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Enterprise Funds account for government-owned services financed primarily by user charges to external customers. Public hospitals, utilities, and airports are common examples. The General Fund (Option B) handles unrestricted operations. Special Revenue Funds (Option C) account for restricted revenues. Internal Service Funds (Option D) serve internal departments. Exam 2 highlights proper fund usage. Option A is correct.

Reasonable assurance recognizes that internal control has limitations due to cost-benefit considerations, human error, and collusion. Controls are designed to reduce risks to an acceptable level, not eliminate all risks. Option A is unrealistic—fraud cannot be fully eliminated. Option C is incorrect—no system operates at 100% effectiveness. Option D is incomplete—controls cover compliance, efficiency, and reliability of reporting. CGFM Exam 3 emphasizes reasonable assurance as a foundational principle of COSO/Green Book frameworks. Therefore, Option B is correct.

Segregation of duties ensures that no one person controls all aspects of a transaction, reducing fraud and error risk. Detective controls (Option A) find issues after the fact. Monitoring (Option C) oversees control effectiveness. Corrective controls (Option D) fix problems once identified. Exam 3 emphasizes segregation of duties as a preventive cornerstone. Option B is correct.

Pre-approval ensures expenditures or commitments are valid and authorized before processing. Segregation (Option A) prevents fraud but is different. Monitoring (Option C) evaluates controls over time. Detective audits (Option D) find issues after. Exam 3 stresses authorization controls. Option B is correct.

Independent audits evaluate whether controls are functioning, a monitoring activity. Approvals (Option A, D) are control activities. Access restrictions (Option C) are preventive controls. Exam 3 emphasizes monitoring as oversight of the control system. Option B is correct.