Author: Gevorg

Whether you are at CPA PEP Core 1, the electives, or the CFE, you have likely seen the “betterment” Financial Reporting (FR) issue. Betterment is covered under the CPA Canada Handbook and, in simple terms, it means enhancing a capital asset. For example, a building renovation, adding a new roof to a house, major repairs, etc. Here are the accounting treatments under both ASPE and IFRS.

Betterment under ASPE (ASPE 3061)

The ASPE 3061 section on Property, Plant and Equipment, specifically covers betterment. According to ASPE 3061, para. 14, betterment is: “The cost incurred to enhance the service potential of an item of property, plant and equipment is a betterment. Service potential may be enhanced when there is an increase in the previously assessed physical output or service capacity, associated operating costs are lowered, the life or useful life is extended, or the quality of output is improved. The cost incurred in the maintenance of the service potential of an item of property, plant and equipment is a repair, not a betterment. If a cost has the attributes of both a repair and a betterment, the portion considered to be a betterment is included in the cost of the asset.”

In CPA cases, do the following:

1. Quote the above ASPE 3061.14 standard
2. Use case facts to prove that there is enhancement
   1. > This can be done through a discussion of  enhancing the asset’s quality, estimated useful life, reducing operating costs,  and output quantity (memory aid: “a better QLOQ”)
3. Analyze which costs can be capitalized
   1. > Just because it is betterment, it does not mean all expenditures can be capitalized. You can only capitalize “directly attributable cost necessary to bring the asset to the intended use.” Discuss the relevant costs and conclude which ones qualify for betterment
4. Recommend

Betterment under IFRS (IAS 16)

The IAS 16 section on Property, Plant and Equipment, does not use the word betterment. Instead, the terms major replacement and major inspection are used. An example of major replacement is replacing the interior wall of a building or the engine of a plane. An example of major inspection is an airline company that does major inspections every few years.

In CPA cases, do the following:

1. Quote the standard (IAS 16) and write that there are major replacements and major inspections
2. Use case facts to prove that the event is either a major replacement or inspection
3. Discuss that under IFRS, as long as there is future economic benefit (FEB) and costs reliably measurable, you can capitalize
4. Use case facts to prove that there is FEB and costs are reliably measurable
   1. Similar to ASPE, only directly attributable cost necessary to bring the asset to the intended use can be capitalized
5. Add that the carrying amount of the parts that are replaced (ie, the old parts) should be de-recognized
6. Recommend

CPA PEP and CFE Exam Coaching

My name is Gevorg. I’m an instructor and a CPA exam coach. I’ve been featured on CBC News and Google News as a CPA exam expert. If you want coaching with me, sign up for my Core 1 and CPA CFE Review Course.

 

Update: 2022 pass rates are now released. Please see the updated post here.

CPA Canada has now released the 2020 PEP and CFE pass rates. This was the first year when PEP exams where written at home and the CFE at hotel rooms.

2020 CFE Pass Rates

Below are the official pass rates as reported by CPA Canada:

CFE Offering	Cumulative Pass Rates
	First Attempt	Second Attempt	Third Attempt
September 2020	75.8%	n/a	n/a
September 2019	76.3%	87.4%	n/a
September 2018	77.6%	87.5%	90.8%
September 2017	77.6%	88.1%	90.6%
September 2016	76.8%	88.6%	91.4%
May 2016	68.7%	75.4%	79.9%
September 2015	82.9%	94.6%	96.6%

There is a marginal decrease (0.5%) year over year, but overall it is consistent at the average 75% rate.

2020 PEP Pass Rates

CPA PEP Module	2020 Pass Rate	2019 Pass Rate
Core 1	81.9%	79.4%
Core 2	86.2%	84.3%
Taxation	88.0%	88.1%
Assurance	89.1%	89.2%
PM	90.7%	90.6%
Finance	89.0%	89.9%

There are marginal increases overall in the PEP (Core 1, Core 2) while other modules have decreased or stayed flat.

PEP and CFE Exam Coaching

My name is Gevorg. I’m an instructor and a CPA exam coach. I’ve been featured on CBC News and Google News as a CPA exam expert. If you want coaching with me, contact me or sign up for my CPA CFE Review Course.

