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Association CAE Test Terms with 100% correct answers | verified | latest update 2024
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Association CAE Test Terms with 100% correct answers | verified | latest update 2024
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Association CAE Test TermsAccounting Segregation of Duty - ANS-No individual should control all four aspects of
any financial transaction. Initiation (check requests); Authorization (approval to pay);
Asset Custody (keeping the checkbook); Recording the Transaction (posting).
Audit: Clean vs. Unqualified - ANS-A Clean Audit is an opinion providing the highest
level of assurance that the Statement of Financial Position fairly presents the
organization's financial position; the Statement of Activities fairly presents the results of
the organization's operations, and the Statement of Cash Flows fairly presents the
organization's cash flows. An Unqualified Audit is an opinion providing the highest level
of assurance an audit can provide. Attention is given to a particular matter and provides
for disclosures of additional financial statements provided or draws attention to an
additional important matter.
Balanced Scorecard, Monitoring - ANS-Board performance is measured in four
categories: financial performance, customer satisfaction, process efficiency and
innovation.
Branding - ANS-A singular look, feel and message in building a belief about your
organization. The power of a brand is the ability to influence behavior.
Budgeting, Strategic Program - ANS-Allocating salaries and overhead to a program
budget to know the true profitability of its products and services.
Dashboard Indicators, Monitoring for Chapters and Components. - ANS-The dashboard
concept identifies the critical variables that determine the chapter's success and a
system for measuring with full, safe, low and warning levels. There are five steps:
1. Revisit the mission and vision of the national organization and the
chapter/component.
2. Define the gauges as they relate to the mission.
3. Establish methods to measure success.
4. Conduct a chapter assessment to establish initial dashboard readings.
5. Assign a staff member to regularly monitor the gauges.
Financial Controls: Annual Audit - ANS-Management is responsible for the report - the
auditor's role is to verify the amounts in the report. The board hires the auditor and
receives a copy of the report. It's a conflict for CFO or CSE to hire the auditor.
,Financial Controls: Essential Factors - ANS-Four factors are essential to good financial
controls.
1. Clear lines of authority.
2. Clear definition and acceptance of responsibility.
3. Authority commensurate with responsibility.
4. Proper training.
Financial Controls: Sarbanes-Oxley - ANS-Two provisions in Sarbanes-Oxley apply to
non-profits.
1. Whistle-blower protection, which prohibits anybody from interfering with a person who
reports a potential infraction.
2. The prohibition of document destruction once a federal investigation has begun.
Sarbanes-Oxley: Procedures for Processing Whistle Blower Complaints. - ANS-1. Code
of Ethics for the Board of Directors.
2. Increases in penalties for document destruction or alteration.
3. Certifications by the CEO and her chief financial officer regarding the financial
condition of the organization.
Sarbanes-Oxley: Non Profit Recommendations - ANS-1. Code of Ethics for the Board of
Directors.
2. Whistle blower policy.
3. Regular board training.
4. Regular board self-evaluation.
5. Audit committee members who are financially literate.
Financial Key Indicators - ANS-Quantitative measures that paint a picture of the
organization in relation to its strategic plan. Indicators might include:
1. Number of new members
2. Accounts
3. New business starts.
4. Members participating in programs.
5. Member retention.
Types of Financial Policies - ANS-1. Investment and reserve policies.
2. Budget policy.
3. Operational accounting policies.
Financial Projections - ANS-A forecast of future financial results, usually presented in a
"pro-forma" statement.
,Financial Statements: Cash and Accrual - ANS-Accrual: unpaid bills are usually
recorded on an accrual basis.
Cash: uncollected income is usually recorded on a cash basis.
Many organizations keep books on the cash basis and convert them to accrual at the
end of the month for accounting purposes. Best practice is to use Accrual Accounting:
allocating dues when earned monthly, rather than recording a lump sum when received.
Financial Statements: Management Letter - ANS-Issued by an independent auditor, the
Management Letter communicates those areas that management needs to address in
order to become compliant with GAAP accounting practices.
Financial Statements: Reporting Capital Gains - ANS-Capital gains should be recorded
in the unrestricted class. There are two exceptions:
1. Gains must be reported in the restricted class if there are explicit donor restrictions on
the gains.
2. An applicable state law judged by the organization's governing board to require the
retention of some or all of the capital gains.
Financial Statements: Statement of Activities - ANS-The organizations's financial activity
by the month and on a year-to-date basis.
Financial Statements: Statement of Cash Flows - ANS-Provides relevant information
about the cash receipts and cash disbursements from operations, investments and
other activities during a certain period of time.
Financial Statements: Statement of Financial Position - ANS-Summarizes the financial
position of an organization at a specific point in time.
Association Reserves - ANS-Net assets minus net liabilities. Reserves are usually
protected by the board.
Capital Budget - ANS-Long-term expenditures such as land, buildings, equipment.
Capital Expenditures - ANS-Long-term objectives, such as major equipment,
improvements, additional to physical facilities.
Chart of Accounts - ANS-System for organizing financial data.
, Financial Narrative - ANS-Tells a story of how financial elements relate. It provides more
than just numbers. It highlights key financial issues, concerns and trends.
Liquidity Ratio - ANS-Liquidity Ratio measures the organization's ability to pay its
short-term obligations.
Current Ratio - ANS-Current Ratio measures the current assets divided by current
liabilities.
Profitability Ratio - ANS-Profitability Ratio measures the profits (losses) over a specific
period of time.
Coverage Ratio - ANS-Coverage Ratio measures the projections for the interest and
principal payments to long-term creditors and investors.
Activity Ratio - ANS-Activity Ratio measures the resources required to cary out certain
activities, sometimes referred to as efficiency ratio.
Net Assets - ANS-Residual values of an organization's assets after liabilities have been
paid. It contains three classes:
1. Unrestricted net assets.
2. Temporarily restricted net assets.
3. Permanently restricted net assets.
Operating Budget - ANS-The basic day-to-day financial plan that projects all the
operational revenue streams and normal business expenses incurred.
Overhead - ANS-Expenses incurred that are not actual, direct expenses of a specific
program. They include administrative (telephone, computers, rent, insurance,
accounting and maintenance).
Classes of Funds - ANS-There are three classes of funds:
1. Restricted
2. Temporarily Restricted
3. Unrestricted
Unrestricted Funds - ANS-Can be used at the discretion of management within the
range of the uses defined.
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