September 2024 CPA CFE Cases and Answers (Download)

Similar to prior CPA Canada Common Final Exams (CFEs), the September 2024 CFE had two Day 1, one Day 2 and three Day 3 cases.

The following Day 1 cases were tested:

The following Day 2 and Day 3 cases were tested:

  • Day 2 (Download)
    • Inspired Books Ltd. (IBL) (300 minutes)
  • Day 3 (Download)
    • Fresh Fashion Inc. (Fresh) (90 minutes)
    • Percy & Thrower Inc. (PT) (80 minutes)
    • Prairies Wheel Company (Prairies) (70 minutes)

For the May 2025 CFE, the following Day 1 cases will be tested:

  • Viviana’s Trattoria Ltd. (VTL) v1
  • Neptune Point Fisheries Inc. (NPF) v2

For the September 2025 CFE, the following Day 1 cases will be tested:

  • Meadowlark Entertainment Inc. (MEI) v1
  • Amuzu Parks Inc. (API) v2

Where can I get the solutions?

CPA Canada will release the official solutions to September 2024 CFE cases in May 2025.

Will I get these cases in Capstone 2?

If you are registered for the Capstone 2 module for Spring 2025, you will NOT receive these cases at the module. You should download using the links above. If you are someone challenging the exam, such as an internationally trained accountant applying under MRA/MOU, please also download using the links above.

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. If you want coaching with me, sign up for my CPA CFE Review Course, for a comprehensive prep package.

CFE Review by Gevorg CPA

Catching up on CPA PERT Reports

If you find yourself behind on your CPA Canada Professional Experience Requirements (PER), don’t panic! While the pressure can be overwhelming, there are effective strategies you can use to get back on track. Here’s a breakdown of what you need to know and do when you’re behind on a CPA PER reports. 

Behind on PERT reports

First, you should know that you’re not the only student behind on PERT. I receive messages daily from students who are behind on PERT – or who’ve never submitted any PERT reports – and their deadline is fast approaching. This is common and CPA PER reviewers are used to this. 

Here’s my advice based on your situation:

  1. Your CPA program deadline is approaching: If your CPA deadline is within the next 6 months, your first course of action is to ask for an extension. The process is to send a message to your provincial CPA PER team and outline the extraordinary reasons that have prevented you from completing your program requirements on time. If you’ve already passed CFE, your chances are even higher. I’ve successfully consulted and helped students get extension and complete their requirements before the deadline. 
  2. You haven’t submitted reports for a long time: If you haven’t submitted PER reports for a while, but your deadline is 6-12 months – or even farther down the road, don’t worry about extension at this point. In fact, PERT team doesn’t allow extension requests until you’re within the 6-month range. Your first course of action is to catch up – and you need to do it ASAP.

How to catchup on PERT

Let’s say you haven’t submitted PERT for 1, 2 or even 3 years. In situations like this, CPA PER team asks that you write 1 big report for the entire period. They don’t require you to go back and re-do the missed reports and mentor meetings, unless you changed jobs during that period or your title changed.

If your job or title changed, then they ask that you split your catch-up report for each of those segments. For example, let’s say you haven’t submitted PER for 3 years and you switched jobs 4 times. You would write 4 catch-up reports for each of those jobs, putting the date range based on when you worked in each company.

Before you start writing the reports, I recommend that you send a brief email to your provincial PER team and let them know your plans. Tell them that you’re behind on PER and you’re planning to do a catch up report for each of your jobs. They will give you confirmation to go ahead and you can write the reports. If for some reason they ask you to combine the reports, or write extra reports, follow their instructions and write as they say. CPA PER requirements are set provincially and PER team is very inconsistent. Though they have harmonized policies, each province has its own team that reviews and approves PER submissions. Some provinces, like Ontario, are consistent in their responses and requirements. Other provinces, like BC and Alberta, are less consistent. For this reason, it’s better to be proactive and communicate your intentions, rather than spending your time writing the reports and getting the feedback from them that you were expected to follow another procedure.

When writing your catch up reports, it’s important that you show progression. This means in the first few reports, claim only level 1 – don’t claim level 2 at all. Then in the final report(s), claim the level 2s.

Now, let’s look at the scenario where you’re behind and you haven’t changed jobs nor titles.  For example, let’s say you haven’t submitted PER for 3 years and you worked in the same company and role for the whole period. In this case, create 1 big report for this entire date range.  Don’t split your report into smaller segments. Similar to above, you should send a brief email to your local CPA PER team and let them know you’re planning to write 1 big report and let them give you green light. As I said earlier, CPA PER team is inconsistent, it’s best to have written communication from so that your bases are covered. 

When you’re writing the 1 big report, the progression (ie, Level 0 and Level 1) can be skipped, you’re assumed to be already at level 2 because it’s a wide range, so claim mostly level 2s. Your challenge will be to write concisely because they will be looking for multiple examples in each area. I have a specialized PER template that will help you write multiple examples in 1 report and stay within the 5,000 character limit in my CPA PER Review coaching program.

Penalties when you’re behind on PERT

In an ideal world, candidates would create a PER report bi-annually (twice a year or every 6 months), meet their mentors twice a year and finish PERT at the exact 30-month point. The reality is that many students are behind on PER and they miss report submissions and mentor meetings. 

