CPFO Exam Quizzes with Answers, Exams of Nursing

Download CPFO Exam Quizzes with Answers and more Exams Nursing in PDF only on Docsity! CPFO Exam quizzes with answers>on the following Risk, Benefits, Procurement How many full-time public employees are covered by defined benefit plans? - Correct Answer-Ninety-one percent How many full-time public employees are covered by defined contribution plans? - Correct Answer-nine percent Prudent-Person Rule - Correct Answer-Requires each retirement board member to perform his or her duties as a prudent person would when acting in a like capacity and in a similar situation. Defined Benefit Plan - Correct Answer-Provides for a guaranteed benefit at retirement using a formula generally based on age, length of service and salary. Defined Contribution Plan - Correct Answer-Provides for benefits based on the assets available in employees' individual accounts. Defined Benefit Plan - Employer Perspective - Correct Answer-"Funding Certainty: Liabilities change based on actuarial assumptions regarding future salary increases, investment earnings, employee turnover and plan experience. Predictable Costs: Annual contributions can vary from year to year based upon actuarial assumptions. Many plans are funded based on a consistent rate of contribution set by statute. Recruitment Tool: Typically not portable between employers, unless under same umbrella system (e.g. WRS). Reward Long-service Employees: Benefits typically based on final year(s) salary. Administrative Expenses: Include actuarial valuation, record keeping and investment management. Investment Risk: Assumed by the employer." Defined Benefit Plan - Employee Perspective - Correct Answer-"Benefit Potential: Benefits paid at retirement are for life and are guaranteed by the plan's formula. COLAs are common. Understanding benefits: Require explanation as they are based on a set of variables. Typically, there are no separate accounts. Access to Assets while Employed: Benefits may not be withdrawn while actively employed. Reward long-service Employees: Based on final year(s) salary. Recruitment Tool: Benefits have limited portability Investment Risk: Risk is assumed by the employer." Defined Contribution Plan - Employer Perspective - Correct Answer-Funding Certainty: Employer liability is fulfilled annually as contributions are made to employee accounts typically based on a percentage of payroll. Predictable Costs: Annual cash expenditures are more predictable as they are based on a set percentage of employee salaries. Recruitment tool: benefits are portable Reward long service: Benefits are based upon accumulated contributions and earnings Admin Expenses: Lower, as no actuarial valuation is necessary. Employee education costs and recordkeeping may be higher. Investment Risk: Assumbed by the employee." Defined Contribution Plan - Employee Perspective - Correct Answer-"Benefit Potential: Based on contributions and earnings. The final retirement benefit can be eroded by pre-retirement distributions and inflation. Understanding benefits: Benefits based on a percentage of salary. No other variables need to be considered. Each individual has a separate account. Access to Assets while Employed: Benefits may be withdrawn under certain circumstances (e.g. loans, death, or disability) per IRS guidelines. Rewards long-service employees: Not really, based on accumulated earnings and contributions." Retirement plan funding objectives - Correct Answer-1. Maintain stable contribution rates 2. eliminate the unfunded accrued liability wihtin a certain time frame 3. Maintain inter-generational equity by not passing current costs on to future generations 4. Utilize techniques to hedge against unexpected adverse experience. Retirement plan funding methods - Correct Answer-Level: produce contribution rates based on an even percentage of payroll. Graduated: funds benefits by increasing the percentage of payroll contribution over an individual's career. Unfunded Accrued Liability (UAL) - Correct Answer-The excess of the total liabilities, both present and prospective, over the present assets and present value of future normal costs. Closed Amortization - Correct Answer-Financing the UAL over a specific number of years with the number of years declining as each year passes. Open Amortization - Correct Answer-Number of years to pay off the UAL may remain constant from year-to-year. Actuarial Process to calculate an employer's annual actuarially determined contribution - Correct Answer-Projection, Discounting, and Allocation and amortization Service Cost - Correct Answer-An amount that represents the assignment of an appropriate portion of an employer's total cost to the current period. Amortization - Correct Answer-An amount designed to gradually eliminate the difference between the present value of future benefits and the value of the assets accumulated in the pension trust fund to pay those benefits. Statement of Net Position - Correct Answer-Government wide financial statement, functional equivalent of a private sector balance sheet. Statement of Activities - Correct Answer-Government wide financial statement, similar of the private sector operating statement. Pension expense - Correct Answer-employers report the cost of pension benefits as pension expenses in the statement of activities Amount reported as a liability by the employer (Net Pension Liability) - Correct Answer-Difference between present value of pension benefits attributable to past service (total pension liability) and resources currently available in pension trust to pay benefits (net fiduciary position) New Pension Accounting - Correct Answer-Employers report the full amount of their unfunded obligation as a liability, even if they have been fully funding their annual acturarilly determined contributions. Traditional Pension accounting - Correct Answer-Employers only reported a pension liability if they failed to fully fund their annual actuarily determined contributions. New Pension Accounting-Expense - Correct Answer-Requires that pension expense be based on cost rather than funding. As a result, there will no longer be a direct tie between what an employer would have