 

About 75% of all CPA Common Final Exam (CFE) writers choose Assurance as their role. The reason is that it’s one of the “easier” roles to achieve depth in.

But don’t let this fool you, there is still a lot of material to cover and lengthy practice cases to write. Here are my top 5 tips for passing the CPA PEP Assurance module:

1. Know how to write procedures

Audit procedures are a heavily tested topic; it may come up as part of an Audit Planning Memo or as a separate required. In both cases, follow these best practices:

• Use the RAP template: Risk, Assertion, Procedures
• Make the procedures case specific by integrating case facts
• Write at least 2 procedures for each FR issue
• Make sure the procedures directly address the risk(s)
• Don’t write the procedures in “point form” – use complete sentences

Writing procedures at the C level requires understanding of case writing and takes a lot of practice. I recommend keeping track of procedures as they come up in practice cases. By the end of the module, you will have an inventory of procedures to refer to. If you need a comprehensive template with lots of procedures, check out my Assurance course.

2. Focus on these Assurance topics

There are roughly 23 chapters on Assurance in the Learning eBook, but I find the topics below to be the most commonly tested:

• Audit Planning Memo (APM) – CAS 315, 320, 330
• Assertions (B/S, I/S)
• Audit evidence – CAS 500
• Procedures – CAS 510
• Analytical Procedures – CAS 520
• Special Reports – CAS 805,  Section 9100,  CSAE 3000/3001, CSAE 3530/3531
• Reviews – CSRE 2400
• Compilations – HB 9200

Start with the above topics, then read the rest of the chapters so that you are well prepared. As you’re reading the Learning eBook, make concise summary notes for yourself. It also helps to use different colours of pens/fonts to separate the different concepts.

3. Qual matters more in Assurance

The qual analysis makes up 90% of the case in Assurance, while quant analysis is a very minor part. From my experience, most candidates fail due to either time management issues or inability to write at the C level. Here are the best practices of writing the qualitative analysis in your cases:

• Use bullet lists to organize your memo
  
• Use formatting to separate the issues (eg bolding, underlining, italicize)
• Keep your writing concise but deep enough for a C
• Have templates in mind for the common topics (eg RAP and VOOP for procedures, RAMP for Audit Planning Memo, WIR for control weaknesses, SAPPY for special reports, RRIIO APEX for audit evidence.)
  
• Come up with memory aids to chunk big technicals (eg IS COCCA CERV’d in BoSton? tells you all the assertions: Income Statement: Completeness, Occurrence, Cut-off, Classification, Accuracy // Completeness, Existence, Rights & obligations, Valuation in Balance Sheet).

Case writing is both a science and an art, the best strategy is to write lots of cases and to debrief effectively.

4. Manage your time well on the exam

It’s important that you manage your time on the exams. This means knowing how to Rank and Time Budget.

Ranking:

• The Assurance elective blueprint tells that 50-70% of the exam is Assurance and 20-40% is FR.
• Start your cases with FR and then write Assurance and any other areas
• The FR topics may impact your Assurance analysis (eg materiality calculation), so it’s important to rank these first
• Write FR topics in any order, as long as you address all of them

Time budgeting:

• The Assurance blueprint tells that the cases are  80-120 minutes in length
• Allocate about 20% of the case’s time on reading the case and the rest on solving the requireds
• Spend roughly 8-10 minutes on each issue and move on when you reach your time limit

5. Write more practice cases

You will get 8 practice cases (PCs) and 8 integrative problems (IPs) in the module.  Unfortunately, those PCs and IPs don’t fully prepare you for the exam, since they don’t cover every AO that you may possibly see on the exam.

I provide four (4) original Assurance supplemental mock exam practice cases to help you improve your case writing skills and broaden your technicals. They cover a range of AOs, including:

• Business combination (IFRS)
• Sale and leaseback
• Lease from lessor’s perspective
• Held-for-sale assets
• Biological assets
• Government assistance
• Convertible debt
• Special engagements
• Use of an auditor’s expert
• Test of control procedures
• Substantive procedures
• Impact of misstatements

Head over to the cases section of my website to learn more. Most of the above topics are not covered in the Assurance module, but they come up on the exam over and over.  If you have any questions  or need additional help, I’m here for email support.