CPA provincial bodies penalize 1 month for every missed mentor meeting. So if we normally need 30 months to graduate, if you’re behind on PER, you’ll need more than this. For example, if you haven’t done PER reports nor met your mentor for 2 years, then you missed 4 mentor meetings (twice every year for two years). You’ll be penalized 4 months. This means you will need a total of 34 months to graduate. Your best course of action is catch up as soon as possible, by writing the catch up report(s), and once you get up-to-date, finish off any remaining months from your current job.

You can see what your penalty is by accessing your online PERT tool, clicking on Consolidated Summary and running it for all your reports. This will not display properly if you haven’t submitted any reports, so you will need to wait until you’ve submitted the catch up report(s) to find out.

How to write a PER report

I’ve written tips and tricks on PER in the articles below:

Keep an eye on my blog posts and social media channels for more articles. For personalized support, check my CPA PER Review courses for consultation, templates, examples and tailored support with writing your CPA PER reports.

 

How To Study for CPA Canada Core 1

Preparing for Core 1 of the CPA Canada PEP program can be challenging. With the right study strategies, you can make your progress easier and more effective. By using a mix of study techniques, practicing active learning, and staying organized, you can improve your chances of passing the Core 1 exam. In this article, I’ll share helpful study tips to prepare for Core 1 and help you get set up for success on the exam day.

What does Core 1 test?

Before diving into study strategies, it’s important to understand the competencies you’ll be tested in Core 1. This module covers Financial Reporting (FR), Assurance, Tax, and Finance. Of these, FR is the biggest part of the module and the exam. Here is the exam blueprint, showing the weight of the four technical competencies assessed in the Core 1 MCQs:

At Core 1 level, the focus will be on fundamental concepts rather than advanced material. For example, in the Tax section, you won’t need to study rollovers, reorganization, or acquisition of control impact. These are too complex for Core 1. Instead, the focus will be on personal and business related tax issues, filing and payment deadlines, classifications of employees, and so on. Check out my Ultimate Guide for CPA Canada Core 1 for more details on what to review.

How exactly do you study?

There are many different study methods: 

  • Active recall
  • Spaced repetition
  • Mind mapping
  • Summarization
  • Feynman technique
  • PQRST (Preview, Question, Read, Summary, Test)
  • PQ4R, (Preview, Question, Read, Reflect, Recite and Review)

I’ve tried most of these methods and the one that I found to be most effective is the active recall. It means to retrieve information from memory without looking at your notes. This method is effective because it forces your brain to work harder, making the learning process more active and engaging. Here are a couple of practical methods to implement active recall in CPA studies:

Quizzing: One of the best ways to apply the active recall technique is to quiz yourself. For example, after reading a chapter on audit assertions, create a list of questions based on the key concepts covered (or use the end of chapter questions) and try to answer without looking at the notes. This tests your understanding and also helps to find areas where you need to review again. 

Flashcards: Flashcards are an excellent tool for studying key definitions and concepts. Write important terms, formulas, and concepts on one side of the card, and their definitions or explanations on the other. This method allows for quick reviews and can be especially helpful for retaining complex information. Make sure to regularly shuffle the cards and quiz yourself to ensure you’re able to recall the information xx. 

How do you take notes?

Effective note taking helps with understanding and retention of important concepts. Here’s a suggested technique:

  • Step 1: Read the chapter’s title, heading and subheadings. This will tell you how big is the chapter and how much space/time you need to take notes.
  • Step 2: In a physical notebook or digital note taking app, create an outline using the chapter’s headings and subheadings. Leave space under each heading to add key points.
  • Step 3: As you read each section, write down the main ideas in your own words under the corresponding heading. Keep it brief, focusing on key concepts. You’ll know what’s important based on highlighted keywords. For example, in the chapter below, the word “WACC” is highlighted in green. This tells us it’s important. Also the WACC formula is highlighted, this means it’s important too. The remaining paragraphs are not highlighted, so they can be less detailed or even skipped.
  • Below is example of how our notes on this section would look like:
    • You’ll notice it’s brief, in bullet form, and doesn’t have filler words (like “the”, “of”, “since”). These are just visual distractions, we can skip them.
  • Step 4: Color code or underline important terms, formulas, or definitions to easily spot them when reviewing later.
  • Step 5: Create 1-2 sentence summary at the very end to wrap-up what you just read.
  • Step 6: Periodically review your notes before the exam to refresh your memory and ensure retention.

For FR competencies, it’s helpful to prepare separate summaries for IFRS and ASPE. This lets you to clearly identify differences between the two frameworks.

Should you study alone or in a group?

When I was a CPA student, I tried both studying alone and in a group. I found studying alone worked better for me. I’ve had friends who studied in a group, or with a study buddy, and they said it helped them a lot. So it depends on your preference and whether you can find a group that matches your study style.

Studying in a group has lots of benefits. Collaborating helps to improve your understanding. One of the most effective ways to deepen your understanding is by explaining topics to others. When you communicate your thoughts, you reinforce your own knowledge and identify any gaps in your understanding. For example, discussing complex concepts like the various IFRS 15 steps with peers can help clarify details that might be confusing when studying alone. You can also quiz each other. This method encourages active recall, making it more likely that you’ll remember the information during the exam. You can incorporate a mix of question types, like MCQ, true/false, or case AOs, to cover a range of topics and difficulty levels. You can also mark each others cases and get feedback. Study groups also give motivation and accountability, helping you stay on track with your study schedule. 

