Author: Erika, CPA

As you’re preparing for CPA Canada PEP and CFE exams, you may be wondering about variances between Accounting Standards for Private Enterprises (ASPE) and International Financial Reporting Standards (IFRS). This post will summarize financial reporting standards that have similarities.

ASPE vs IFRS: Converged

The following standards are converged (exactly the same):

• Inventories IAS 2 / ASPE 3031

ASPE vs IFRS: Minor differences

The following standards have minor differences:

• Intangible assets: IAS 38 / ASPE 3064
• PPE: IAS 16 / ASPE 3061
• Business combination: IFRS 3, 10 / ASPE 1582, 1591

Others

All other standards have major differences and should be studied separately. The above can be grouped and studied together since they are similar.

Extra resources

Easy to read summaries of ASPE and IFRS standards are available here.

A frequent obstacle for students preparing for CPA Canada’s PEP and CFE exams is whether is an AO needs need to be discussed both quantitatively (quant) and qualitatively (qual), or just quantitatively (quant). Here’s my strategy on approaching these AOs correctly.

How to tell if both quant and qual are needed?

There are two triggers that you can use to find out whether you need to write quant, qual or both:

1. The way required is phrased.
2. Information in the appendix.

Let’s take a look at these one by one.

Look at the required’s wording

The phrasing of the required is a hint how to approach it. For example, if it says: “Please prepare a quantitative analysis and provide a recommendation”, then it’s quants only.

If it says: “Please prepare a qualitative analysis and provide a recommendation”, then it’s qual only.

When it says: “Please prepare a quantitative and qualitative analysis, and provide a recommendation.”, then it’s both.

Below is an example from CFE W2C case where they requested both:

Clearly, both quant and qual are needed.

Look at the information in the appendix

Second trigger is the type of information provided in the appendix. If the appendix contains qual data, it’s a clear hint that qual information should be incorporated into the analysis.

For example, below is a case with make vs. buy required:

The required is ambiguous and doesn’t tell us if we need quant, qual, or both. So we’ll look at the Appendix:

The first part has lots of numbers, which we’ll use for quants. The rest of the appendix is full of words such as: extremely strong, impossible to break, safer, long lasting, survey.

These are all qual terms, so the only possible reason they’ve given this information is to have us prepare a qual analysis.

Conclusion

In summary, if the required says “quant and qual,” or the information in the appendix has qual items, then you need to perform both quant and qual. However, if the required explicitly asks you not to perform qual, or there are only numbers in the appendix, then perform quants only.

Extra resources

Extra resources are available at PEP and CFE Review courses.

The CPA Canada PEP and CFE exams are designed to assess your in-depth understanding of various financial reporting standards, including IFRS 15: Revenue from contracts.

Common challenge for candidates in addressing IFRS 15 AOs is whether Step 1 needs to be discussed in detail. Sometimes, a simple statement such as: “Contract has been approved by both parties” suffices. However, in other solutions, you’ll see the answer go into depth of 5 sub-steps outlined in IFRS 15.

So what is the correct approach?

Understanding IFRS 15

First, we must understand the basics of IFRS 15. This standard is divided into 5 steps:

1. Identify the contract with a customer
2. Identify the performance obligations
3. Determine the overall transaction price
4. Allocate the transaction price to the performance obligations
5. Recognize revenue as the entity satisfies a performance obligation

Step 1 is further divided into 5 sub-steps (sub-criteria) that a contract must meet to qualify for revenue recognition:

1. Contract has been approved by the parties involved.
2. Each party’s rights in relation to the goods or services to be transferred are identifiable.
3. The payment terms for the goods or services to be transferred can be identified.
4. Contract has commercial substance.
5. It is probable that the entity will collect the consideration

Going through each of the sub-steps will take valuable case writing time. However, they are part of the standard and can’t be omitted. So what do we do?

Should you discuss the 5 sub-steps?

I recommend listing the IFRS 15 Step 1 sub-steps, but don’t discuss them one-by-one. Instead, at the end, say “MET” or “NOT MET” and explain why. For example, take a look below how CFE 2019 Elcar case handled it:

You can see it listed the Step 1’s sub-steps, then analyzed everything in one shot at the end. This is an effective way to approach IFRS 15 since it follows the standard accurately and saves case writing time.

Furthermore, the CPA Canada Feedback Guides don’t put emphasis on Step 1 of IFRS 15. Instead, Step 2 and Step 4 are the most important

As such, we must spend most of our time analyzing steps 2 and 4.

Extra resources

Extra resources are available at PEP and CFE Review courses.

In this article, we’ll dive deep into CPA Canada’s Core 2 module. We’ll cover all major aspects: format, assignments, topics, exams, how it’s assessed, and of course, study tips to help you pass. 

