CGFM Flashcards
Government Environment
What is the different between “government sovereignty” and “popular sovereignty”?
Government sovereignty - National government cannot be sued by states or citizens without its permission. Accountable to citizens
Popular sovereignty - Citizens hold ultimate authority through the ballot.
What is the implication of “reserved clause” in 10th Amendment to the US Constitution?
Powers not delegated to the national government, nor prohibited to the states, are reserved to the states and the people.
National government can influence lower levels, but cannot dictate how state and local government will operate.
What is the implication of doctrine of separation of powers?
Legislation - Oversight of executive branch operations and programs.
Each branch of government is granted powers that constrain the other two.
The judicial branch can declare that laws passed by the legislature and signed by the chief executive are unconstitutional.
From where do local governments derive their authority to exist?
State statutes and US Constitution.
What is a special-purpose government?
Perform only 1 or 2 functions, such as education, water supply, and environment monitoring.
Created from general-purpose government, local ordinance or ballot initiative.
Give an example of a permanent and a temporary commission.
Permanent: Federal Trade Commission (FTC).
Temporary - National Commission on Terrorist Attacks Upon the US.
What are the characteristic of government corporations?
Formed to conduct fee-based, businesslike functions.
Have fewer regulations and restrictions than general-purpose entities.
Their proliferation can lead to fragmentation in government services.
Over the past decades, what has been the trend in the number of governmental entities?
General-purpose - Held constant.
Special-purpose school districts - Consolidated/ reducing their number.
No-school and special purpose - Significant increase.
What are the distinction between policy and administration, as it applies to government?
Executive - Implements policies and administer programs (resembles an operating unit of a for-profit business where it executes policies that were developed elsewhere).
Legislative - Develops policies that establish and guide programs.
What is the difference between local charters and local ordinances?
Charters - Basic authority by which a local government operates = State’s constitution.
Ordinance - Local laws = State statute/ US code.
What prevents the executive branch from spending whatever it desires on government programs?
Legislative - “Power of the purse.”
Executive - Can only spend what has been authorized and appropriated by the legislative branch.
How does the judicial branch exercise its power vis-a-vis power the legislative and executive branches?
Judicial - Thru review it has power to declare laws/ statutes unconstitutional and intervene in disputes involving the other two branches.
How does tribal councils exercise sovereignty on tribal lands?
Tribal govt: Nation-to-nation relationship with US, not subordinate to states, establish businesses/ public safety mechanisms, adopt/ enforce their own civic codes, license activities/ collect taxes within tribal areas.
Tribal council determines criteria for legal membership/ eject nonmember from tribal lands.
What are responsibilities of tribal council?
Must pay federal income tax (some exemptions apply).
May levy/ collect taxes on activities conducted on tribal (reservation) land (which is exempt from local real estate taxes).
What is object class control?
A state legislature establishes limits on fund that can be spent on salaries, equipment, utilities, supplies and travel.
What is the primary financial control device used in government?
Appropriated budget and a system of budgetary accounting. The budget is a law.
What is the primary reason for establishing a special fund?
To ensure specially-identified (or dedicated) revenues are applied to specific programs (ex: gasoline taxes are for highway repairs).
What are the purposes of the budget process?
Establishes govt priorities (establish goals to guide decision-making within agencies).
Communicates public values/ policies (develop approaches to achieve goals with available resources).
Plan future govt expenditures (make funding adjustments based on past performance)
What are the relationships among appropriations, apportionments, and allotments at national level?
Appropriations are budget law passed by Congress.
OMB apportions budgetary authority to major departments/ components of govt.
Major dept further distributes the budgetary authority within its own organization (“down the chain”) by issuing allotments.
What is reprogramming?
When executive submits a requests to legislative branch for approval to move funds from one appropriation line item to another (usually after operations when added funds are needed/ priorities have shifted).
Reprogramming is sometimes necessary can happen at any phase of the management.
What limits the practice of government borrowing at various levels of government?
National level - Debt limit can only be raised by an act of Congress (occurs frequently). The national borrows for both operational and capital expenses.
State constitutions/ local charters - Limit borrowing to capital improvement projects. Cannot borrow to cover operational expenses.
Usually, a proposed govt debt issue must be put in a referendum (must approved by voters before borrowing can take place). Also, many bond covenants limit future borrowing until debt issue associated with the covenant is paid off.