Stay organized

Finally, staying organized is crucial for maximizing your study efficiency and ensuring you cover the study material effectively. One of the best ways to do this is by creating a study plan. Outline what topics you plan to cover each week leading up to your exam, breaking down larger subjects into manageable sections. Fore Core 1, the module syllabus is a good starting point to build the plan. A study plan helps you allocate enough time for all chapters, preventing last-minute cramming and reducing stress as the exam date approaches.

Also, it’s helpful to track your progress. Keeping a checklist of topics you’ve covered, or tracking of your AO grades, allows you to visualize your achievements and see what still needs attention.

Extra resources

Sign up for CPA Review courses for exam strategies, technical summary notes, mock exam cases and extra set of MCQs.

 

How to Write Assumptions in CPA Canada Cases

Writing assumptions is important for getting full marks in CPA Canada cases, specifically in the quantitative (quant) type of AOs. In this guide, you’ll learn how to write assumptions the correct way, with tips on mastering this aspect of the case writing.

Are assumptions necessary?

Assumptions are necessary whenever there are uncertainties in quants (often there are lots!). It’s rare that you’re given a quants AO where all numbers are straightforward and there are no estimates or doubts. For this reason, you should write assumptions for every quants AOs. This is even more important for PM elective and CFE. 

Below is an example from a recent CFE Day 1 case. You’ll see that it requires providing financial implications or quant considerations, like assumptions, as part of the marking rubric:

Below is an example of how assumptions could be written for Day 1:

You’ll notice that:

  • It’s point form
  • There are only 4 bullets (3-4 assumptions is acceptable)
  • Unknown and uncertainties are included
  • Other considerations, such as constraint, is included

So in summary, you should always write assumptions when you’re solving quants. Keep it point form, only a few bullets, and include any other considerations that are relevant, like constraints, user preferences, company objectives.

What about CFE Day 3?

Similar to CFE Day 1, assumptions are needed in CFE Day 3 quants whenever there are unknowns or uncertainties. Although it’s not a separate MPI (minimum proficiency indicator) in the Feedback Guide, it’s required when you have calculations that have uncertainties.

Below is an example from a CFE Day 3 case Feedback Guide:

Below is how you would write assumptions for this case:

The same rules apply towards CFE Day 2 common MA AOs, PM elective, Tax elective and Core 2. Write assumptions similar to above to support your quants and ensure you get a C.

Extra resources

Sign up for CPA Review courses for Gevorg’s comprehensive training programs on quants, assumptions and case writing.

 

How to Reference ASPE and IFRS Standards in CPA Cases

Solving CPA Canada cases can be confusing. In some assessment opportunities (AOs), you provide an answer based on logic and case facts, such as sources of  financing, management accounting questions, board of director issues, audit procedures, data analytics, and so on. In other AOs, you are required to reference authoritative materials, such as ASPE, IFRS, ASNPO, ITA, and CAS. For these second kind of AOs, a common concern I get from candidates I’m teaching is whether they need to cite the exact standard number and exact paragraph in the response to get competent (C) grade. In this blog, we’ll look at how to format AOs when referencing to the CPA Canada Handbook.

Do you need to give the exact paragraph?

The short answer is no, you don’t need to provide the exact ASPE or IFRS standard and paragraph in your response. Instead, you can simply refer to the criteria itself, whether it’s ASPE or IFRS or ASNPO, to support your answer effectively.

Let’s look at an example. Using CFE Day 2 case Ferguson Real Estate (FRE) as an example, for a lawsuit AO, you can see below it says: “Per the ASPE section on contingencies, a contingency exits when…”

You’ll notice it doesn’t give the exact ASPE standard numbers nor does it give the exact paragraph where the recognition criteria are found. This is acceptable. The Feedback Guide doesn’t require it either:

Needless to say, if you do give the standard number and paragraph number in your response, you won’t lose marks, you’ll just lose precious case writing time.

Why is it not required?

The main reasons for this include:

  • Objective of CPA exams: The objective of CPA Canada exams is to assess your understanding of accounting principles and your ability to apply them in cases. Knowing the standards is good, but the examiners are more interested in evaluating your your ability to apply case facts and answer “so what”. This is why you won’t see specific marks identifying the section of the framework.
  • Focus is on analyzing and recommending: CPA Canada exams give cases that require you to analyze problems and make recommendations. The emphasis is on your ability to apply the accounting treatment rather than memorizing standard numbers and paragraphs. 
  • Time management: CPA Canada exams are intentionally time constrained, requiring you to manage your time efficiently to complete all sections. Spending time searching for specific standard numbers and paragraphs just for the sake of referencing is not smart. Instead, focus on understanding the Handbook structure.

What about Assurance and Tax referencing?

For most Tax and Assurance AOs, the same rule applies and you don’t need to reference the exact standard and paragraph numbers. However, there are some exceptions.

For example, you may get a Tax AO that requires you to reference a specific part of the Income Tax Act (ITA) to describe the type of transaction, such as Section 85 or Section 86. Below is an example where the answer references Section 86 to speak about reorganization:

This is rare, in 80-90% of Tax AOs you don’t need to reference the standard, you can simply say: “As per ITA,…”. 