Related readings:

• Core 1 Module Guide
  
• PM Elective Guide
• Finance Elective Guide
• Tax Elective Guide
• Assurance Elective Guide
• Capstone 1 Study Guide
• Capstone 2 Study Guide
• CFE Study Guide

What’s Core 2?

Core 2 is the second of six modules in the CPA Canada Professional Education Program (PEP) that will lead you to the Common Final Exam (CFE). Completing the core modules (Core 1 and Core 2) is required before you can choose your elective modules, complete the capstones, or sit in the CFE. Though you can take Core 2 at the same time as Core 1, most students complete Core 1 before writing Core 2. 

The technical topics covered in Core 2 are mostly Management Accounting (MA), Strategy and Governance (SG) and Finance (FN). Of these, MA is the biggest part of the module and the exam.

Examples of MA topics include:

• Contribution margin (CM) analysis
• Break-even point (BEP)
• Variances analysis (VA)
• Sensitivity analysis (SA)
• Transfer pricing (TP)
• Activity-based costing (ABC)
• Budgeting

As you notice, I use lots of abbreviations when I  write technicals. This is a good study hack. Abbreviating long phrases, like break-even point or contribution margin, helps to keep study notes concise and easier on the eyes.

Similar to Core 1, the Core 2 module is held in online format, with all assignments, readings and quizzes taken on the website Desire 2 Learn (D2L). You’ll get access to D2L a week before the Core 2 start date.

How long is it?

The Core 2 module is designed to be completed in 8 weeks, which is the traditional route most students take. However, an extended version is available, allowing you to complete the module over a 5 -month period. This is good for students who have commitments or those who prefer a slower pace of study.

You can also challenge Core 2, where you skip the entire module and just take the exam. This is allowed only in special circumstances, such as for internationally trained accountants under MRA/MOU.

There’s also an expedited option to complete Core 2, known as fast-track. In this format, you take both Core 1 and Core 2 together. This is the quickest route to completion of the CPA PEP program. However, I suggest fast-track only for those who are not working. The intensity and volume of the coursework are too challenging to manage with full-time or part-time jobs and Core 1 and 2 together.

Also, if you take Core 1 module, but don’t pass the exam, you can take Core 2 and re-attempt Core 1 at the same time. This is also not recommended unless you feel very comfortable with Core 2 technicals. You’re risking to fail both of them since you’ll have too many things to study; it’s better to take one module at a time.

Is there an instructor?

When you enroll into Core 2, you’ll be assigned an online facilitator. Their job is to help you via email, provide feedback on assignments, assist in finding information, and moderate the forums. Since Core 2 is online, you will not meet your facilitator in person.

Core 2 also has Module Workshop (MWS). This compulsory two-day event has presentations and activities by a session leader. The activities cover a wide range of topics, including review of technicals and case writing. I previously worked as a session leader with CPA Canada.

Before attending the workshop, you must complete and submit pre-work to D2L dropbox.

What are the assignments?

Core 2 has weekly assignments that consist of:

• Multiple-choice questions (MCQs)
• Integrative problems (IPs)
• Practice cases (PCs)

MCQs are small problem-based questions that test on technicals.

Below is an example of a Core 2 MCQ:

The IPs are short-answer assignments that test the technical material learned in the weekly unit.

Below is an example of Core 2 IP:

The PCs are 60-minute cases designed to simulate the actual Core 2 module exam.

Below is an example of Core 2 PC:

Majority of students find the Core 2 exam to be harder than the PCs, so I suggest practicing with retired exam cases (discussed below) and mock exam simulations.

The IPs and PCs are to be completed using Microsoft Word and Excel, and uploaded to D2L weekly. The deadline is typically Friday night. Your facilitator will personally mark and provide you with feedback a few days after submission. Feedback is provided in the form of an Excel file, referred to as the Feedback Guide (FG), which will show you how you scored in each assessment. Solutions will automatically be provided to you upon submission. If an assignment is not submitted, the solutions will be released after the deadline.  

Below is an example of a Core 2 FG:

Each row in the feedback guide is graded as:

• No (N): You didn’t attempt the element (Note: Each element in FG is known as MPI, which stands for minimum proficiency indicator) .
• Partially (P): You attempted the element to some degree.
• Yes (Y): You fully achieved the element as needed.

The MCQs are marked automatically by the system.

You will also be provided with retired exam cases (actual cases from past module exams). These are optional but I recommend to practice them under time-constraint to see how ready you are for the final exam.

You are also provided with data analytics activities. There are optional and include solutions and FGs. Since the CPA Canada Competency Map now includes data analytics and information services (DAIS), I recommend completing these exercises, because you can get DAIS topics on your exam.

How is it graded?

Similar to Core 1, the Core 2 IPs and PCs are made up of assessment opportunities (AOs). Grades are provided individually by AO and will be ranked as one of the following:

• Competent with distinction (CD): More than what’s needed, lots of details written.
• Competent (C): Well-balanced answer, in both quantitative and qualitative. This is what you’re striving for.
• Reaching competent (RC): Missing some critical points, not enough to get full marks
• Nominal competence (NC): You tried but it was incorrect or missed lots of case facts.
• Not addressed (NA): You missed the AO completely. Usually when you are out of time or don’t catch it.

