CGFM common mistakes
CGFM · Understand the traps and how to avoid them.
On governmental fund questions, records a capital asset purchase as an asset and depreciates it in the General Fund, or treats long-term debt proceeds as revenue.
The candidate memorized fund names but did not connect each fund category to its measurement focus and basis of accounting.
What to do instead
Build a matrix of fund type, statement, measurement focus, basis, and typical journal entries; practice converting General Fund transactions to government-wide full-accrual treatment.
Classifies fund balance by the source of the money rather than by the constraint on it, such as calling a formally committed rainy-day reserve 'unassigned' or treating assigned and committed amounts as interchangeable.
The five fund balance classifications look similar, and candidates often skip the questions of who has authority to establish or remove the constraint and whether it is legally enforceable.
What to do instead
Use a fund-balance decision tree: nonspendable first, then restricted, committed, assigned, unassigned; for each, identify the authoritative body, required action, and enforceability.
Recognizes modified-accrual revenue when it is levied or billed even if it is not available, or applies a fixed 60-day rule to every revenue source without checking the government's availability policy.
'Available' is easy to gloss over, and candidates often reduce modified accrual to a memorized time window instead of the measurable-and-available criterion.
What to do instead
For each revenue source, state when it is measurable and when it is available for current-period obligations; practice distinguishing property tax, sales tax, grants, and charges for services.
In a budgetary comparison schedule, reports actual amounts on the GAAP basis and ignores basis, entity, and perspective differences, or assumes every favorable variance is good and every unfavorable variance is bad.
Candidates confuse the budget basis with GAAP and do not separate the reconciliation from variance analysis.
What to do instead
Prepare a three-column reconciliation: original/ final budget, actual on budgetary basis, and actual on GAAP basis; list each basis, entity, and perspective difference and explain variances by cause, not just sign.
Excludes a legally separate organization from the reporting entity because the primary government has no ownership interest, or blends every component unit instead of applying the blending criteria.
Candidates rely on a private-sector consolidation intuition and miss the financial accountability tests used in governmental reporting.
What to do instead
Apply the reporting-entity tests in order: financial accountability, then blending versus discrete presentation; practice voting-majority, benefit-or-burden, and fiscal-dependency examples.
Looks for capital assets and depreciation in governmental fund financial statements, or expects major-fund columns in the government-wide statements.
Candidates memorize statement names without learning each statement's purpose and the reconciliation between fund and government-wide reporting.
What to do instead
For each statement, write its purpose, included columns, measurement focus, and basis; practice the reconciliation from governmental fund balances to net position.
Describes internal control only as 'tone at the top' or lists COSO components without linking them to specific Green Book principles and government transaction examples.
The candidate memorized control labels but not the relationships among components, principles, and evidence of operation.
What to do instead
Map each COSO component and Green Book principle to a concrete government example, such as segregation of duties in cash receipts, IT access review, or management override risk.
Designs or evaluates controls without first identifying objectives, risks, and fraud risks, or treats risk assessment as a one-time annual formality.
Candidates jump directly to control activities because controls are easier to list than risk analysis.
What to do instead
Practice a risk-based sequence: objective, inherent risk, fraud risk, control activity, information and communication, monitoring; update the risk assessment when conditions change.
Cites FASB guidance for a city's pension or lease accounting, or applies FASAB guidance to a state government, because the standards sound similar.
The candidate does not anchor the question in the reporting entity's jurisdiction and authority hierarchy.
What to do instead
Use a jurisdiction tree: state and local governments follow GASB; federal entities follow FASAB; nongovernmental entities follow FASB; then check the specific standard and effective date.
Answers a question about legality, appropriation, or ethics with a generic 'best practice' response, such as assuming a manager may redirect earmarked funds because it is operationally efficient.
Candidates import private-sector management logic and overlook the source of legal authority, restrictions, and public-sector accountability.
What to do instead
For each scenario, identify the source of authority first-constitution, statute, ordinance, appropriation, grant term, or ethics rule-then evaluate whether the action is authorized before judging efficiency.