CGFM key terms

A system in which power is divided between a national government and state governments, each with its own authority; states retain powers not delegated to the national government, shaping how programs are funded and administered.

The division of government authority among legislative, executive, and judicial branches so that no single branch holds all power; each branch can limit the others through checks and balances.

The process by which a legislature monitors, reviews, and holds the executive branch accountable for how it spends public money, implements laws, and achieves program results, often through hearings, audits, and reports.

The obligation of government officials to answer for the use of public resources and the results of programs, demonstrating that money was spent lawfully, efficiently, and as intended.

Intergovernmental aid given to a recipient government for a narrowly defined purpose or program, with detailed conditions and reporting requirements attached, which limits the recipient's discretion over how funds are used.

Intergovernmental aid provided to a recipient government for a broad functional area, giving the recipient substantial discretion over specific spending decisions within general federal or state requirements.

A legal requirement imposed by a higher level of government on a lower one without providing the money needed to comply, forcing the recipient to fund the cost from its own resources.

A program that pays benefits to anyone who meets eligibility criteria set in law, so spending is driven by the number of eligible recipients rather than by a fixed annual appropriation.

A separate self-balancing set of accounts, with its own assets, liabilities, and fund balance or net position, used to track resources that are restricted to specific purposes or activities.

The fund category used for core government services, comprising the general, special revenue, capital projects, debt service, and permanent funds, reported on a modified accrual basis with a current financial resources focus.

The fund category used for business-like activities, comprising enterprise funds and internal service funds, reported on a full accrual basis with an economic resources measurement focus and reporting of operating results.

Funds that hold resources a government controls as trustee or agent for others, such as pension trust, investment trust, private-purpose trust, and custodial funds, which cannot be used for the government's own programs.

The Governmental Accounting Standards Board, an independent private-sector body that sets generally accepted accounting principles for state and local governments in the United States.

The determination of what is measured in financial statements: either current financial resources available to pay near-term obligations or all economic resources, including capital assets and long-term liabilities.

An accounting basis that recognizes revenues when they become measurable and available to pay current obligations, and expenditures when liabilities are incurred, with certain exceptions such as long-term debt service.

A commitment recorded in governmental funds for goods or services ordered but not yet received, reserving budgetary authority so the government does not over-commit appropriated funds.

The categories that describe how much of a governmental fund's balance is available for spending: nonspendable, restricted, committed, assigned, and unassigned, based on the strength of the constraint.

A legally separate organization whose elected officials are financially accountable to the primary government, or whose exclusion would mislead users, and which is therefore reported as part of the government's reporting entity.

A transaction in which a government gives or receives value without directly exchanging equal value, such as taxes and grants, with recognition timed by the type of transaction and any eligibility requirements.

The complete annual financial report of a state or local government, containing introductory, financial, and statistical sections, presented in conformity with generally accepted accounting principles and often submitted to a national award program.

The required narrative analysis presented before the basic financial statements, in which management explains the government's financial position and results of government-wide and fund activities, comparing current and prior years.

Statements that present, on a full accrual basis, the government's net position and changes in net position as a whole, comprising the statement of net position and the statement of activities.

Statements that report detailed activity for individual major governmental and enterprise funds and for nonmajor funds in aggregate, using the measurement focus and basis of accounting appropriate to each fund type.

Information that accounting standards require to accompany the basic financial statements, such as budgetary comparison schedules and pension or OPEB schedules and trend data, but which lies outside the basic statements themselves.

A schedule required as supplementary information that compares the original and final appropriated budget with actual results and variances, on the government's budgetary basis, demonstrating compliance with the legally adopted budget.

A legal authorization by a legislature that permits the executive branch to incur obligations and spend public money for specified purposes up to a stated amount during a defined period.

A legal or constitutional rule requiring that planned spending not exceed expected revenues for a given fiscal period, or requiring the executive to submit a plan that avoids a deficit.

A budget structured around program results and service levels, linking requested funding to measurable outputs or outcomes rather than to detailed line items of inputs such as salaries and supplies.

The principle that a government should raise enough revenue each period to pay for the services provided in that period, so costs are not passed to future taxpayers without their consent.

The process, involving an entity's people and systems, designed to provide reasonable assurance that operations are effective, reporting is reliable, and applicable laws and regulations are followed.

The GAO's Standards for Internal Control in the Federal Government, which define five components of internal control and are widely used as a framework by federal entities and their auditors.

The internal control component in which management identifies, analyzes, and responds to risks that could prevent the entity from achieving its objectives, including risks of fraud and changes in the operating environment.

A control that divides related tasks such as authorizing, recording, and custody among different people so that no single individual can both commit and conceal an error or fraud.

A deficiency, or combination of deficiencies, in internal control over financial reporting such that a reasonable possibility exists that a material misstatement will not be prevented, or detected and corrected, on a timely basis.

An entity-wide audit of a nonfederal entity that spends a threshold amount of federal awards, covering both the financial statements and compliance with major program requirements, as required by the Single Audit Act.

The Yellow Book standards that set ethical, quality, and performance requirements for audits of government entities and recipients of government funds, issued by the U.S. Government Accountability Office.

An independent, objective activity inside an organization that evaluates risk management, internal controls, and governance, and reports findings and recommendations to management or an oversight body.

A model describing three conditions that together explain occupational fraud: pressure or incentive, opportunity, and rationalization, widely used to design controls and raise fraud awareness.

A governing document that states permitted investments, credit-quality and maturity limits, diversification rules, and reporting requirements for a government's idle or reserve cash.