Here’s another example for Assurance. To speak about the special engagements, we are expected to reference the CAS standard:

Below is the feedback guide for this AO:

Will you get C if you don’t reference these standards?

There are some exceptions in Tax and Assurance, but will you still get C if you don’t reference in these specific type of AOs? The answer yes, you’re very likely to still get a C. The reason is that the exam markers apply professional judgement to grade your papers, in addition to the solution keys. A competent marker will see that you referenced the right sections, even through you didn’t write the exact paragraph number or standard name, so they still give you the C grade. So you should focus on putting the correct criteria itself and don’t worry about putting the paragraph numbers just for the sake of referencing.

Extra resources

While it’s important to have a solid understanding of ASPE, IFRS and other standards for CPA Canada exams, you don’t need to worry about memorizing specific standard numbers and paragraphs. Focus on understanding the Handbook structure, applying criteria correctly with case facts, and communicating your case clearly and concisely. By doing so, you’ll be well-prepared to tackle any AO that comes your way, both in the exams and in your future career as a CPA

If you want CPA Canada exam tutoring, sign up for CPA Review courses for Gevorg’s comprehensive preparation package.

 

Understanding Warranty Treatment: IFRS vs ASPE

Warranties are a commonly tested topic in Financial Reporting (FR). Similar to other standards, they have definition, recognition, measurement, and disclosure rules. As you learn the complexities of ASPE and IFRS frameworks, understanding how warranties are treated is needed to pass your CPA Canada exams. In this blog, we’ll look at how to solve warranty AOs, with the key differences between IFRS and ASPE.

Example of a Warranty AO

For example, consider that as of September 1, 202X, Entity A must, by law, provide a 3-year warranty on all appliances sold. This warranty is not sold separately and ensures that Entity A will replace any appliances that do not meet product specifications over this period.

Records of historical sales indicate that over the past 5 years, most appliances incur defects within the first 2 years following the sale. It is estimated that 15% of appliances will incur defects and need replacement within the warranty period.

The estimated warranty cost for appliances sold between September and December 202X is $950,000 at an average of $2,000 per unit. Expenses totaling $15,000 are related to warranty claims on these sales. The average warranty cost per unit is $300.

Solving Using IFRS

Nature of Warranty

The first step to assessing this issue, is to identify the nature of the warranty, and whether this should be accounted for as revenue or as a provision.

As per IFRS 15, there are two types of warranties:

  1. Warranties that give customers assurance that the product will operate as intended by both parties, as it adheres to agreed specifications.
  2. Warranties that provide the customer with a service in addition to the assurance that the product complies with agreed-upon specifications. 

If the following criteria are both met, the warranty should be assessed using provision and contingency standards. If one, or both, criteria are not met, the warranty should be assessed using revenue standards.

  1. The warranty can’t be purchased separately by the customer. – MET, the example indicates that Entity A does not sell this warranty separately
  2. The warranty doesn’t provide a service to the customer in addition to the assurance that the product complies with agreed-upon specifications. To assesses this, you can consider the following factors:
    • The warrant is required by law – if the warranty is required by law, this supports that the warranty is not a separate performance obligation.
    • The warranty period – A longer period of coverage supports that the warranty is a separate performance obligation.
    • The nature of the warranty tasks promises – Certain tasks such as return shipping related to the defective product supports that the warranty is not a separate performance obligation.
  • MET, Entity A is required by law to provide this warranty and no additional services are provided.

Because both criteria are met, the next step is to assess the provision using IFRS provision and contingency standards within IAS 37.

Definition

A provision is a liability of uncertain timing or amount. To assess this definition, we need to assess the following criteria:

  1. Is this a liability?
    • A present obligation – MET, the warranty is an obligation required by law to fix or repair issues with appliances.
    • Arises from past events – MET, the appliances have been sold
    • Expected outflow of resources – MET, will require economic resources to provide a new appliance or repair the existing one
  2. Uncertain timing or amount – MET, the amount of the warranty spend is uncertain as this depends on the volume of claims and the cost to resolve each, and the timing is uncertain over the course of the warranty coverage period.

Therefore, the definition is met.

Recognition

Under IFRS, a provision should be recognized when the following criteria are met:

  1. There is a present obligation resulting from a past event – MET, the event occurred in the past.
  2. Probable outflow of economic resources will be required to settle the obligation – MET, based on historical trends provided, defects typically occur within the first 2 years so it is likely claims will occur that will require economic resources from Entity A to resolve it
  3. The obligation can be reliably estimated – MET, historical trends as per the above assessment can be used

Therefore, the warranty provision should be recorded.

Measurement

A provision should be recognized at the best estimate to settle the obligation. If there is an effect of time value of money, a present value should be determined.

The estimated warranty cost currently is – $950,000

The expected expenses already incurred for the warranty claims – $15,000

The difference, and present value of the warranty expense and provision is $935,000.

Conclusion

The provision for the warranty of $935,000 should be recorded as of December 31st.

(Note to students: In this example, we solved the problem in a very detailed way to help you understand the warranty concept. In your CPA Canada exam, depending what module you’re taking – Core 1, Assurance, CFE Day 2, CFE Day 3 – the amount of depth and details you need to write will be different.)