Your target grade for an AO is a C. The PCs have 5 AOs and the IPs will range from 3 to 6 AOs. The actual Core 2 exam will have 5 AOs.

The RC/C scores in IPs and PCs give you certain number of points. To be eligible to write the exam (discussed below), you need to get at least 75% total grade from your weekly assignments. The course is weighed as follows:

• IPs: 30%
• PCs: 30%
• Unit quizzes and MWS pre-work: 30%
• MWS participation: 10%

You should not worry about getting this 75% threshold. Most student reach the 75% mark and get to write the exam; the real challenge is passing the exam.

What’s module syllabus?

The syllabus lists the weekly readings and assignments. You can use the syllabus as a checklist and narrow down topics to study. To download the syllabus, click here.

What are the exams?

There is only one final exam at the end of Core 2. The exam is 4 hours and consists of 75 MCQs and one 60-minute case. Some students write the 75 MCQs first then tackle the case, others write the case then answer the MCQs. I recommend that you start with the case.

The Core 2 MCQs are extremely hard. Most students don’t pass Core 2 due to MCQs. It’s very important that you complete all core-level MA, SG and Finance MCQs in D2L during your studies.

Below is the exam blueprint that shows the weighing of the 4 technical competencies tested in Core 2 MCQs:

As you can see, Management Accounting is the biggest subject. I recommend that you spend most of your study time on MA.

Beware that the exam is not based on the syllabus, it’s based on the CPA Canada Competency Map. So there will be topics tested in the exam that you didn’t see in the syllabus, PCs, and IPs. You should expect to see surprises.

How many tries do I get?

You have 3 attempts to pass Core 2. If you don’t pass in your first try,  you can challenge the next exam without taking the entire module again. If you don’t pass in your second try, you’ll need to re-take the entire module for 3rd and final attempt. If you don’t pass in your third attempt, you’ll be de-registered from the PEP program. At that point, you can re-register and start from Core 1 again. Another option would be to take the PEP courses through a university and skip Core 1 and Core 2 altogether. You can read more about it here.

What are the textbooks?

Each study unit in the Core 2 syllabus covers chapters in the Learning eBooks. The Learning eBooks are PDF textbooks given to you by CPA Canada when you register for Core 2. The eBook chapters provide e-lessons, technical drills, examples,  summary problems and so on. While it may not be possible for you to study each eBook chapter, prioritize the subjects you see more frequently on cases, such as break-even analysis. Here is more information on how to download the CPA Canada Learning eBooks.

You don’t get access to the eBook during the exam, but you get a “cheat sheet”, with a list of common ratios and a few other formulas. Most formulas you need for Core 2 are not on that cheat sheet. I suggest that you build it yourself as you study. Note that can’t take your cheat sheet to the exam, it will be used for your studies.

Below is an example of how to build a cheat sheet / study notes for Core 2. Create an Excel file with tabs for each topic. When you come across a topic in your assignments, copy the format of how it was solved. At the end of your studies, you’ll have a master workbook with all major topics, testing scenarios, and how it was solved.

What should I study?

As you saw in the blueprint, MA is the biggest portion.  I suggest spending most of your time studying the MA area.

The exam’s case portion will mainly test on MA, and 1 or 2 other areas (eg. S&G or Finance). For example, your exam case may have 3 MA AOs (eg. BEP, CM, VA), 1 S&G AO (eg. key performance indicators) and 1 Finance AO (eg. NPV). Or it may have 4 MA AOs (eg. BEP, CM, VA, SA) and 1 Finance AO (eg. WACC). This changes every semester and I can provide you tips and estimates on what I think will come up in my Core 2 success program.

For the MCQ portion, MA is again the most weighted subject. As mentioned, Core 2 MCQs are extremely long and hard. I suggest that you practice all D2L MCQs in MA, SG, and Finance. Don’t study Assurance or Tax, these are not tested in Core 2 at all.

What’s the Core 2 pass rate?

The Core 2 pass rate is around 83%. 

Why do students fail Core 2?

Interestingly, more students pass Core 2 than Core 1, but if you ask around, everyone will say Core 2 was harder. Here are the top reasons:

About 50-70% of the exam is MA. Most students struggle with MA, because it’s challenging to think about the problem and solve in Excel in the short amount of time. Having weak MA and no formatting templates in mind are key factors why candidates fail Core 2.

Unlike Core 1, which is “theory” based, Core 2 is all about calculations. This means it’s not possible to pass Core 2 by just doing readings from EBook. Instead, work on your quantitative analysis skills by practicing as many Core 2 MCQs and cases as possible. With each attempt, you will learn a new MA formula and how it was solved.

