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Management Accounting (MA) competency area is tough. Most of us haven’t worked in the manufacturing industry, so understanding terms like “joint costing” and “cost driver” is challenging. Of all concepts in MA, the variance analysis (VA) comes up most often in the CPA exams.

If you’ve ever thought:  “How do I solve variance analysis? How do I memorize all the formulas?”, you’re not alone. This is one of the top questions CPA students ask me when studying for Core 2, PM and CFE exams. Lets dive in and learn how to tackle VA.

Understanding Variance Analysis (VA)

Mastering VA is not not about memorizing 20+ formulas, it’s about understanding the why behind them. What actually works when studying VA is understanding the logic. Think of variances as telling a story:

• What did we plan?
• What actually happened?
• Why is there a difference?
• Who caused it?

Once you understand the story, the formulas are easier to build, even if you forget the exact one.

Static vs Flexible

The backbone of VA is static and flexible budgets. Here’s how they work:

• Static Budget:
  • This is the original plan, based on expected volume.
  • Formula: Static Budget Variance = Actual Result – Static Budget
  • Why we use it: Checks if sales revenue or fixed costs met expectations. It doesn’t adjust if you sell more/less units than expected, which is why it’s called “static.” 
  • Example: Company A budgeted $1,000 travel expenses. Actual were $1,500. The static variance is $500 unfavourable.
• Flexible Budget:
  • This adjusts the budget to the actual volume of sales or production.
  • Formula: Flexible Budget Variance = Actual Result – Flexible Budget
  • Why we use it: It shows whether price or quantity changed. It’s most often used in manufacturing where price and quantity drive the costs.
  • Example: Company B budgeted to pay $4 per metal sheet but ended up paying $5 per sheet. They used 2,000 sheets in production. Using the formula (AP – SP) × AQ, we get $2,000 unfavorable variance (= ($5 – $4) × 2,000).

Focus on “Big 6” variances

There are 6 core variances that come up with most on MA questions. Here they are:

Variance	Formula (Actual – Standard)	Interpretation
Price (DM)	(AP – SP) × AQ	Paid more/less for materials
Quantity (DM)	(AQ – SQ) × SP	Used more/less materials
Rate (DL)	(AR – SR) × AH	Labour cost more/less per hour
Efficiency (DL)	(AH – SH) × SR	Took more/less time than planned
Sales Mix Variance (SMV)	(Actual Sales Mix % – Budgeted Sales Mix %) x Total Actual Sales x Budgeted CM per unit	Impact on CM from selling a different mix of products than planned.
Sales Quantity Variance (SQV)	(Actual Qty Sold−Budgeted Qty Sold) × Budgeted CM per unit	Impact on CM from selling a different total quantity of products than planned.

Above, the “P” stands for “Price”, the “Q” for “Quantity”, the “R” for “Rate” and “H” for “Hours”. The “CM” means contribution margin. The terms “Standard” and “Budgeted” mean the same thing: the planned cost.

Here are my top tips to help you understand and remember these formulas.

Tip#1: The 3 Buckets

Variances can be sorted into three categories: (1) Price/Rate, (2) Quantity/Efficiency, (3) Volume. Every time you see a variance, ask yourself: “Is this about price, quantity, or volume?” 

• • Price/Rate: This measures how much you paid per unit/hour. 
  • Quantity/Efficiency: Measures on how much material/labour you used
  • Volume: How many units you produced/sold.

Tip#2: Same Patterns

Notice that the above formulas follow the same pattern. Inside the parentheses, we always deduct Actual and Standard. The name of the variance is always what’s inside the parentheses. For example, let’s say you get a Core 2 MCQ that asks: “Calculate the direct material price variance.” Since it’s asking for “Price” variance, this tells you that inside the parentheses, you’re gonna use “P”.

Outside the parentheses, we multiply by the opposite. For example, when we have “price” in the parentheses, we multiple by “quantity”. When we have “quantity” in the parentheses, we multiple by “price.” This is true for the first four, but the SMV and SQV involve the CM.

Tip#3: Explain the Cause

Calculating the variance is not the end. Once you calculate the variances, you must then determine the root cause of the variance. Once that’s done you can then make a recommendation. Common causes include:

• For efficiency variance:
  • Higher scrappage due to lower quality materials, resulting in unfavourable variance.
  • Extra training time for unskilled workers resulted in unfavourable efficiency variance.
  • Increased usage of materials due to poor fit/install issues with low-quality product.
  • Manual labour increased due to equipment downtime.
• For price/rate variance:
  • Lower quality materials purchased, leading to favorable variance (ie, better price than expected)
  • Use of unskilled workers at lower wage rates led to favourable rate variance.
  • Overtime and higher hourly wage rates due to rework caused by low-quality materials.

