Certified Government Financial Manager (CGFM) Practice Exam 2026 – Your All-in-One Guide to Exam Success!

The Budget Accounting and Procedures Act of 1950 primarily focuses on improving the financial management and budgeting practices of federal agencies. One of its key requirements is for federal agency heads to establish internal controls. This means that the heads of agencies must implement and maintain systems and processes that ensure the integrity of their financial operations, prevent the misuse of funds, and promote effective management of resources.

Establishing internal controls is crucial as it helps agencies to safeguard assets, ensure compliance with laws and regulations, and accurately report financial information. This requirement is foundational for sound financial governance within federal agencies, as it lays the groundwork for all other financial accountability measures.

Other options, while relevant to financial management practices, do not directly stem from the core requirements of the Budget Accounting and Procedures Act of 1950. For instance, preparing annual financial statements, monitoring monthly expenditures, and compliance with Generally Accepted Accounting Principles (GAAP) are important aspects of federal financial management but are governed by other regulatory frameworks and acts. The emphasis of the act is more specifically on the establishment and maintenance of internal control systems.