Assurance Practice Cases and Solutions

Preview and purchase the supplementary mock exam cases to improve your case writing skills and take on the Assurance module.

 

 

 

 

 

The Tax and Assurance electives are the “bread and butter” of accounting. If you want to work in public practice (or if you already work in public practice), you should take those two electives; they are required for various licensing requirements.

Candidates often ask me which one is better to take first, Tax or Assurance? The short answer – take Assurance first.

Assurance is “kind of” easier than Tax

Unless you are a tax specialist or someone well-versed in the Canadian tax, you will likely find the Assurance elective easier.

The number of common topics in Assurance are much lighter than in Tax:

• Audit Planning Memo (APM) – CAS 315, 320, 330
• Assertions (B/S, I/S)
• Audit evidence – CAS 500
• Procedures – CAS 510
• Analytical Procedures – CAS 520
• Special Reports – CAS 805, HB 5815, HB 8600, HB 9100,  CSAE 3000/3001, CSAE 3530/3531
• Reviews – CSRE 2400
• Compilations – HB 9200
• Misc assurance topics…

The quant analysis is also very minor, compared to Tax, and from my experience, most candidates fail due to time management issues on the quants.

The key to getting good at the above Assurance topics is to read the Learning eBook and make concise summary notes for yourself.

Take Assurance, then Tax

The Core and Elective modules are different. It’s better to take the “easier” Assurance to get comfortable with the Elective module and exam, then take the Tax elective when you have experience under your belt.

• Elective modules have longer cases
  
• The exams have two cases and few MCQs
  
• There is greater requirement for depth in the Electives

You are better off “warming up” with Assurance, then take on Tax.

Assurance and Tax Practice cases and Solutions

Preview and purchase supplementary Assurance and Tax mock exam cases to improve your case writing skills and technical knowledge.

 

 

 

 

 

 

The PEP Tax module is arguably the toughest. You have to be prepared for quants, and I mean a lot of quants.

Below are my top 5 tips for Tax candidates:

1. Know the Blueprint

The CPA Canada’s elective blueprint gives the breakdown of the exam structure. Here are the competency allocations for the Tax module:

• Total Duration: 4 hours
• MCQ-portion
  
  • Up to 30 questions
  • Allow 40 minutes
  • Competencies:
    • Tax 100%
• Case-portion
  • 2 cases
  • 80-120 minutes in length (each)
  • Allow 200 minutes
  • Competencies:
    • Tax 50% (from my experience, more likely 70-80%)
    • FN or FR or S&G or MA 50%  (from my experience, more likely 30-20%)
• Other notes
  • You will have access to the Handbook (HB) and the Income Tax Act (ITA)
    
  • New tax standards cut-off date is December 31 of the prior year
  • Reference sheet for common tax formula are provided

2. Be Prepared to Study for Hours

Be prepared to spend more than the usual number of hours going through the cases. Most of the AOs have quants components, which means you need to debrief the excel solutions thoroughly.

• Plan to spend 15-25 hours per week studying
  
• Go through the ITA to understand its structure and where common things are (eg CCA rates).
• Deconstruct the excel solutions to understand the formula
  
• Make personal notes of the common topics (see below)

3. Write Schedule 1 Explanations in Excel

One of the most common topics tested in Tax is the Schedule 1. The case provides the accounting income and your task is to figure out the net income for tax purposes (NITP), taxable income (TI) and potentially tax payable (TP). Candidates often ask me if it’s required to write explanations for additions and deductions and if so, where is the best place to write them.

• All additions (eg amortization) and deductions (eg CCA) require explanations
• Keep your explanations in excel to help the marker tie your numbers to the analysis
• Explain WHY an item is allowed or disallowed, don’t write superficially
• Check out my interview with Matt, who passed the CFE with Honour Rolls, while writing depth in Tax.