Core 2 exams are also very time-constrained. As I noted earlier, Core 2 MCQs are long and time consuming. I suggest during the exam to take educated guesses on some long MCQs. Students who passed Core 2 tell me that they guessed on 20-25% of MCQs (1 of every 5), so you’re expected to take some guesses.

Lastly, Core 2 is a self-lead course, which means you are responsible for managing your time, planning your readings, and understanding the material.

Overall, weak MA skills, not having enough time to study, and time management are the biggest reasons students fail.

Do I need a tutor?

Hiring a tutor is a personal preference and it depends on your circumstances. A CPA tutor brings their expertise, helping to identify your weaknesses, reinforce your strengths, teach complex topics, reveal what topics are most tested through analyses of the Competency Map and exam blueprint, thus helping you speed up your study time and increase your chances of passing the exam.

If you attempt Core 2 by yourself and don’t pass it, I suggest that you consider getting a tutor. But if you are successful, then you can keep doing what works for you.

Extra resources

Extra Core 2 resources are available at Core 2 Lessons course.

In this article, I will provide information about the CPA Canada’s Core 1 module, outlining the basics, format, assignments, assessment, examination, and tips for successfully passing the module.

Related readings:

• Core 2 Module Guide
  
• Assurance Elective Guide
• PM Elective Guide
• Finance Elective Guide
• Tax Elective Guide
• Capstone 1 Study Guide
• Capstone 2 Study Guide
• CFE Study Guide

What’s Core 1?

Core 1 is the first of six modules in the CPA Canada Professional Education Program (PEP) that will lead you to the Common Final Exam (CFE). Completing the core modules (Core 1 and Core 2) is required before you can choose your elective modules, complete the capstones, and sit in the CFE.

The objective of Core 1 is to teach and test you on financial reporting (FR), Assurance, Tax, and Finance. Of these, FR is the biggest part of the module and the exam.

Examples of FR topics include:

• Revenue recognition
• Financial instruments
• Non-monetary transactions
• Related-party transactions
• PPE
• Inventory

Core 1 is provided in an online format, with all assignments, readings and quizzes taken on the website Desire 2 Learn (D2L). You’ll get access to D2L about a week before the Core 1 start date.

How long is it?

Core 1 is 8-weeks long and most students take this standard 8-week path. However, you can take the extended version and finish Core 1 in 5 months. This is recommended for students who are busy or like to study in a slower pace.

You can also challenge Core 1, where you skip the entire module and just take the exam. This is allowed only in special circumstances, such as for internationally trained accountants under MRA/MOU.

You can also complete Core 1 in a format called fast-track. With fast-track, you take Core 1 and Core 2 together. This is the fastest way to finish the CPA program. I recommended fast-track only for those who are not working, because you won’t have time to do all the assigned readings if you work full-time or part-time.

Is there an instructor?

You’ll be assigned an online facilitator at Core 1. Their job is to answer questions via email, provide feedback on assignments, help you find information, and facilitate the forums. You won’t see them in-person, since the module is online.

There is also a module workshop (MWS) and an orientation workshop (OWS). These workshops are mandatory two-day events, where you’ll participate in several activities led by a session leader. These activities include a review on technical material and case writing techniques. I previously worked as a session leader with CPA Canada.

Prior to the workshop, you’ll be required to complete workshop pre-work and submit to D2L dropbox. Surveys are also required to be completed after each workshop. Workshops are your only chance of seeing someone live, so I suggest taking advantage of them and asking lots of questions. You should also network with your classmates and try to form a study group.

What are the assignments?

Core 1 module consists of weekly assignments that are made up of:

• Multiple-choice questions (MCQs)
• Integrative problems (IPs)
• Practice cases (PCs)

MCQs are small problems that test on various technical topics.

Below is an example of a Core 1 MCQ:

The IPs are short-answer assignments that test the technical material learned in the weekly unit.

Below is an example of Core 1 IP:

The PCs are 60-minute cases designed to simulate the actual Core 1 module exam.

Below is an example of Core 1 PC:

Most students find the exam to be harder than the PCs, so I suggest practicing with retired exam cases (discussed below) and mock exam simulations.

The IPs and PCs are to be completed using Microsoft Word and Excel, and uploaded to D2L weekly. The deadline is typically Friday night. Your facilitator will personally mark and provide you with feedback a few days after submission. Feedback is provided in the form of an Excel file, referred to as the Feedback Guide (FG), which will show you how you scored in each assessment. Solutions will automatically be provided to you upon submission. If an assignment is not submitted, the solutions will be released after the deadline.  

Below is an example of a Core 1 FG:

Each row in the feedback guide is graded as:

• No (N): You didn’t attempt the element (Note: Each element in FG is known as MPI, which stands for minimum proficiency indicator) .
• Partially (P): You attempted the element to some degree.
• Yes (Y): You fully achieved the element as needed.