Extra resources

Don’t struggle with MA. Check out Gevorg, CPA exam coaching and learn the strategies to pass. Our comprehensive courses cover every stage of the CPA PEP process, including Core 2 and PM, ensuring you’re fully prepared. With a proven track record of helping over 4,500 students succeed, you can be next.

 

When your CPA Canada CFE is finally over, you’ll get the time to breathe a sigh of relief and switch gears into “Practical Experience Requirements (PER) mode.” There are two key components to PER: Technical Competencies and Enabling Competencies.

Technical is the bread and butter of what you do everyday, like financial reporting analysis, prepping financial statements, tax analysis, preparing budgets and so on.

Enabling are the soft skills that are developed over time and gained through experience, like ethical issues, teamwork, communication and leadership.

Let’s take a deeper dive into Enabling Competencies in this article and understand how many examples you need to give to get completion (“Level 2”).

Understanding PER Enabling Competencies

There are five (5) Enabling Competencies in CPA PER:

• Acting Ethically and Demonstrating Professional Values
• Solving Problems and Adding Value
• Communication
• Managing Self
• Plans and effectively manages teams and projects / Collaborates effectively as a team member

You need to write examples in all of them to graduate. Here’s a brief summary of each, with more resources available in Gevorg’s PER Review:

• Acting Ethically and Demonstrating Professional Values: This is about tensions, conflicts and ethical issues at work. It’s not about  personal stress management issues, it has to be something that created a “dilemma”. Dilemma means the conclusion is not obvious. This means that if you have only one choice of doing the right thing, then there is no dilemma. For example, if your manager asks you to steal something from the office, obviously the right thing is not to do it, so there is no dilemma. If your manager asks you to take on extra work that’s beyond your abilities, there is a dilemma, because you now have multiple options to consider and the outcome is uncertain.
• Solving Problems and Adding Value: This is about process improvement, enhancing a product or solving a problem. You can think of many examples, such as process improvement (eg. creating macro-based Excel tool), adapting your work due to new technology, or optimizing your workflow (eg. removing redundant tasks).
• Communication: If you work in a small company, you are the accounting expert but your co-workers/clients are likely not CPAs. They are operations experts or middle managers, who need to understand the basics of accounting, like budget or income statement. You would write here an example of how you translated complex accounting concepts to easy-to-understand language.
• Managing Self: Think of situations where you didn’t meet the expectations of your manager, your teammates or clients. You weren’t sure how to manage your strengths and weaknesses, and you felt disappointed. Write an example of such situation.
• Teamwork  and Collaboration: Most jobs require people interaction. This area is about teamwork challenges or leadership issues. Here’s a brief example: During a system implementation project in my company, a cross-functional team from departments like Accounting, Internal Audit, Budgeting, and IT faced challenges in working together. Each member brought a different perspective, so meetings had frequent arguments, misalignment on goals and frustration. Some pushed for speed, others for strict compliance and few raised concerns about budget impacts. The team couldn’t agree on a direction and progress stalled. Recognizing the risk to both the project, I stepped in to address the conflict. Applying the CPA Way, I assessed the situation, analyzed alternatives and provided a conclusion. I created space for each team member to voice their concerns openly and without judgment. Over the next few weeks, the team regained momentum, worked cohesively, and successfully completed the implementation on schedule. The experience delivered results, built trust, and strengthened my organization’s culture of collaboration.

Level 2 in PER Enabling Competencies

Similar to Technical Competencies, you can get in Enabling Competencies either at Level 0, Level 1, or Level 2. Normally, the strategy to completing PER is progression. This means giving one example at-time. For example, in your report #1, you give one non-complex example and claim Level 0. In report #2, you give a second, more-complex example and claim Level 1. In report #3, you give a third, very complex example and claim Level 1. In report #4, you give your fourth and fifth complex examples and claim Level 2. 

You get the point; progression is about gradual and smooth way of claiming your experience. Once you have 3 complex examples, you get the Level 2.

Luckily, progression is not needed for Enabling.