to contribute to the pension trust fund in a given period to ensure the sustainabile funding of benefits (=actuarially determined contribution and what the employer reports as pension expense in its financial statements. Frequency of actuarial valuations in pension accounting - Correct Answer- Old: Could be up to 3 years old. New: must take place within 18 months of the start of the reporting period. Objectives of a sound pension funding policy - Correct Answer-"1. Base Funding on actuarially determined contributions 2. Ensure an appropriate balance between stable contribution rates and intergenerational equity 3. Maintain funding discipline 4. Be accountable and transparent" Smoothing investment experience - Correct Answer-Maximum of a 5 year period is suitable. Key factors in assessing the sustainability of a defined benefit pension plan - Correct Answer-"1. An employer's funding progress 2. Actual employer contributions as a percentage of actuarially determined employer contributions" Risk - Correct Answer-Chance of a loss Operational Risk - Correct Answer-Risks encountered during the delivery of public services Pure risks - Correct Answer-Risks that erode a government's financial strength. Here, there is no upside; either the government incurs a loss or there is no loss at all. Speculative Risks - Correct Answer-Have an upside and a downside, such as an investment (e.g. a stock making money but falling below expectations). Goal of risk management - Correct Answer-"1. To create a safe workplace 2. To prevent catastrophic financial losses that have the potential to bankrupt a government 3. To provide budgetary stability" Comprehensive Risk Mgmt program benefits - Correct Answer-"1. Allows for a more effective use of government funds 2. Increases worker productivity 3. Reduces uncertainties associated with future projects, including budgetary uncertainty" Risk Management Process - Correct Answer-Identify Risks ->Evaluate Risks - >Develop measures to treat risks ->Implement and finance risk management Risk Identification - Correct Answer-Determining where there is potential exposure to loss. loss. During construction projects, a government may require the contractor and subcontractors to absorb losses related to any construction-related accidents or litigation. Hold-harmless provision - Correct Answer-The government transfers risk under the terms of a contract. One party agrees to indemnify and hold the other party harmless for all claims and legal expenses incurred. Tasks of a risk management committee - Correct Answer-Create the risk mgmt. policy, developing inspection programs, designing safety orientation program for new employees, creating accident/claims investigation systems, identifying safety measures that require funding, developing disciplinary procedures, establishing review boards. Risk Retention - Correct Answer-Assumes financial responsibility for some loss (e.g. self insures). When done as part of a full, risk mgmt. plan, retaining some risk (i.e. paying deductible) can lower the government's premiums and align its incentives with the insurance company to create a safer work environment. Risk Avoidance - Correct Answer-Most complete way to manage risk, by avoiding it completely. But in the hcase of emergency services, usually not possible or very difficult. Property Insurance - Correct Answer-Protects against damage or loss of property, directly. Liability Insurance - Correct Answer-Covers losses related to a government being found negligent in the performance of operations. Protects against indirect loss. Worker's compensation - Correct Answer-Provides employees with coverage for all medical bills resulting from job-related injuries or disabilities as well as lost income. Projects against indirect loss. Risk Pools - Correct Answer-Provide a vehicle for local governments to pool their funds to provide for their insurance needs. Also function as a govt's comprehensive risk manager; providing services that include training and workshops, loss control audits, risk assessments, and onsite safety inspections. Risk Pool Factors - Correct Answer-Services offered (e.g. risk control, risk finance), lines of insurance coverage offered (e.g. worker's compensation), type of government member, "a la carte" options versus a single package of services, degree of state regulation, financial resources available to the pool, extent of risk transference, and primary vs. excess coverage. Primary Coverage - Correct Answer-Risk Pool that assumes the obligation to pay the entire claim Excess Coverage - Correct Answer-Risk pool that assumes that it will only pay on claims over a certain threshold (e.g. $100,000) Risk Finance Alternative-Commercial Insurance - Correct Answer- Variability in Cost: Highly variable due to market cycles. Financial Capacity: Large. Reserving Practice: Done at the company level, as required by stockholders or state regulators. Profit Incentive: For Profit. Covered Risks: clearly defined by policy Risk Finance Alternative-Risk Pool - Correct Answer-Variability in Cost: Stable (adequate reserves maintained). Financial Capacity: Medium to Large. Reserving Practice: Funds are set aside to pay member claims; additional reserves are established for unreported claims and contingencies. Profit incentive: Nonprofit, unused funds may be returned to members. Covered Risks: Defined by contract among members. Risk Finance Alternative-Self Insurance - Correct Answer-Variability in Cost: Variable (if govt does not maintain adequate reserves or follows a pay-as- you-go approach. Financial Capacity: Intermediate. Reserving practice: Funds may be set aside, but this is subject to govt's discretion. Profit incentive: Nonprofit, unused funds are retained by govt. Covered risks: Subject to interpretation. Typical Expenditure Breakdown for Risk Mgmt. - Correct Answer-52% - Worker's Compensation, 35% - Liability, 13% - Property Insurance Brokers - Correct Answer-Brokers that assist governments in procuring insurance coverage. Insurance companies - Correct Answer-Commercial carriers that underwrite and accept financial risk. Risk Pools - Correct Answer-Nonprofit entities that underwrite or share the