The MCQs are marked automatically by the system.

You will also be provided with retired exam cases (actual cases from past module exams). These are optional but I recommend to practice them under time-constraint to see how ready you are for the final exam.

How is it graded?

The IPs and PCs are made up of assessment opportunities (AOs). Grades are provided individually by AO and will be ranked as one of the following:

• Competent with distinction (CD): Above the required answer, much detail was provided.
• Competent (C): Well-balanced response. This is what you’re striving for.
• Reaching competent (RC): Identified the AO, but the response lacks depth and/or breadth (missing some critical points)
• Nominal competence (NC): Attempted but lacked a sufficient analysis or completely inaccurate.
• Not addressed (NA): Didn’t attempt to answer the AO. Usually when you are out of time or don’t catch it.

Your target grade for an AO is a C. The PCs have 5 AOs and the IPs will range from 3 to 6 AOs. The actual Core 1 exam will have 5 AOs.

The RC/C scores in IPs and PCs give you certain number of points. To be eligible to write the exam (discussed below), you need to get at least 75% total grade from your weekly assignments. The course is weighed as follows:

• IPs: 30%
• PCs: 30%
• Unit quizzes and MWS pre-work: 30%
• MWS participation and OWS: 10%

You should not worry about getting this 75% threshold. Most student reach the 75% mark and get to write the exam; the real challenge is passing the exam.

What’s module syllabus?

The syllabus lists the weekly readings and assignments. You can use the syllabus as a checklist and narrow down topics to study. To download the syllabus, click here.

What are the exams?

There is only one final exam at the end of the module. The exam is 4 hours and consists of 75 MCQs and one 60-minute case. Some students write the 75 MCQs first then tackle the case, others write the case then answer the MCQs. I recommend that you start with the case.

Below is the exam blueprint that shows the weighing of the 4 technical competencies tested in Core 1 MCQs:

As you can see, Financial Reporting is the biggest subject. I recommend that you spend most of your study time on FR.

It’s important to note that the exam is not based on the syllabus, it’s based on the CPA Canada Competency Map. So there will be topics tested in the exam that you didn’t see in the syllabus, PCs, and IPs. You should expect to see surprises.

How many tries do I get?

You have 3 attempts to pass Core 1. If you don’t pass in your first try,  you can challenge the next exam without taking the entire module again. If you don’t pass in your second try, you’ll need to re-take the entire module for 3rd and final attempt. If you don’t pass in your third attempt, you’ll be de-registered. Here is further reading on how to re-register and try Core 1 for the 4th time.

What are the textbooks?

Each study unit in the Core 1 syllabus covers chapters in the Learning eBooks. The Learning eBooks are PDF textbooks given to you by CPA Canada when you register for Core 1. The eBook chapters provide e-lessons, technical drills, examples,  summary problems and so on. While it may not be possible for you to study each eBook chapter, prioritize the subjects you see more frequently on cases, such as revenue recognition. Here is more information on how to download the CPA Canada Learning eBooks.

You will also be provided with the CPA Canada Handbook. This will contain Financial Reporting (eg IFRS and ASPE) standards. 

The platform that has the Handbook and other authoritative materials, such as the Income Tax Act, is known as Knotia. You will be using the eBook and Knotia (which has the Handbook, ITA, etc) throughout the module. Here are tips on how to access and use the Handbook.

You don’t get access to the eBook during the exam, but you get access to the Handbook. You’ll use Handbook to look up the accounting standards and the tax rules. You’ll also be provided with a “cheat sheet” during the exam, with a list of common ratios, a tax shield formula, and other relevant tax information. You can’t take your own notes to the exam. 

What should I study?

As you saw in the blueprint, FR is the biggest portion.  I suggest spending most of your time studying the FR area.

The exam’s case portion will mainly test on FR, and 1 or 2 other areas (eg. Assurance, Finance and/or Tax). For example, your exam case may have 3 FR AOs (eg. revenue recognition, PPE, impairment), 1 Tax AO (eg. small business deduction) and 1 Assurance AO (eg. control deficiencies). Or it may have 4 FR AOs (eg. revenue recognition, PPE, impairment, inventory) and 1 Assurance AO (eg. procedures). This changes every semester and I can provide you tips and estimates on what I think will come up in my Core 1 success program.

For the MCQ portion, FR is again the most weighted subject. I suggest that you practice D2L MCQs in FR, Assurance, Finance and Tax areas. Don’t study Management Accounting or Strategy and Governance, these are not tested in Core 1 at all.

I give more tips on how to prepare and pass the Core 1 exam in my YouTube channel (Gevorg, CPA).

What’s the Core 1 pass rate?

The Core 1 pass rate is around 75%. 

Why do students fail Core 1?