You can give only 1 example and get Level 2

Yes, you can give just one example in Enabling and claim Level 2 right away. You don’t need to show progression or provide 3 examples. From my experience of helping hundreds of students with PER, I can say this works 90-95% of the time. Occasionally, we get a reviewer that challenges and asks you submit a second example before giving Level 2. In this case, I advise my student to submit a second example and the student gets the Level 2 at that point.

Also, you don’t have to wait for your final reports to claim this, you can claim this Level 2 as early as your report #1.

Extra resources

Check out Gevorg’s CPA PER Review, Canada’s first and only comprehensive PER coaching program that features several Level 2 examples, templates, video lessons, marking services, and support to help you pass PERT. This program recognizes your need for clear and concise content and has been designed to meet your busy schedule.

 

Thinking about pursuing the Canadian Chartered Professional Accountant (CPA) designation in 2026, but aren’t sure if it’s worth it? The journey to becoming a CPA requires a big commitment, in terms of time, effort, and money. You may have also heard that major changes are coming to the CPA program in 2027-2028. With all this, there are still plenty of benefits and opportunities that come with the CPA letters. I’ll explain the top benefits that you can get with the CPA designation in 2026 and beyond.

Benefits of Becoming a CPA in Canada

1. You can make $143,000 salary

Let’s start with numbers. CPAs in Canada earn more than their non-designated peers. According to CPA Canada’s 2023 Compensation Study, CPAs with 3 years of post-designation experience reported a median salary of $143,000, which is a 12% increase from $128,000 in 2020.

Among the provinces, Alberta has the highest median salary at $153,000. If you’re curious about salaries in your province, you can find regional reports on the CPA Canada website.

2. Job security

We’re in a talent crisis right now. A CPA Canada article quotes a survey by Robert Half, which found that 40% of finance and accounting hiring managers are struggling to fill positions due to a lack of accountants in Canada. In response to this “shrinking talent pool”, 45% of companies are offering referral bonuses and 40% are increasing salaries.

The situation in the U.S. is worse. An article from Financial Times notes that three-quarters of U.S. accountants are at or near retirement age. This prompted AICPA, the U.S. version of CPA Canada, to create a “Pipeline Acceleration Plan”, effectively making it easier to become a CPA. They launched the Experience, Learn & Earn (ELE) program, which allows students to work full-time at firms while completing their extra education requiements. They’re also pushing to classify accounting as a STEM field to attract more federal funding and a broader candidate pool.

The Government of Canada’s Job Bank also predicts a positive outlook for CPAs from 2024 to 2026. Factors like employment growth and the increasing demand for financial expertise across industries make this a solid career choice.

What about ChatGPT?

I know every future accountant is thinking that AI may eliminate their job. For routine clerical work, yes. For higher level judgement, doubt it. There’s still no concrete evidence that designated accountants are losing jobs to AI. The World Economic Forum’s 2023 Future of Jobs Report suggests that the jobs least likely to be lost to AI include ones that require “human skills such as judgment, creativity, physical dexterity, and emotional intelligence.” Accountants must be able to think logically to make informed decisions, use their creativity to find solutions for clients, and communicate effectively. 

3. Diverse career options

The CPA designation isn’t just for traditional accounting roles. CPAs can branch out into a variety of industries and roles, including:

• Forensic accounting: Investigating financial fraud and disputes
• Climate accounting: Helping companies monitor their environmental impact
• Sports accounting: Managing finances for sports teams, athletes and high net-worth (HNW) clients
• Entrepreneurship: Starting and running your own business or advising firm
• Education: Teaching the next generation of accountants

Every company, from a tech startup to a Fortune 500 firm, needs financial expertise. As a CPA, you bring the necessary skills to help organizations make important business decisions.

Plus, the Canadian CPA designation is recognized globally. CPA Canada has Mutual Recognition Agreements (MRAs) with several countries, including the U.S., Australia, Hong Kong and Ireland, to name a few, making it easier to work abroad.

4. Prestige and credibility

The CPA designation is highly respected and CPAs are held to strict professional standards. Adding “CPA” after your name boosts your credibility with employers, colleagues and clients, opening doors for career growth and leadership opportunities. It tells people you’ve put in the work, you know your stuff, and you’re someone they can trust with complex business decisions. 

Challenges to consider

Here are some challenges to consider as you’re thinking towards becoming a CPA.

1. Rigorous education process

Becoming a CPA takes time, effort, and money. The process typically takes 5-7 years, including the time to get an undergraduate degree in accounting. I break down the process of becoming a CPA in Canada in 4 steps here, showing different paths available to you depending on your background.