4. Show Support for Calculations

If you want to get Competent (C), you need to show support for calculations. If the marker is confused, he/she will not take the time to dig through your complex spreadsheet,

• Your quants need references to suppose the calculations
• You can create “note 1”, “note 2”, etc, but it’s simpler to use letter annotations (eg A, B, C = A-B)
• Make sure to keep your annotations simple (time management is key)

5. Focus on these Tax Topics

Though the CPA Competency map for Tax is lengthy, and any of the testable materials can come up, these are the key topics to focus on:

• Section 85 rollover
• Acquisition of control
• Employer provided automobile – standby charge
• Employer provided automobile – operating benefit
• CCA
• Tax income/payable – individual
• Tax income/payable – corporation
• Deductibility of expenses(eg home office, meals, moving expenses, etc.)
• Common business expenses DISALLOWED
• Common business expenses ALLOWED
• Death/divorce of taxpayer
• Employee vs Contractor
• Residency
• Property Income
• Sales tax (GST) rules and deadlines
• Pros/cons of incorporating
• Salary vs. Dividends
• Filing and payment deadlines 

Get More Mock Exam Practice Cases

I offer two (2) original CPA PEP Taxation mock exam practice cases that help you prepare for the tax module exam. My cases test you on new AOs and help you better prepare for the exam.

 

 

 

 

CPA Canada releases Common Final Exam (CFE) results in late-November or early December (for September CFEs) and August (for May CFEs). Find out if you passed using the links below:

• CPA Western School of Business (BC, AB, SK, MB and NWT, Yukon, Nunavut): https://www.certificationenterprise.net/CPAcp/cpLogin.aspx
• CPA Ontario:  https://www.certificationenterprise.net/CPAcp/cpLogin.aspx
• CPA Quebec: https://www.certificationenterprise.net/CPAcp/cpLogin.aspx
• CPA Atlantic School of Business (PEI, NS, NL, NB, and Bermuda): https://www.certificationenterprise.net/CPAcp/cpLogin.aspx

Honour Roll

The list of CFE Honour Roll candidates will be made available at the link below:

• CFE Honour Roll: https://www.cpacanada.ca/en/become-a-cpa/cpa-certification-program-evaluation/common-final-examination-honour-roll

How to Read the Transcripts

You will receive Day 1 and Days 2/3 transcripts.

The Day 1 transcript will have “Pass” or “Fail” only.

 

 

 

 

The Days 2/3 transcript will have 4 levels of assessment:

• Level 1: Sufficiency – The combined number of Cs and RCs.
• Level 2: Depth in FR or MA – The combined number of Cs in FR or MA
  
• Level 3: Depth in Role – The number of Cs in your role (Day 2 only)
  
• Level 4: Breadth – The minimum number of Cs and RCs in all competencies

The transcript will show pass or fail at each of the levels. Only Level 1 will show sufficiency grouping from 1-10 (1 means you were close to passing, 10 means you were far).

What to Do if You Failed

Day 1 and Days 2/3 are assessed and graded separately. For example, you can pass Day 1, but fail Days 2/3. Similarly, you can pass Days 2/3 ,but fail Day 1.

If you were unsuccessful at any of the CFE days, you can:

• Option #1: Request review and re-marking
• Option #2: Purchase Performance Analysis Report (PAR)
  
• Option #3: Retake the next exam

#1) Review and re-marking will have your exam re-marked by a senior marker. There are specific deadlines and fees for application. About 8% of candidates request re-marking and only ~1% of them are successful. Read if CFE results are worth appealing here.

#2) Performance analysis report (PAR) is available for Day 1, Days 2/3, or all days. There are specific fees for each type of PAR report.

#3) Before retaking the next exam, make sure you fully understand your transcript and the reasons you failed.

Get Personalized CPA Exam Coaching

Sign up for the newest CPA CFE Review Course, the comprehensive and highly personalized CPA exam prep course for May and September CFEs.

 

 

Congrats! You made it to Core 2. Unlike Core 1, you have a higher statistical chance of passing, there are less topics to learn and you have an exam writing experience under your belt. That’s not to say that Core 2 is easy, however.