There are many reasons why students don’t pass. First, Core 1 is a fast-paced module and it’s difficult to complete all the readings. It is also a self-lead course; while there is a facilitator for questions, you are responsible for managing your time, planning your readings and understanding the material.

Secondly, the module has a wide range of topics, which most find challenging to keep track and remember. This makes the MCQs very difficult, because they have a variety of complex technical topics.

Thirdly, the cases are very time-constrained and most find it difficult to complete within the 60-minute time frame. You will need to have at least 50 WPM typing speed and good understanding of topics because you won’t have time to think during the exam.

Overall, not having enough time to study and time management during the exam are the biggest reasons students don’t pass.

Note that the exam results are “curved” based on average performance and CPA Canada doesn’t reveal how they mark the exam. From my experience, passing the exam requires getting only RC and C grades, with only 1 or max. 2 NCs. If you get 2 NC grades, you will need several Cs to offset it.

Do I need a tutor?

Hiring a tutor is a personal preference and it depends on your circumstances. A CPA tutor brings their expertise, helping to identify your weaknesses, reinforce your strengths, teach complex topics, reveal what topics are most tested through analyses of the Competency Map and exam blueprint, thus helping you speed up your study time and increase your chances of passing the exam.

If you attempt Core 1 by yourself and don’t pass it, I suggest that you consider getting a tutor. But if you are successful, then you can keep doing what works for you.

Extra resources

Extra Core 1 resources are available at Core 1 Review course.

In a recent update, CPA Canada announced a change to the May 2023 Common Final Examination (CFE).

Starting from May 2023 CFE, all tables on the CFE that contain 10 or more lines of financial information, including F/S, will be pre-loaded into the spreadsheet component of the exam writing software (SurPass). This change is applicable to all cases on all three days of the CFE.

How do pre-loaded tables impact CFE?

Since the new rule applies to 10 or more lines of information, I anticipate this will impact management accounting (MA) and Finance AOs, in addition to financial statements. This means you may get some MA or Finance tables that are pre-loaded into your spreadsheet, in Days 2 and 3.

Day 1 may also be impacted. Sometimes Day 1 exams have F/S and sometimes they don’t. With this update, I expect your Day 1 exam to have F/S. I recommend to use it for Situational Analysis Framework analysis, by copying the relevant numbers and performing high-level quant analysis.

Will CFE be harder?

I don’t anticipate CFE to be harder due to this change. Prior to 2020, the CFEs had pre-loaded F/S, and their level of difficulty was equivalent to the ones from 2020-2022, where F/S were not pre-loaded.

With the reintroduction of pre-loaded tables, even if 10 lines, I expect the exam to maintain a similar level of difficulty. 

What are my CFE strategies now?

With the new update, you can optimize your CFE strategy to save time and improve the overall exam performance. Here are some suggestions on how to make the most of the pre-loaded financials:

1. Copy relevant numbers: Instead of manually transcribing the numbers from the F/S, simply copy the relevant figures from the pre-loaded tables and paste them into your calculations. This will save you time and minimize the risk of errors from manual transcription.
2. Expect Day 2 F/S adjust AO: You may get Day 2 FR AO to adjust the F/S due to FR errors. You can copy the pre-loaded F/S and make adjustments to arrive to revised F/S faster.
3. Perform calculations efficiently: You can now perform the MA and Finance calculations efficiently. For example, if you need to calculate the working capital ratio, copy the current assets and current liabilities from the pre-loaded financial statements and perform the calculation.

Overall, I don’t anticipate CFE to be more difficult. You should use this update to your advantage.

Extra resources

By adopting effective exam strategies, you can leverage this new feature to save time and improve your exam performance.

Extra resources are available at CFE Review courses.

As a CPA Canada student, understanding the practical experience requirements (PER) is crucial for your journey towards becoming a CPA.

Two common questions I get from students is whether they can report part-time work experience or claim experience from multiple jobs simultaneously. In this blog post, I will clarify these concerns and help you better understand the CPA PER process.

Can you claim part-time work experience in PERT?

Yes, you can report your experience gained from a part-time position for CPA PER. It’s important to know that the duration of your part-time work experience will be calculated on a pro-rated basis. This is because part-time work weeks are generally below the standard full-time work week of 35 hours.

For example, if you work 20-30 hours per week in a part-time role, your experience will be adjusted accordingly when compared to a full-time position. This ensures that you receive credit for your part-time experience while maintaining a fair balance between part-time and full-time work experience.

Can you claim PERT experience from multiple jobs?

If you find yourself working multiple jobs at the same time, you may wonder if you can claim experience from both positions. You can only have one job ‘pre-assessed’ by CPA Canada at a given time to report the experience for that duration. You will not be able to claim the experience from multiple jobs if the dates for the duration from these two jobs overlap.

For example, if you work two jobs for a year, each with 40 hours per week, you might think that you can claim a total of 80 hours per week. However, this is not the case. You can only claim the experience from one of these jobs at a time.