The full CPA Professional Education Program (CPA PEP) program and the Common Final Examination (CFE) cost around $11,000 including HST. On top of that, CPA students pay Annual Student Dues (ASD) of about $800 and most sign up for tutoring programs to boost their chances of passing.

The most recent fee schedule for CPA Ontario can be accessed here. While this can seem expensive, many employers offer financial support, covering CPA program costs if you agree to stay with the company for a certain period.

As noted earlier, there are major changes coming to the CPA program in 2027-2028. CPA Canada has re-assured us that there’ll be pathways for new students to either remain in the current program or transition to the future program. So you’ll have options. If you start now, you’ll likely complete most modules before the changes take effect. But if you wait, you’ll need to carefully compare the current program with the updated model to see which one aligns better with your goals, timing, and learning style.

2. Changing landscape

Decades ago, people used to say “accounting never changes.” Students who prefer a slower pace of work or stable routines often chose it for that reason. Not anymore. CPAs need to stay on top of industry changes. The accounting world is evolving fast, especially with the recent advancements in AI. A 2024 article by DataSnipper, an audit and finance software company, found that 78% of professionals say their companies are investing in AI to stay competitive. To keep up, CPAs will need to adapt and upskill.

Extra resources

Considering both benefits and challenges, yes, CPA is still worth it in 2026. 

It gives you the expertise and credibility to succeed in the world of business and finance. It offers strong earning potential, career options, and career flexibility. AI is reshaping the profession, but it’s also creating new opportunities for CPAs to add value.

Ready to take the next step and set yourself up for success? Check out Gevorg, CPA exam coaching and learn the strategies to pass. Our comprehensive courses cover every stage of the CPA PEP process, including Core 1 and the Practical Experience Requirement (PER), ensuring you’re fully prepared. With a proven track record of helping over 4,500 students succeed, you can be next.

 

The exam case Meadowlark Entertainment Inc. (MEI) case will be tested in September 2025 and September 2026 Common Final Exams (CFEs) on Day 1. The original Capstone 1 case has been made available to candidates enrolled in Capstone 1 in May 2025 and released publicly by CPA Canada.

How do I prepare for MEI case for the CFE Day 1?

On CFE Day 1, you will be presented with the same MEI case and you will be required to analyze and answer new strategic and additional issues.

Follow these strategies:

• Step 1: Study the Capstone 1 original case well: It’s important that you know the Capstone 1 case inside-out. You will encounter the same users and similar industry challenges. I suggest making notes of the following key situational analysis factors:
  • Users
  • Mission, vision and values
  • Key success factors (KSF)
  • Strengths, weaknesses, opportunities and threats (SWOT)
  • Board objectives
  • Quantitative constraints (eg. covenants, financing options)
• Step 2: Know the Capstone 1 strategic issues: In Capstone 1, MEI faced 4 major strategic issues and several minor issues. In the Day 1 CFE exam, you’ll get 3-5 new strategic issues.
• Step 3: Make note of the timeline: CFE Day 1 case is several years in the future and there are new issues to analyze. It helps to stay organized by creating a timeline of events as you are reading the case.
• Step 4: Understand key stakeholder preferences: MEI case has several users who have opposing views. It’s important that you understand these user preferences as these will repeat in the CFE Day 1.

I strongly recommend practicing with supplemental mock exam cases. In Capstone 2, you will get 3 practice versions of the MEI case. However, most writers find that this is not enough and feel unprepared.

Where can I get extra MEI mock exam cases?

I have released one (1) original Meadowlark Entertainment Inc. (MEI) supplemental mock exam practice case to help you better prepare for the CFE Day 1. This mock exam case is a realistic simulation of what you may get on your exam and covers typical AOs that you may find in your Day 1. The casepack includes the MEI mock exam case, marking guide, and the solution.

Now available as PDF and Excel, head to the cases section of my website for a free preview.

 

 

 

Similar to prior CPA Canada Common Final Exams (CFEs), the May 2025 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) v2
• Viviana’s Trattoria Ltd. (VTL) v1

The following Day 2 and Day 3 cases were tested:

• Day 2
  • Keats Learning Institute (KLI) (300 minutes)
• Day 3
  • Lazy Guest Ranch Inc. (Lazy Ranch)
  • Ocean Brewing Inc. (OBI)
  • LeBlanc Asphalt Paving Inc (LeBlanc)

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

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

For the June 2026* CFE, the following Day 1 cases will be tested:

• Karnat Bread Company Ltd. (KBC) v1
• Viviana’s Trattoria Ltd. (VTL) v2

*(Note: Usually CFEs are in May and September. For 2026, the May 2026 CFE has been delayed to June [June 2 to June 4], so it’s referred to as June 2026 CFE in this post.)