What office mostly likely to provide preliminary budget targets to executive agencies?
- National - OMB
- State - State Budget Office/ CFO
Legislative Services Agency (LSA) - Advises legislative on fiscal matters, not provide preliminary budget targets.
State Auditing Agency assesses accountability.
The GAO, like OMB but does not provide preliminary budgets targets.
What are the purposes of the reporting process?
Financial mangers endeavor to present operating results according to GAAP.
What are the purposes of the auditing process?
External auditors evaluate whether operating results have been presented according to GAAP.
Why can the use of earmarks be controversial?
It bypass normal budget process, so certain programs/ objectives receive “set aside” funding without “competing” with other programs for scarce public funds.
What are techniques used by Federal Reserve System to achieve monetary policy?
Buying/ selling government bonds.
Altering the reserves amounts that other banks must keep on deposit with Federal Reserves Bank.
Changing interest rate it loans funds to other institutions.
What is the relationship between the strategic plan and the budget?
Strategic - Longer-term (3 - 6 years), should always be integrated with budget plan.
Budget - Shorter-term (1 - 2 years), reflects current plans for achieving long-term goals.
What are the purposes of the planning phase?
The most emphasis between auditing and programming. Some levels occur throughout the year.
What are the purposes of the programming phase?
“Make or Buy” decision when officials link goals/ objectives to resources.
What are types of budget?
Operations
Cash Flow
Capital
What is the purposes of forecasting with regard to the budget?
Determine economic activity and trends, and how they will impact revenue and expenses.
What publication of national government provides an effective guide to internal controls and be applied at all levels of government?
Standards for Internal Control in the Federal Government published by US GAO.
What information support financial accounting?
Information of expenses and intergovernmental transfers. fund levels and disbursements, deposits of earmarked receipts.
Both financial and non-financial information are required to evaluate the achievement of program outcomes.
What report makes financial results easier for general citizen to understand?
Popular report - Annual financial reports that have been summarized and presented in a manner easy for typical citizens to comprehend.
What body defines GAAP for national, state and local?
National - FASAB
State and Loca - GASB
Private sectors - FASB
What different between internal and external reports?
External - Formal and required at end of reporting period. Format/ content is prescribed by GAAP, legislation/ covenants.
Internal - Issued at time and in format useful to management.
Who are required to issue performance report?
GASB recommends state government, but not require to issue one.
OMB provides detailed instructions to all federal agencies for completing the Performance and Accountability report.
What is progressive tax?
US income tax - Tax rate rises with income.
What is tax expenditure?
Exemption, credit/ reduction in tax liability to promote certain desirable activities, such as deduction on home mortgage interest/ energy-efficient windows installation and credit for adoption costs.
What are different types of taxes and which one is the most significant source of revenue for local government?
Property tax - Maine source of revenue for local govt, based on appraisal to determine market value.
Income tax - Respond to changing economic conditions, based on expert assessments, compliance rates are high.
Estate -
Use -
Sales - Consumption
Excise - Consumption
VAT - Consumption
What is project grant?
Discretionary and based on completion and peer review.
Provide funding for narrowly-defined purposes for a limited period of time and amount of expenditures.
What is block grant?
Devolution - Transfer resources to state/ local governments and allow maximum local discretion in how the resources are applied.
What is formula grant?
Program guidelines determine amount to be transferred from grantor to grantee if basis eligibility requirements are satisfied.
Both Categorical and Block are formula grants (many grants support education).
What is a cross-cutting requirement?
One that is broad in nature, such as recipients must comply with environmental impact standards.
What are license fees used for?
To regulate both business and non-business activities. The fees obtained from the program are used to pay for administering the program.
How are donations different from user fees and taxes?
Donations - Voluntary. No privileges on the donor.
Taxes - Involuntary.
User Fees - Convey privileges on the donor.
How are legal debt limits established?
State constitution/ statutes establishes legal debt limits.
When and why does restructuring of debt incur?
Entities issue new debt at lower interest rates to pay off older debt to save money.
The debt program must produce enough funds to complete the project in order to be effective.
What interest to a credit-rating agency?
Details of the bond covenant.
Qualifications/ authority of officials who will manage the debt.
Current debt issues outstanding.