Extra resources

Understanding the CPA Canada PERT requirements can be challenging, but it’s crucial to ensure that you’re on the right track to obtaining your designation. When it comes to part-time work and multiple jobs, keep in mind that part-time experience is counted on a pro-rated basis and you can only claim experience from one job at a time.

Extra PERT resources are available at PER Review courses.

As you’re progressing through the CPA Canada’s PEP program, you will eventually enroll into Capstone 2 module.

Capstone 2 module is designed to help you prepare for the Common Final Examination (CFE). It provides past, actual CFE Day 2 and 3 exams, as well as Day 1 mock practice cases. For Day 1, the actual, past exams are not given, because the Day 1 company changes every CFE. Instead, you will get three practice versions that “simulate” your Day 1 exam.

Many students have expressed concerns that the Day 1 practice cases offered in Capstone 2 are not good representations of the actual Day 1 exam. In this post, I will explore these concerns in more detail and give you other study options.

What Day 1 practice cases will I get in Capstone 2?

Capstone 2 provides (3) three practice cases of the Day 1 CFE exam: module workshop version (MW), week 3 (W3) and week 6 (W6). These practice versions are meant to prepare you for your Day 1 exam, similar to how core/elective module practice cases prepared you for those exams.

However, the Capstone 2 Day 1 practice versions do not accurately reflect the real Day 1 exam.

What’s wrong with Capstone 2 Day 1 practice cases?

There are several problems with the Capstone 2 Day 1 practice cases. For example, the way constraints and strategic direction (big picture issues) are handled in the Capstone 2 practice cases is flawed. In the actual Day 1 exam, constraints and strategic direction are supposed to be discussed in all recommendations, including the overall recommendation. Below is a screenshot of the marking rubric, taken from the Day 1 automatic feedback report:

As noted above, the constraints (in this case, the cash flow constraint) must be discussed in all recommendations. However, in the Capstone 2 practice cases, the constraints are not always integrated into the recommendations, which can be confusing for students.

Day 1 exams have recently started testing on strategic direction overarching issue. Missing this can be a fatal flaw in the exam and you may fail. Capstone 2 cases don’t have this overarching issues, which means you’re not getting full preparation for the actual exam.

Below is an example of strategic direction overarching issue from a recent Day 1 exam:

Second example of strategic direction overarching issue:

As you see above, the strategic direction must be discussed in all recommendations.

Spring 2024 update: Starting Spring 2024, the strategic direction required is now part of Capstone 2 practice versions.

What else is wrong with Capstone 2 Day 1 practice cases?

Another concern is that the Capstone 2 Day 1 quantitative analysis are much longer than those that come up in the actual Day 1 exam.  This means you have no real chance of finishing the quants in the Capstone 2 cases, but you can finish them in the Day 1 exam.

Above screenshot is an actual Day 1 exam quants. It’s much shorter than the Capstone 2 version.

Additionally, the situational analysis framework (SAF) provided in the Capstone 2 practice case solutions is very long and includes both Capstone 1 factors and Day 1 factors.

In the actual Day 1 exam, you don’t need to re-write the Capstone 1 and Day 1. You need to simply compare the Capstone 1 and Day 1 changes in a combined analysis. 

Similarly, the Capstone 2 SWOT analysis has an extremely long and detailed list of factors. These factors come from the narrative, dialogue and appendices of the case.

In Day 1, you need to briefly explain the SWOT factors, you don’t need to answer the “so what” in detail as this part is not graded (it’s only graded once you integrate it).

In the real Day 1 exam, the SWOT factors come mostly from the narrative (first 1-2 pages of the exam). There is small input from the board dialogue and rarely from appendices.  We would only add from the appendices if there is an appendix called “Industry update“.

Should you even practice with Capstone 2 Day 1 cases?

Despite these flaws, there are some good aspects to the Capstone 2 Day 1 practice cases. For example, the format in which qualitative points are discussed is a good way for you to write pros/cons during the exam. Though it is long and detailed, you need to write in similar depth during the Day 1 exam.

However, the number of pros and cons provided (“breadth”) in the practice cases is too much, and you should aim to write 3-4 pros and 3-4 cons in the actual Day 1 exam.

Do these flaws apply to every Capstone 2 case (eg Days 2 and 3)?

These flaws apply to only Day 1 practice cases. The Day 2 and Day 3 practice cases in Capstone 2 are the real, past CFE exams, so they are good representations of what may come up in your CFE.

What other resources can I get to learn about Day 1?

If you are looking for more accurate representations of the CFE Day 1 exam, I recommend to seek out supplemental cases from third-party providers. These cases are designed to simulate the actual exam and can provide you with more valuable practice and insights into the types of questions that may be asked.