Solving Using ASPE

Under ASPE, there isn’t a dedicated section to discuss warranties. ASPE 3290 for contingencies can instead be applied to warranty scenarios.

Definition

A contingency exists where there is an existing condition that involves uncertainty to a possible gain or loss to the company, which will be resolved by a future event. The following criteria should be assessed:

  1. Existing condition – MET, Entity A is committed to replacing defective appliances and these appliances have already been sold.
  2. Possible gain or loss – MET, it is uncertain how many appliances will be returned and need to be replaced so there is uncertainty about the extent of the cost
  3. Resolved by a future event – MET, uncertainty will be resolved as appliances are returned, or after the 3-year warranty coverage has passed.

Therefore, this meets the definition of a contingent loss. 

Recognition

Under ASPE, a contingent loss should be recognized in the financial statements when the following criteria are met:

  1. It is likely that the loss will occur – MET, Entity A estimates that 15% of appliances will be defected during the warranty period.
  2. The amount of the loss can be reasonably estimated – MET, the average cost of replacing each appliance is $300.

Therefore, since the amount can be estimated and is likely, a contingent loss should be accrued for 15% of appliances sold in the financial statements.

Measurement

Under ASPE, the minimum amount is used for an estimate. Because a range is not provided, we will use the best estimate. Given that 475 units ($950,000 / $2,000 per unit) were sold between September and December 202X, and 15% are likely to be defective during the warranty period, this means approximately 71 units (475 units x 15%) will be defective. At an average warranty cost of $500 per unit, this is a total warranty cost of $35,500. Since $15,000 of warranty costs have been incurred, the remaining balance is $20,500.

Conclusion

A contingent loss for the warranty of $20,500 should be recorded as of December 31st.

Key Differences

The main differences between the two include:

  • IFRS assesses the nature of the warranty, to determine if it should be assessed using revenue or provision criteria.
  • Under ASPE, the term contingent liability is used opposed to the term provision.
  • Under ASPE, instead of taking the best estimate or range for measurement, the minimum amount is used.

Overall, under both methods, be sure you are addressing the definition and recognition criteria, and then calculating a measurement of the warranty impact. Be sure to integrate case facts when assessing these criteria to achieve depth! For more information on provisions and contingencies, click here.

Refer to ASPE vs IFRS for other standards that are unique or similar under the two frameworks.

Extra resources

I’m Gevorg. I’m an instructor and CPA Canada exam coach. If you want CPA Canada exam tutoring, sign up for CPA Review courses, for a comprehensive learning package.

CFE Review by Gevorg CPA

Is It Worth Ordering a Late CPA PAR Report?

If you find yourself wondering whether to order a Performance Analysis Report (PAR) after you receive your Common Final Exam (CFE) results – particularly if it arrives late – the answer depends on your circumstances and when you’re planning to re-write the CFE. Using the May CFE as an example, if you order PAR after September CFE results, you’ll receive the PAR at the start of May, which gives you just 3-4 weeks to analyze and learn lessons from it. Let’s dive deeper on what is PAR, whether it’s worth buying it, and whether it’s worth buying it if you’re gonna get it only a few weeks before CFE. 

What is CPA PAR?

PAR means Performance Analysis Report. If you don’t succeed on the CFE, whether partially or entirely, you have the option to ask for a re-marking and/or a PAR. The PAR gives detailed insights and feedback on the AOs where you didn’t meet the minimum standard, along with guidance on how to improve your performance. It also shows areas where you did well. So it’s like a Feedback Guide, but a bit less helpful because it doesn’t show the grade breakdown, which we call MPIs (minimum proficiency indicators), instead it gives general comments per AO.

PAR is useful because it helps you see where you made mistakes so you can understand why you didn’t pass and where to improve in your next attempt.

PAR is not free. The price ranges from $400-$1,100, depending on your province and the type of PAR you order. You can find CPA Ontario’s PAR fees here.

Here are sample PARs for Day 1 and Days 2/3 of CFE:

Day 1 CFE PAR & AFR

For CFE Day 1, there is Automatic Feedback Report (AFR) and Performance Analysis Report (PAR). Only Day 1 has this, Days 2/3 have only PAR, but no AFR.

What is AFR? To provide more prompt feedback to unsuccessful Day 1 candidates, the Board of Examiners (BOE) recently started to issue this AFRs for Day 1 . This report is automatically generated based on the candidate’s specific responses and it’s free. It aims to highlight your main shortcomings in the Day 1, thus helping you decide whether to request the comprehensive PAR for a fee.

A lot of students ask me whether the AFR is personalized or generic. It’s both personalized and non-personalized. Here’s what  I mean. The AFR shows where you personally made mistakes. For example, it’ll show that you made mistakes in Strategic issue #1 quants, Strategic issue #2 qual, big picture issue and so on. In this way, it’s personalized to your performance, others will not get the same exact report. However, the commentary inside your report, like: “You didn’t do well in Strategic issue #1 quants due to incorrect quants tool…”, this comment is generic, everyone who made a mistake in this part of the exam will get that same comment. 

Here’s what the AFR looks like:

 

AFR is free and everyone who didn’t pass Day 1 can download it from their CPA portal.