CPA candidates struggle with Core 2. A lot. From my experience, the main reasons come down to:

1. Weak Management Accounting (MA)
   
2. No excel templates in mind
   
3. Time management issues
   
4. Bad case writing skills

As much Core 1 focuses on Financial Reporting (FR), so does Core 2 focus on MA. In fact, according to CPA Canada blueprint, 50-70% of the exam is going to be MA.

It’s All About Management Accounting

Here are some common MA topics that you need to know for the Core 2 module exam:

• Budgets
• Variance analysis
• Relevant costing
• Break-even analysis
• Contribution margin analysis
• Cost-volume-profit (CVP) analysis
• Transfer pricing

The secret to getting good at these topics is to write as many cases as possible. With every case attempt, you learn a new MA format, a new approach, and improve your case writing skills.

CPA Canada provides eight (8) cases in Core 2. These are helpful, but at times they are repetitive. Most candidates who took Core 2 say that the exam had different AOs compared to practice cases. They suggest to get more cases and practice more.

Where can you get more Core 2 cases?

I provide six (6) original CPA Core 2 cases that are representative of the exam, in both format and content. They cover a range of AOs, including:

• Special order analysis
• Buy vs. lease decisions
• Business environment evaluation
• Responsibility centres
• Contribution margin (CM) with constrained resource
• Profitability calculation
• Financing sources
• Break-even analysis
• Variance analysis
  
• Transfer pricing

Head over to the cases section of my website to learn more. Some of the above topics are not covered in the Core 2 module, but they come up on the exam over and over. If you have any questions  or need additional help, I’m here for email support.

Where can you get more Core 2 MCQs?

With the April 2022 change in the exam format, I have added 75 mock exam MCQs to my cases.

Core 2 Practice cases and Solutions

Preview and purchase the supplementary mock exam cases to improve your case writing skills and take on Core 2.

 

 

 

Update: Please see the new blog posts with September 2021, May 2022 and September 2022 exam case download links:

• September 2021 CFE download
• May 2022 CFE download
• September 2022 CFE download

CPA Canada released the September 202

0 CFE exam cases (without solutions) in November 2020. These are the original exam cases for Day 1, Day 2, and Day 3. You can download the copies below.

September 2020 CFE Day 1:

• Distinct Hotels Corporation (DHC) v1 (PDF)
• Marmani v2 (PDF)
  

September 2020 CFE Day 2:

• EnviroCab Inc. (ECI) (PDF)

September 2020 CFE Day 3:

• Download PDF here, includes all three cases:
  • Jump Inc.
  • Festival Inc.
  • Dreamy Donuts Co.

How do I prepare for the CFE?

There are several steps to preparing for the CFE. Generally, these 10 steps are necessary in your strategy:

1. Create a study plan
   
2. Find a study location
   
3. Find a study partner
   
4. Obtain study materials (through Capstone 2 or through a prep program)
5. Learn technicals
6. Understand case writing
7. Study and practice Day 1 cases
8. Practice Day 2 cases
9. Practice Day 3 cases
10. Final Review

Pass the CPA Canada CFE Exam

I’m Gevorg. I’m an instructor and a CPA exam coach. I’ve been featured on CBC News and Google News as a CPA exam expert. If you want coaching with me, sign up for my CPA CFE Review Course.

Update: You can download the May 2022 CFE cases here. September 2022 cases are here.

Similar to prior Common Final Exams (CFEs), the May 2021 CFE had Day 1, 2 and 3 cases. The following Day 1 cases were tested:

May 2021 CFE:

• Waste Disposal Incorporated (WDI) v1 (download)
  
• Distinct Hotels Corporation (DHC) v2 (download)

The following Day 2 and Day 3 cases were tested in May 2021 CFE:

• Day 2 (download):
  • RMZ Pharmaceuticals Inc. (RMZ) (300 minutes)
• Day 3 (download):
  • Sally’s Good Furniture (SGF) (85 minutes)
  • Kitchen Apparel Inc. (KAI) (85 minutes)
  • Wicked Water Sarnia Inc. (WWS) (85 minutes)

Note: September 2021 CFE will have these Day 1 cases:

• Waste Disposal Incorporated (WDI) v2
• Distinct Hotels Corporation (DHC) v3

Where can I get these cases?