Conclusion

In conclusion, while the Capstone 2 practice cases provided by CPA Canada are helpful for some aspects of Day 1 preparation, they may not be the most accurate representation of the actual exam. It’s important for you to be aware of the differences between the Capstone 2 Day 1 practice cases and the real Day 1 exam, and seek out additional resources if necessary. With the right preparation, you can increase your chances of success on the Day 1 of the CFE.

Extra resources are available at CFE Review course.

For each strategic issue in Day 1 of the CFE, candidates will be marked on a qualitative (qual) and quantitative (quant) component. In this article, I’ll discuss if this should be done in a specific order. For example, should qualitative be written before quantitative, or should quantitative be written before qualitative.

You can read about basics of Day 1 here. 

Day 1 marking

As per CFE Day 1 feedback guides, the marking of strategic issues is divided into quantitative and qualitative. For example, below is the marking guide for a proposal AO:

You’ll notice the feedback guide shows the quantitative first. However, even though the quantitative comes first, you can choose to write the qual (pros vs cons) first. There is no criteria in terms of which one you should write first.

Quant vs qual

Some candidates require more time to think about the most appropriate calculation to perform on an AO. Doing the qual (pros vs cons) first ensures they can finish the AO in the allotted time while they consider the calculation. This is better than spending the entire time solving quant and leaving qual empty.

However, there can be instances where the qualitative may still be fresh from your reading of the case or easier to spot, and in such cases, it’s beneficial to write the qual (pros vs cons) first.

I suggest picking one strategy and sticking with it throughout the exam.

Writing all quant/qual at once

Since you are likely highlighting and noting down potential pros vs cons as you read them, you can even do all of the qualitative responses first, for all strategic issues, and then take care of the quantitative at once for all issues. If your strength is performing calculations instead, the reverse can be true: you can solve all calculations first, and then come back to do your qualitative. Be careful with this strategy though, your recommendations must stay consistent. Don’t forget what your first analysis was as you’re doing the second part.

If you’re struggling with quants, the Day 1 Quants Mastery toolkit is a valuable resource to practice with.

Conclusion

Some candidates prefer writing quant and then qual, others prefer the reverse. Some candidates prefer writing all quants, and then all qual, for all strategic issues. It’s usually because they are efficient in working in one workbook at a time (excel vs word). Others may find it more efficient to finish an entire AO while it’s fresh in their minds.

The preferred method is entirely up to your preferences and your strengths. I’ve coached students under both methods and the results were successful.

Extra resources are available at CFE Review course.

During CPA Canada’s PEP and CFE exams, you’ll be using a lockdown software called SurPass. This program gives you access to the CPA Canada Handbook, which you can use to answer Financial Reporting (FR) AOs. 

During your preparation, you should use the Handbook extensively to become familiar with it. Here are the steps to access the Handbook:

Step 1: Access Knotia

Knotia is the website where the Handbook is located. During the exam, you’ll access Knotia using SurPass software.

Access Knotia here: https://www.knotia.ca/

Step 2: Click on CPA Canada Standards

Knotia has several authoritative resources:

• CPA Canada Standards and Guidance Collection: This is the Handbook with FR and CAS (audit) standards.
• Income Tax Act: This contains the tax standards

Both are available during the exam.

Click on the CPA Canada Standards and Guidance Collection for FR standards.

 

Step 3: Expand Accounting section

On the left-hand side navigation pane, expand the Accounting section.

Step 4: Choose IFRS, ASPE or ASNPO

The Handbook is divided into IFRS (International Financial Reporting Standards), ASPE (Accounting Standards for Private Enterprises) and ASNPO (Accounting Standards for Non-For-Profit Organizations).

These three are tested in CPA Canada exams. Expand each section by clicking on the plus (+) signs.

Special notes

IFRS:

• IFRS is organized by year. Choose the year that’s one year prior to your exam year. For example, if you’re wring your exam in 2024, choose 2023. If you’re writing in 2023, choose 2022.
• Only the sections called “Conceptual Framework..” and “IFRS Standards in Effect…” are the relevant parts.

ASPE:

• Open “Accounting Standards” and choose either: “General Accounting…” or “Specific Items…“. Both are relevant to the exam.
• The other sections of ASPE are not relevant.

ASNPO:

• ASNPO is simpler than IFRS and ASPE. Once you expand it, you’ll see a handful of standards. They are all relevant for your exam.

PSA:

• There is also “Public Sector Accounting Handbook” on the bottom. This contains accounting standards for government entities, such as crown corporations. These standards can be tested in PEP and CFE, per the Competency Map, however they have never been tested before. Don’t spend much time here.

Are EBooks, Handbook and Knotia the same thing?

No, they are different. EBook is a learning resource to help candidates prepare for the CPA exams. Handbook contains IFRS and ASPE standards. Knotia is the platform that has the Handbook and other standards, such as Income Tax Act. During the exam, you have access to the Handbook, but not the EBook.

Extra resources

FR resources are available in my CPA Canada tutoring programs.