Days 2/3 CFE PAR

Days 2/3 PAR is more comprehensive and gives a breakdown for each case and each AO. You’ll find information such as:

  • Where are your specific mistakes
  • Example of how to write it better (in 1-2 sentences)
  • How you performed on your role
  • Assessment by competency area (ie, how did you do in each of 6 technical competencies)
  • CPA Enabling skills (how did you follow the CPA Way)
  • General findings such as:
    • Did the response appear balanced?
    • Was the response easy to read and understand?
    • Was the response well organized with a logical flow?
    • Did the candidate understand their role?
    • Did the candidate focus their response on the appropriate issues?

Here’s an example of Days 2/3 PAR.

Should you order PAR?

I did a detailed analysis and walkthrough of PARs in this blog post, please review to see if it’s worth it.

Is PAR worth it if it arrives late?

For Day 1, I recommend to first thoroughly review your AFR. It gives you good information what areas you didn’t pass. If you’re still not clear why you didn’t pass Day 1, then I recommend to order the full PAR. Yes it is worth ordering it even if it arrives late. The reason is that, unlike Days 2/3 PAR, it’s only about 13 pages. You can easily review, learn lessons and optimize your strategy in the 3-4 weeks before your CFE.

For Days 2/3, I recommend to order PAR, even if it arrives late, if:

  • Your transcript shows you failed in many areas, such as Level 1, Level 2, and Level 3
  • You’re on your 2nd or 3rd attempt 
  • You have the entire May off work to study for CFE and you have time to review your PAR

Make sure to take the time to thoroughly review it and summarize the key takeaways in your own words. I analyze PARs for my students in my CFE tutoring course, you can consider signing up to take advantage of this support.

Conclusion

In conclusion, deciding whether to order a PAR depends on your individual circumstances and preparation timeline. For most students, I recommend ordering PAR, even if it arrives late. The PAR provides valuable insights and guidance for improving your performance. Thoroughly reviewing the feedback, whether through AFR or PAR, is essential for identifying areas of improvement and optimizing your strategy for your next CFE attempt.

Extra resources

I’m Gevorg. I’m an instructor and CPA Canada exam coach. If you want CFE tutoring, sign up for my CPA CFE Review Course, for a comprehensive learning package.

CFE Review by Gevorg CPA

Preparing for CFE: What Topics to Study

As you prepare for the CPA Canada CFE, knowing your role subject is very important.  A question that a lot of CFE writers have is this: Should you review in-depth topics outside of your role too? For example, if you have chosen Performance Management (PM) as your role, should you review in-depth Financial Reporting (FR), Management Accounting (MA), and PM topics exclusively, or should you also get very familiar with Finance (FN), Taxation (TX), and Assurance (AS) technicals? This article will give you useful tips and tricks how to study for these secondary topics.

CFE Blueprint

The CFE is designed to assess your competencies across a big range of technical areas and your ability to apply these competencies in real-world scenarios, which we call “cases.” As a PM candidate, for example, your main focus is PM competency. However, this does not mean you should overlook other technicals.

To understand what areas you should be focusing your study time, it’s important to understand the CFE passing profile.

To pass Day 2/Day 3 of the CFE, you must pass the following 4 levels:

  • Level 1 – Sufficiency Level: Combined Cs and RCs from Days 2 and 3. This includes all competencies, meaning those outside of your role as well.
  • Level 2 – Depth Level: Need C in FR or MA. Regardless of your selected role, FR and MA are tested for all candidates. In one or the other (not both), you need 3 to 5 Cs.
  •  Level 3 – Role Level: Score Cs on Day 2 in your assigned role. This is role specific. For example, if your role is Assurance, you will need to score enough C-level grades in Day 2 pass. Aim for 4-5 Cs.
  • Level 4 – Breadth Level: This one tests on everything: FR, MA, FN, AS, TX, SG. Counts both Day 2 and Day 3. To pass Level 4, you need at least 2 RCs in all areas.

In summary, studying your role will help you pass Level 3 and Level 4, studying for FR and MA will help you pass Level 2 and Level 4, but you are required to study all competencies to pass Level 1 and Level 4.

The good news is that you don’t have to study these in-depth! For example, if you selected PM as your Day 2 role, you must score Cs in PM. You must also score Cs in FR or MA . However, on Day 3, you can get a mix of RC and C on secondary areas, such as Assurance, Tax and Finance. Aim to get 70% Cs and 30% RCs in these secondary topics.

Tips for Studying non-role AOs

Here are some study tips for the secondary areas:

  1. Focus on Core-level topics: There is no need to study complex topics. These secondary areas are tested at the same level as you’ve seen in Core 1 and Core 2. For example, in Tax, you can expect basic questions like personal & corporate tax returns, employee vs contractor, salary vs dividends, but you won’t get tough questions like Section 85 rollovers, re-structuring or amalgamations. Another example is CAS in Auditing. While CAS should be studied for Assurance role writers, it’s not needed for non-Assurance writers. Day 3 assurance AOs are very repetitive, there’s a very low chance you’ll be required to look up CAS.
  2. Study historical AOs: Though there are diverse topics that can be tested in Day 3, ~80% of them are repetitions from past CFEs. I recommend that, as you practice Day 3 cases, you spend some time summarizing the AOs in an Excel file. This will help you see a pattern of the repetitive topics. I’ve already done this and have 2015-to-now CFE data in my coaching programs. This strategy will help you study smart and use your time efficiently.
  3. Embrace cases and mock exams: Practicing cases and mock exams is the best method in your preparation for the CFE. Past cases provide opportunities to apply knowledge and skills in an environment similar to the actual exam. Similar to how you learn a new language, no matter how much theory you read, it’s the actual experience talking that helps you master the skill.

