Selection Criteria for Contract Awards:

When awarding contracts, federal, state, and local governments typically evaluate contractors based on objective criteria like staff expertise, past performance, and financial position to ensure the contractor can successfully fulfill the contract requirements.

Union affiliation is irrelevant to the contractor's ability to meet the contractual obligations and is not a valid selection criterion.

Explanation of Answer Choices:

A . Staff expertise: Correctly used to ensure the contractor has qualified personnel.

B . Past performance records: Correctly used to evaluate the contractor's historical success in fulfilling similar contracts.

C . Union affiliations: Correct. This is not considered a valid selection criterion for contract awards.

D . Financial position: Correctly used to assess the contractor's financial stability.

Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation.

Office of Management and Budget (OMB) Circular A-102, Grant and Contract Management Requirements.

What Is the Cash Management Improvement Act (CMIA)?

CMIA requires states and federal agencies to minimize the time between when federal funds are drawn (transferred to the state) and when those funds are spent (final disposition).

The goal is to reduce idle funds, ensure efficient use of federal funds, and reduce interest liabilities for both parties.

Key Objective:

By minimizing the time between fund transfers and usage, the act ensures that federal funds are used promptly for their intended purposes, preventing excess cash from sitting idle in state accounts.

Why Other Options Are Incorrect:

A . States to pay invoices within 30 days: This is unrelated to CMIA; it is part of general payment practices.

C . Federal agencies to take discounts: This relates to payment terms, not the timing of fund transfers.

D . Federal agencies to disburse payments via EFT: While electronic funds transfers are a common practice, CMIA focuses on minimizing idle funds, not payment methods.

Reference and Documents:

Cash Management Improvement Act (1990): Mandates reducing the time between fund transfer and usage.

Treasury Financial Manual: Provides specific guidelines for implementing CMIA.

Management's Role in Resolving Audit Recommendations:

By appointing a senior official to oversee the resolution of audit recommendations, management demonstrates its commitment and support for the audit process.

This action indicates a proactive approach to addressing findings and improving operations.

Explanation of Answer Choices:

A . Agreement with the audit findings: While this may indicate agreement, appointing a senior official is more about ensuring action is taken rather than expressing agreement.

B . Disagreement with the audit findings: Incorrect. Appointing a senior official is a constructive step, not an indication of disagreement.

C . Delegation of authority: Incorrect. Delegation is involved, but the key point is the demonstration of management's support for addressing audit findings.

D . Support for the audit process: Correct. This action underscores management's commitment to resolving audit findings and improving accountability.

GAO, Standards for Internal Control in the Federal Government (Green Book).

OMB Circular A-50, Audit Follow-Up.

What Is Internal Control Evaluation?

Internal control evaluation is the process of assessing an organization's internal controls to ensure they are adequate and effective in mitigating risks, ensuring compliance, and achieving objectives.

Why Is Identifying Potential Risks the First Step?

The entire purpose of internal controls is to mitigate risks. Therefore, before evaluating the controls, you need to identify the risks they are meant to address.

Once risks are identified, the organization can evaluate whether the existing controls are adequate and effective in mitigating those risks.

This approach aligns with risk-based frameworks like the COSO Internal Control Framework, which emphasizes risk identification as the foundation for effective controls.

Why Other Options Are Incorrect:

A . Identifying the effectiveness of management activities: This is part of control evaluation but occurs after risks and controls are identified.

B . Assessing the adequacy of controls: Controls cannot be assessed until the risks they address are identified.

C . Documenting how transactions or events are processed: While this step is important, it comes later in the process, after risks and controls are identified.

Reference and Documents:

COSO Internal Control Framework: Identifies risk assessment as the foundation for designing and evaluating controls.

GAO Standards for Internal Control (Green Book): Highlights risk identification as the first step in the control process.

Deterrence of Fraud:

A primary deterrent to fraud is the fear of being caught. When individuals believe there is a high likelihood of detection, they are less likely to commit fraudulent acts.

Strong internal controls, monitoring, and audits increase this fear and serve as effective deterrents.

Explanation of Answer Choices:

A . Delegation of responsibility without oversight: Incorrect. Lack of oversight increases the risk of fraud rather than deterring it.

B . The fear of detection: Correct. The fear of being caught is one of the most effective fraud deterrents.

C . Job satisfaction and sense of 'team': While these contribute to a positive work environment, they do not directly deter fraud.

D . Performance of employee background checks: Background checks are a preventive measure but are less effective as a fraud deterrent compared to detection risk.

Association of Certified Fraud Examiners (ACFE), Fraud Prevention Guidance.

GAO, Fraud Risk Management Framework.