For the September 2026 CFE, the following Day 1 cases will be tested:

• Singular Textiles Corporation (STC) v1
• Meadowlark Entertainment Inc. (MEI) v2

There is no CFE in May 2027.

For the September 2027 CFE, the following Day 1 cases will be tested:

• Singular Textiles Corporation (STC) v2
• TBD, new case v1

Where can I get the solutions?

The solutions for May 2025 CFE exam cases, including the solution to Viviana’s Trattoria Ltd. (VTL) v1, will NOT be released by CPA Canada until later. In the interim, I have written sample answers to help you prepare for the June 2026 CFE.

Now available to download as PDF and Excel, you can obtain them from here. 

Will I get these cases in Capstone 2?

If you are registered for the Capstone 2 module, 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

We are Gevorg CPA Coaching Team. To get help with passing your exams, sign up for CPA CFE Review Course, for a comprehensive prep package.

The exam case Viviana’s Trattoria Ltd. (VTL) case will be tested in June 2026 Common Final Exams (CFEs) on Day 1. The original Capstone 1 case has been made available to candidates enrolled in Capstone 1 and released publicly by CPA Canada.

How do I prepare for VTL case for the CFE Day 1?

On CFE Day 1, you will be presented with the same VTL case and you will be required to analyze and answer new strategic and additional issues.

Follow these strategies:

• Step 1: Study the Capstone 1 original case well: It’s important that you know the Capstone 1 case inside-out. You will encounter the same users and similar industry challenges. I suggest making notes of the following key situational analysis factors:
  • Users
  • Mission, vision and values
  • Key success factors (KSF)
  • Strengths, weaknesses, opportunities and threats (SWOT)
  • Board objectives
  • Quantitative constraints (eg. covenants, financing options)
• Step 2: Know the Capstone 1 strategic issues: In Capstone 1, VTL faced 4 major strategic issues and several minor issues. In the Day 1 CFE exam, you’ll get 3-5 new strategic issues.
• Step 3: Make note of the timeline: CFE Day 1 case is several years in the future and there are new issues to analyze. It helps to stay organized by creating a timeline of events as you are reading the case.
• Step 4: Understand key stakeholder preferences: VTL case has several users who have opposing views. It’s important that you understand these user preferences as these will repeat in the CFE Day 1.

I strongly recommend practicing with supplemental mock exam cases. In Capstone 2, you will get 3 practice versions of the VTL case. However, most writers find that this is not enough and feel unprepared.

Where can I get extra VTL mock exam cases?

I have prepared one (1) original Viviana’s Trattoria Ltd. (VTL) supplemental mock exam practice case to help you better prepare for the CFE Day 1. The mock exam case is a realistic simulation of what you may get on your exam and cover typical AOs that you may find in your Day 1. The casepack includes the VTL mock exam case, marking guide and the solution.

Head over to the cases section of my website for a free preview.

 

 

 

If you’re an ACCA member and thinking about becoming a Canadian CPA, here’s what you need to know.

No more MRA, but there’s still a clear path

CPA Canada used to have a Mutual Recognition Agreement (MRA) with the ACCA, but that ended in 2021. So, there’s no longer a direct shortcut to transfer your ACCA to a Canadian CPA. However, being an ACCA member means your education and experience already meet the entry requirements for the CPA Canada program. So you won’t need to start from scratch. You’ll still have to go through exams and modules, but the path is shorter compared to someone who doesn’t have an accounting designation.

What the CPA PEP looks like

The CPA Professional Education Program (CPA PEP) is a graduate-level program made up of 6 modules and a final 3-day exam called the Common Final Examination (CFE).

Here’s a quick breakdown:

• Core 1: Focuses on Financial Reporting competency. Includes a module exam, made up of a 60-minute case and 75 multiple-choice questions.
• Core 2: Similar to Core 1, but it focuses on Management Accounting.
• Two electives: You choose two out of four electives (Finance, Performance Management (PM), Assurance,  Tax). Choose the ones that fit your background, for most ACCA members, I recommend PM, Assurance or Finance.
• Capstone 1 and Capstone 2: Focused on teamwork and case writing, no exams for Capstone 2 and only a preparation in Capstone 1.
• CFE: A 3-day, computer-based exam that tests your depth and breadth across all CPA competencies. More details below.