You can download by clicking on the hyperlinks above.  If you are registered for the Capstone 2 module for Winter 2022, you will also receive these cases at the module. If you are someone challenging the exam, such as an internationally trained accountant applying under MRA/MOU, you can download using the links above.

Where can I get the solutions?

I have written my version of the solutions to May 2021 CFE cases, which you can get from here. The official solutions will be released in February, 2022, per CPA Canada’s announcement. 

How do I prepare for the CFE?

There are several prep methods for the CFE. You will need to focus on these three items:

1. Technical knowledge
2. Case writing skills
3. Strategy

I speak a lot about these items on my YouTube channel and webinars. You can check out my latest webinar.

Technicals:

• Know the key topics on each of the competencies
• Distinguish depth from breadth
• Debrief

Case writing skills:

• It’s all about following the CPA Way
• Know your case inside out
• Integrate throughout the case

Strategy:

• Prepare a study plan
• Obtain study materials
• Get support and resources

Pass the CPA Canada CFE Exam

I’m Gevorg. I’m an instructor and a CPA exam coach. I’ve been featured on CBC News and Google News as a CPA exam expert. If you want coaching with me, sign up for my CPA CFE Review Course, for a comprehensive prep package.

It’s no secret that Core 1 is one of the most challenging modules in the CPA Canada’s PEP program. In fact, it has the highest failure rate among all modules. The main reasons are:

1. Self-lead studies
2. Wide range of topics
3. Time constrained exam
4. Challenging cases

Like with all problems, adopting a proper strategy and plan will help you win:

1. Create a study plan for Core 1
   
2. Focus on the blueprint, not the competency map
3. Study in advance
4. Practice case writing

Just write more cases

The majority of candidates who don’t pass Core 1 struggle with the case portion. You will face several Financial Reporting (FR) AOs mixed with one or more competencies (Assurance, Tax, Finance). You can guess on MCQs, but you can’t guess your way out of a case.

The solution is to write as many cases as possible. With every case attempt, you learn a new scenario, a new approach, and improve your case writing skills (speed, formatting, time management).

CPA Canada provides eight (8) cases in Core 1. These are helpful but at times they are repetitive. Most candidates who took Core 1 say that the exam was different than the practice cases, especially the AOs. You will want to get more cases and practice more.

Where can you get more Core 1 cases?

I provide supplemental CPA Core 1 cases that are representative of the exam, in both format and content. These are original CPA cases that I have authored. My mock exam cases cover a wide range of AOs, including:

• Revenue recognition (IFRS 15, ASPE 3400)
• Leases (IFRS 16)
• Liabilities
• Government assistance
• NPO
• PP&E and betterment
• Onerous contract
• Taxes payable
• Special engagements

My Core 1 value-pack edition contains even more cases that test you on complex IFRS issues, all of which are examinable at Core 1, including:

• Business combinations (IFRS 3, 10)
• Joint arrangements (IFRS 11)
• Financial instruments (IFRS 9, IAS 32)
• Financial instruments – Hedge accounting (IFRS 9)
• Share based payments (IFRS 2)
• Investment properties (IAS 40)
• Employee benefits (IAS 19)
• Income taxes (IAS 12)

Head over to the cases section of my website to learn more. Most of the above topics are not covered in the Core 1 module, but they come up on the exam over and over.  If you have any questions  or need additional help, I’m here for email support.

Where can you get more Core 1 MCQs?

With the April 2022 change in the exam format, I have added a set of 75 mock exam MCQs to the above cases.

Core 1 Success Program

My Core 1 Review program includes ten (10) mock exam cases, 75 MCQs, and a full coverage for Core 1. You’ll get:

• Review of technicals
• Case writing strategies
• Memory aids
• Advanced case writing lessons
• Mock exam practice cases
• Efficient outlining strategies
• Time management exercises
• Technical formats
• Study plan
• Live coaching with me
  

Personalized Core 1 Coaching

Sign up for the Core 1 Review program to get full coaching and take on the challenging Core 1.