risk of their members. Attorneys - Correct Answer-Assist in preventing and/or defending against litigation Ways procurement activities can be subject to abuse - Correct Answer- External influence, circumventing competitive bidding requirements, splitting purchases in order to remain within small purchase limits, using emergency procedures in the absence of an emergency, using sole source when competition is available, denying one or more vendors the opportunity to bid or propose, using unnecessarily restrictive specifications, prequalifying some bidders on a discriminatory basis, removing companies from the bidders list without just cause, requiring unnecessarily high bonding, making info available to some but not all vendors. Abusive procurment practices by the private sector - Correct Answer- Collusion or price fixing, providing kickbacks or offering bribes, low-balling to win a contract followed by requests for change orders, falsifying certifications. UPPCC - Correct Answer-Universal Public Purchasing Certification Council CPPO - Correct Answer-Certified Public Purchasing Officer CPPB - Correct Answer-Certified Public Purchasing Buyer Objective Procurement Performance Measures - Correct Answer-Avg. length of time to complete a solicitation, avg. number of bidders for each soliciation, number and type of vendor complaints, percent of early payment discounts taken. Invitations to bid (ITB) - Correct Answer-Preferred method of announcing a government's desire to purchase through competitive sealed bidding. Bidders or vendors list - Correct Answer-Useful tool for encouraging competition and ensuring that all interested vendors are notified when the government wishes to engage in trade. Specifications - Correct Answer-Description of the item or services sought via design or performance. Reasons for prefered vendors - Correct Answer-Local or in-state vendors, small businesses, minority owned businesses, sheltered workshop products, vendors in areas of high unemployment, and government institutions. Competitive Sealed Bids - Correct Answer-Preferred method for purchases larger than the small purchase threshold. Competitive Sealed Proposals - Correct Answer-Method used for selling goods and services above the small purchase threshold where the specifications cannot be developed so that they are sufficiently precise to make selection solely based on price. Requests for quotation - Correct Answer-Less formal than a bid, and may be verbal. Based on lowest price. Faster and less formal than RFP or IFB. Emergency preparedness - Correct Answer-When it is necessary to use a shortened method in which as much competition is sought as is practical given legitimate time constraints. Sole Source procedures - Correct Answer-When a single source is deemed to be the only one practicably available and advertising would be pointless. Proprietary source - Correct Answer-When competition can be obtained, as a practical matter, only on the basis of a specification of a good or service produced or marketed by one having exclusive legal right. Unsolicited Proposals - Correct Answer-Offer made by a vendor, without the government's involvement or seeking offers. Should trigger a competitive process. Evaluation of bids and offers - Correct Answer-Bids are evaluated strictly on price, proposals are evaluated partly on price and partly on experience, understanding of entity, and quality of service. Responsible Bidder - Correct Answer-Deemed to be capable of supplying the goods or services requested in the solicitation. Goods - Correct Answer-Tangible items, comprised of commodities or articles of trade, and non-commodities which are complex, novel, or customized goods. Services - Correct Answer-Intangible items, including: personal, professional, client, construction and technology services. Commodity code - Correct Answer-A code assigned to every type of items a government is likely to purchase. Privatization - Correct Answer-Term used to describe the process of transferring to a non-government entity the responsibility for delivering services previously delivered by the government. Divestiture - Correct Answer-Mode of privatization, when the govt gets out of the business of delivering a service and divests itself of both management responsiblities and the assets previously ussed for providing services. Service Contracting - Correct Answer-When the government procures the services of a vendor to perform a function for which the government retains control, responsibility and accountability. Franchising - Correct Answer-When the government gives to a private entity the right to provide a service and run it as its own business. Govt continues to regulate the service monopoly to ensure adequate consumer protection. 2 aspects of contract administration - Correct Answer-Quality assurance and contract management Quality Assurance - Correct Answer-Quality of the goods or services which were provided are monitored. Contract management - Correct Answer-Invoices are reviewed and approved, compliance with the terms and conditions of the contract is ensured, and modifications are made if needed. 6 Leverage Points to manage employee health care benefit costs - Correct Answer-"1. Change the level of the benefit provided: Modify how many and what type of benefits the plan provides and who they provide them to 2. Manage participants' choice of providers: Direct or even limit health plan participants choices to lower-cost providers. 3. Share cost with employees: Structure the health plan so that employees bear part of the burden of benefit costs. 4. Reduce use of health care services by employees: Address the economic incentives and actual need for health care services. 5. Right- source health benefit services: Use the right combination of outsourced service providers and providers within a network to deliver health benefits. 6. Maximize the value received for the health care dollar: Rather than just minimizing costs, consider the benefit received per dollar spent on health benefits. " Best ROI benefit investments - Correct Answer-Onsite clinics, variable premium contributions, high-deductible health plan and health savings accounts, wellness