Conclusion

In conclusion, while your role on Day 2 is the main competency you must master, it’s essential to maintain a balanced approach during preparation. Study your role in-depth. Study FR or MA in-depth. Then study all other topics at the core-level, which means knowing 80% of the subject. Remember, you don’t need to be an expert in these secondary areas; just get comfortable with the basics and common topics. This balanced approach will give you the confidence and skills needed to tackle all parts of the CFE successfully.

Extra resources

I’m Gevorg. I’m an instructor and CPA Canada exam coach. If you want CFE tutoring, sign up for my CPA CFE Review Course, for a comprehensive learning package.

CFE Review by Gevorg CPA

May 2024 CPA CFE Cases and Answers (Download)

Similar to prior CPA Canada Common Final Exams (CFEs), the May 2024 CFE had two Day 1, one Day 2 and three Day 3 cases.

The following Day 1 cases were tested:

  • Neptune Point Fisheries Inc. (NPF) V1 (Download)
  • Kingsdale Tea Inc. (KTI) v2 (Download)

The following Day 2 and Day 3 cases were tested:

  • Day 2 (Download)
    • Fancy Luxury Jewellery Inc. (Fancy) (300 minutes)
  • Day 3 (Download)
    • Best Buddies Inc. (BB) (85 minutes)
    • Laura Saeed GR Inc. (LS) (85 minutes)
    • Lotoski (70 minutes)

For the September 2024 CFE, the following Day 1 cases will be tested:

  • Amuzu Parks Inc. (API) v1
  • J.R. Pets Inc. (JRP) v2

For the May 2025 CFE, the following Day 1 cases will be tested:

  • Neptune Point Fisheries Inc. (NPF) v2
  • (New case to be announced later in 2024)

For the September 2025 CFE, the following Day 1 cases will be tested:

  • Amuzu Parks Inc. (API) v2
  • (New case to be announced later in 2024)

Where can I get the solutions?

The solutions will NOT be released by CPA Canada until 2025. I have written sample strong answers to May 2024 CFE cases. These are realistic answers that you can use for self-debrief or send for marking. You can get them from here.

Will I get these cases in Capstone 2?

If you are registered for the Capstone 2 module for Summer 2024, you will not receive these cases at the module. You should download using the links above. If you are someone challenging the exam, such as an internationally trained accountant applying under MRA/MOU, please also download using the links above.

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 videos.

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 CPA Canada exam coach. If you want tutoring with me, sign up for my CPA CFE Review Course, for a comprehensive learning package.

CFE Review by Gevorg CPA

Equivalent Units: FIFO and Weighted-Average Approach (Simple Example)

In CPA Canada’s CFE, Core 2 and PM exams, you can expect to see complex management accounting (MA) topics tested. One example of such topic is equivalent units. Understanding how to calculate equivalent units is a fundamental concept, particularly in the context of process costing. This is often tested, particularly for the Core 2 multiple-choice questions (MCQs). Determining equivalent units are important in determining total units of production, but it also influences cost allocation decisions in manufacturing processes. In this article, you will see the comparison between FIFO and weighted average, with an easy to understand example.

What’s the point of process costing?

Process costing is used to figure out how much it costs to produce items that are very similar or identical, like chocolate bars or cans of soda. In this costing system, costs are tracked for each step, or “process,” in the production, and then the total cost is divided by the number of units produced. This way, we can find out the cost per unit. It’s useful for companies making large quantities of similar products because it helps them understand cost per item.

Something similar to process costing is job costing. While process costing tracks costs for huge number of identical products, job costing tracks costs for specific, individual jobs or orders, which are often unique. For example, building a custom piece of furniture or a unique construction project would use job costing. In this case, we would track the costs of materials, labor, and overhead for each specific job separately. Both methods help businesses understand and manage their production costs, but they are used in different situations based on the type of products being made.

How does process costing work?

Process costing works by tracking the costs of each step, totaling the costs, and dividing by the total number of items produced. This is called the Weighted Average method and there are other methods too (discussed below).

Example:

Imagine a company that makes chocolate bars. They have 3 main steps in their production process:

  1. Mixing ingredients
  2. Molding the chocolate into bars
  3. Packaging the bars

In process costing, the company tracks costs at each step. Let’s say in one month, the costs are as follows:

  1. Mixing ingredients: $1,000
  2. Molding: $800
  3. Packaging: $200

In that month, the company makes 10,000 chocolate bars. To find the cost per chocolate bar, they add up all the costs ($1,000 + $800 + $200 = $2,000) and then divide by the number of chocolate bars (10,000). So, the cost per chocolate bar is $2,000 ÷ 10,000 = $0.20.

This means it costs $0.20 to make each chocolate bar, and this helps the company understand their production costs and set their selling prices.

What’s Equivalent Units?

Equivalent units (EU) is a way to measure partially completed products as if they were fully completed. The reason we do it is because it helps to calculate the costs of products that are not yet finished at month-end or year-end. Without this, we can’t assign costs to products in different stages of completion, so we won’t know the true costs at period end.

