Vendor
AGA
Practice questions
Not available yet
Free sample questions
4
Question bank last updated
Not available yet

Try 2 sample questions

Taken from the free sample set for GAFRB.

Question 1

The purpose for establishing a custodial fund is to 

  1. Option A:
    Account for assets held in a trustee capacity.
  2. Option B:
    accumulate resources for payment of debt.
  3. Option C:
    track financial resources to be used for acquisition of capital facilities.
  4. Option D:
    provide services to the public on a fee basis.
Show answer and explanation

Correct answer: A

A custodial fund is a type of fiduciary fund used by state and local governments to report assets held temporarily in a purely custodial capacity—for example, taxes collected by one government on behalf of another. These funds do not involve administrative or financial control over the assets; the  government is merely acting as an intermediary. As per GASB Statement No. 84, custodial funds replace agency funds and are used to report fiduciary activities that are not held in a trust agreement and where the government does not have discretion over how the resources are spent. Relevant Standards and Reference: GASB Statement No. 84, Fiduciary Activities GASB Codification Section 1300: Fiduciary Funds GFOA Best Practices – Accounting and Financial Reporting for Fiduciary Activities Therefore, Option A is correct.

Question 2

What role do the U.S. Department of the Treasury, GAO and OMB have in the standard-setting activities of FASAB?

  1. Option A:
     They are all non-voting advisory board members of FASAB.
  2. Option B:
    They are all members with authority to veto any standard approved by FASAB.
  3. Option C:
    They are all members whose agencies may be exempt from FASAB standards.
  4. Option D:
    They are all sponsors and voting members of FASAB.
Show answer and explanation

Correct answer: D

The Federal Accounting Standards Advisory Board (FASAB) was established in 1990 by the U.S. Department of the Treasury, the Office of Management and Budget (OMB), and the Government Accountability Office (GAO). These three entities are collectively known as the “sponsors” of FASAB. Each has a representative who serves as a voting member of the board. FASAB is responsible for establishing GAAP for federal entities. The sponsor organizations appoint board members and have authority over standard-setting governance, but do not individually veto standards. Final standards are issued only after due process, including public comment and sponsor approval. FASAB Memorandum of Understanding (MOU) Among Treasury, OMB, and GAO (as amended): “These three agencies are the sponsors of FASAB and each appoints one voting member to the Board.” FASAB Governance Manual (2023 Edition), Section 2: Identifies Treasury, OMB, and GAO as sponsors and voting members. AGA’s “CGFM Study Guide 2,” Chapter 2: Highlights the role of sponsors in the standard-setting process. Therefore, Option D is correct. 
See all 4 free sample questions