Certified Government Financial
Manager (CGFM)
Governmental Environment
Study Guide
2016 Edition
Larita J. Killian, Ed.D., CGFM, CPA

Governmental Environment Study Guide
2016 Edition
Disclosures
The views expressed in this book are those of the authors and not of their
employer.
Copyright © 2016 by the Association of Government Accountants, 2208 Mount
Vernon Avenue, Alexandria, VA 22301. All rights reserved. Printed in the United
States of America. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any way by any means ñ electronic,
mechanical, photocopying, recording or otherwise ñ without prior written
permission of the publisher.
This publication is proprietary to the Association of Government Accountants
(AGA) and is protected by federal copyright law. This publication may not be
copied in whole or in part by any person, including any AGA chapter, nor may
any portion of this publication be incorporated into another work, or any work
created that is derivative of this publication, without the express written
permission of AGA. Federal law imposes severe civil and criminal penalties for
infringement, including fines of up to $250,000 per violation and imprisonment for
a period of up to five years. No copyright is claimed to material that, by virtue of
having been created by a governmental entity, is in the public domain.

Governmental Environment Study Guide
2016 Edition
Acknowledgements
AGA thanks Indiana University ñ Purdue University at Columbus for supporting
Dr. Killian in her work on this publication.
AGA wishes to acknowledge the following people for their valuable suggestions,
comments and/or contribution to this study guide (original and revised editions):
Richard Arns, MBA, CGFM, CDFM-A
WA ìBillî Broadus Jr., CGFM, CPA
Jonathan Breul, MPA
Sefton Boyars, CGFM, CPA
Virginia S. Brizendine, CGFM, CPA
Julie V. Bryant, MBA, CGFM, CPA
Raymond H. Harris, CGFM-Retired
John Herko, MBA, CGFM, CPA (Retired)
Charles Hester, CGFM, CPA, CFE, CFIP
Mitch Laine, CGFM, CPA
Stephanie Mango, CGFM
J. Dexter Peach, CGFM, CPA
Lela Dale Pumphrey, CGFM
Ronell B. Raaum, CGFM-Retired, CGAP
Virginia B. Robinson, CGFM, CPA, DABFA
Pete Rose, CGFM
Helena Sims, MA
Harold I. Steinberg, CGFM, CPA
Leon Young, MA

Governmental Environment Study Guide
2016 Edition
About this publication
This study guide has many purposes:
ï
It is a self-study guide for those interested in studying on their own for
Certified Government Financial Manager (CGFM) examination 1:
Governmental Environment.
ï
It serves as the training material used in AGAís CGFM course 1,
Governmental Environment.
ï
It offers a wealth of knowledge and learning for todayís government
financial managers, whether or not they are studying for the CGFM
examination.
If you have any feedback on the study guide, please email AGA at
studyguides@agacgfm.org.
For more information on the CGFM program, please visit the CGFM pages of the
AGA website at www.agacgfm.org/cgfm.
Notes for CGFM candidates:
AGA CGFM study guides and courses are separate from CGFM examinations
and are based on the publicly available examination content outlines.
The AGA study guides are not intended to offer answers to individual
examination questions, but instead provide a general review of the topics
covered in the examination content outlines that dictate the content of the CGFM
examinations. While many CGFM candidates find the study guides to be
sufficient preparation for the CGFM examinations, some may need to go beyond
the study guides and review additional materials. There are reference materials
listed at the end of each study guide and the list of study references on AGAís
website (www.agacgfm.org/cgfm/prepare) provides additional resourcesóthese
publications were used as references by examination question writers.
Whatever preparation method is used, AGA recommends that CGFM candidates
start by reviewing the examinations' content outlines, as well as the list of
acronyms and sample examination questions found on
www.agacgfm.org/cgfm/exams. Candidates can also purchase online practice
exams on this site. The reinforcement quiz questions and end-of-course review
questions found in each study guide are not designed to serve as sample CGFM
examination questions, but as a self-assessment tool to help in the study
preparation.

SECTION I
Governmental Environment
This study guide will help you prepare for a successful career in government
financial management. It also provides a critical foundation for the Certified
Government Financial Manager (CGFM) Examinations sponsored by the
Association of Government Accountants (AGA). Use this guide to improve your
knowledge, and then demonstrate your competency and commitment through
AGAís certification program.1
This guide has seven major topics. Section I reviews the organization and
structure of government. You will learn about the different levels and branches of
government, and the authorities and responsibilities of each....








































































































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