For example, a factory is making chocolate bars and they have 200 bars that are halfway done at month-end. Instead of counting these as 200 incomplete bars, we use equivalent units to measure them. Since they are halfway done, it’s like having 100 fully completed chocolate bars. This helps the factory calculate costs more accurately for the partially finished products.

What’s FIFO and Weighted-Average?

FIFO (First-In, First-Out) and WA (Weighted-Average) are methods used to assign costs to units produced. FIFO assumes that the oldest costs are assigned to the units completed first. For example, for a factory is making chocolate bars, FIFO means the cost of the ingredients and labor from the beginning of the production period are used first to calculate the cost of the finished bars. This helps to track the flow of costs more accurately based on the production timeline. On the other hand, the Weighted-Average method blends all the costs together to find an average cost per unit. So, if the factory had different costs for chocolate bars at different times, the Weighted-Average method would add up all the costs and divide by the total number of bars produced to get a single average cost per bar. This makes it easier to calculate costs when there are many different costs over a period.

FIFO, WA, and EU are all tools used to calculate the cost of producing products. A company will choose either the FIFO or WA. Equivalent units help measure the production activity by converting partially completed products into an equivalent number of fully completed products. The FIFO method uses these equivalent units by assigning the oldest costs to the units completed first, which helps track costs in the order they were incurred. The Weighted-Average method, on the other hand, averages out all the costs over the period, using equivalent units to find a single cost per unit for both completed and partially completed products. Together, equivalent units and the chosen method (either FIFO or Weighted-Average) help companies accurately calculate production costs.

What’s conversion costing and WIP?

Conversion costing is the cost spent to turn raw materials into finished products. For example, in the case of chocolate bars, conversion costing means the cost for mixing, molding, and packaging. Work In Progress (WIP) are the products that are still being made and not finished yet. In the case of chocolate bars, WIP means the bars that are partially made and not ready to be sold.

Full Example

Let’s imagine a chocolate bar manufacturing company.

  • Beginning Inventory: At the start of the month, the company has partially finished chocolate bars. These bars are 70% complete in the process (mixing, molding, and packaging) and have all the necessary materials (100% complete for materials like cocoa, sugar, and milk).
  • Ending Inventory: By the end of the month, the company has some chocolate bars that are still in the production process. These bars are 20% complete in terms of the conversion process and have all the necessary materials.
  • Units Started: During the month, the company starts production on 200,000 chocolate bars.
  • Transferred Out: By the end of the month, 160,000 chocolate bars are fully completed and moved out of the production line to be ready for sale.
  • Ending Inventory: There are 90,000 chocolate bars still in production at the end of the month.

In CPA Canada exams, this information would be presented like this:

The requirement is to determine equivalent units (EU).

Solving under FIFO:

FIFO separates the cost of current work, and work in beginning inventory. It also assumes all beginning WIP are transferred out first (i.e. FIFO is first-in, first-out). This means that the ending WIP is what was started in the current month.

Under FIFO, the approach would be:

  • Step 1: If we started 200k units this period, and transferred out 160k units, with 90k units left in ending inventory, this means we had beginning inventory of 50k units (160k units transferred out + 90k units in ending inventory – 200k started this period). This also means 250k units were worked on during this period (160k units transferred out + 90k units in ending inventory). Because 100% of materials are used at the beginning of the process in FIFO, 0% of materials need to be added to complete the beginning inventory. For conversion costs, only 70% is added at the beginning, which means 30% is needed to complete beginning inventory. Think of this as what you have left to do, or what is left to complete the inventory.
  • Step 2: Now we need to determine the units started and completed. This means that these units are 100% completed with respect to conversion and material costs. If we started with 50k units in beginning inventory, these units would have been transferred out first as part of FIFO. Since we transferred out 160k units, this would leave 110k units that were started and transferred out in addition to the beginning inventory.
  • Step 3: For ending inventory, you will take the ending inventory units, and multiply them by their corresponding percentage of completion. This will become your beginning inventory for the next period.

For total EU, this is the sum of the beginning inventory, the units started and completed, and the units still in the ending inventory. The answer is 200K EU for materials, and 143K for CC.

We format our answer in CPA Canada exams like this:

Solving under WA:

Weighted average takes the units completed during the period and adds it to your ending WIP.

  • Step 1: Identify the units completed (transferred out) – Units being transferred out are transferred with both material and conversion costs. This would be 160,000 for both.
  • Step 2: Identify the ending WIP – For materials, there is 100% completion, and with 90,000 units in ending inventory, this would be 90,000 units for materials. However, there is still work to be done on these units, as conversion costs are only 20% complete. Using the WA method, we don’t specifically know which units are complete, so the 20% will be applied to the full 90,000 units.

For total equivalent units, this is the sum of the units transferred out, with your ending inventory. The answer would be 250K EU for materials, and 178K for CC.

We format our answer in CPA Canada exams like this:

Conclusion

Both FIFO and WA methods calculate equivalent units to determine the total units of production. The specific calculation differs in terms of how ending work in process inventory is treated: FIFO focuses on the partially completed units in ending WIP inventory separately, while the WA method combines all units completed and in process to calculate an average cost per equivalent unit.

Extra resources

Extra resources are available in Gevorg’s CPA review programs.