Exam challenge option

If you have:

• At least 3 years of relevant experience and a degree, or
• 8 years of experience without a degree

…you can challenge the exams for Core 1, Core 2, and the two electives. This means you don’t take the full module but just write the exam.

From my experience tutoring many ACCA members, most succeed with the challenge option. The full module does provide prep materials, like practice cases and MCQs, but ACCA members often don’t need that to pass if they opt for private tutoring. 

Practical experience requirement

Alongside the education part, you also need to report at least 30 months of qualifying practical experience. You’ll need to submit your work history and have it assessed to see if it meets CPA Canada’s standards. This is something I help candidates often, I can help to make sure your experience is documented properly and fits the CPA framework.

CFE: The final challenge

The CFE is a 3-day, back-to-back, computer-based exam. It’s focused on:

• Financial Reporting (both IFRS and ASPE)
• Management Accounting
• Deep knowledge of one area of your choice (Assurance, Performance Management, Finance, or Taxation). Tip: It’s best to choose the role to be one of your electives.
• Core knowledge of other non-role areas

Most ACCA members choose Assurance or Performance Management as their role. Regardless of your role, you need basic knowledge in all areas. More details on CFE are available here.

Next steps

If you’re ready to start, contact the provincial CPA body where you live or plan to move. Register, get your experience assessed, and plan out your PEP modules.  Don’t hesitate to reach out to me for high-quality study resources, review courses, and support with your Canadian CPA journey.

 

When you write the CPA Canada Day 1 Common Final Exam (CFE), you’re expected to find – and recognize in your Situational Analysis Framework (SAF) – two types of quantitative items: 1) financial analysis and 2) quantitative big picture (quant BP) issues. Students often ask me what’s the difference between the two. Let’s review in this post.

What’s Financial Analysis?

Financial analysis is about getting a picture of a company’s financial health. It involves financial ratio and trend analysis where you compare different F/S elements, like revenues, profits, and various ratios. Financial analysis in Day 1 doesn’t need to be in-depth, you can keep it brief.

To know what financial analysis to perform in the Day 1 exam, you need to pay close attention to the details provided in the case. 

For example, in the CPA Canada CFE Day DHC v1 case below, Appendix III provides various benchmarks, comparing company to the industry for the years 2022 and 2019 as follows:

When you see these ratios, it’s a signal to discuss some of these ratios.

You don’t have to discuss all of them nor answer the “so what“, but you gotta compare the key ratios of company vs industry, and state whether it decreased or increased. To know which ratios are important enough to discuss, look for BOD objectives in your case. For example, if the BOD wants to achieve a better current ratio in the next three year, this is a key ratio. If the BOD wants to achieve a better occupancy rate, this is a key ratio. 

Here’s an example response:

About 3-4 bullet points like above are enough. You don’t need to do anything further except to integrate it to your analysis (discussed below).

What are Quantitative Big Picture issues?

Big picture issues in general are overarching, pervasive issues that impact all the other issues in the case and relate to the company’s overall strategic direction. 

Big picture issues can be quantitative and qualitative. As quantitative, they can be financial or non–financial.

Quant BP issues involve constraints, basically limitations on resources that the company needs. Financially these are cash constraints, like company has $10M spending available. Non-financially these are resource constraints, like company has raw materials of only 10M kg.

As I teach in my popular CFE tutoring classes, these are crucial to include in your strategic analysis, recommendations, and overall recommendation. You cannot proceed with that strategic option if it exceeds the constrained resource. For example, if the investment requires more cash than the company has, even if all factors suggest the option is profitable and the pros outweigh the cons, you can’t suggest to proceed with it, unless the company can come up with a way to mitigate it. For example, they can accept a strategic issue to sell part of the company to raise cash and use that cash for other investments.

Here are some examples of quant BP constraints: 

• Cash flow constraints
• Lending constraints
• Covenants
• Management time constraint
• Materials constraint 
• Space constraint

These can be tricky to spot because they require reading between the lines. For example, Day 1 might hint at a covenant tied to the company’s bank loan without explicitly saying it’s a constraint. 

How to Integrate Financial Analysis and Quant BP Issues

Now you learned what are Quant BP issues and Financial Analysis. How do you add those into your response? First, you have to put them in your SAF. Second, you need to integrate factors from the SAF into your analysis of the strategic and other issues in order  to pass Day 1. 

You can add your financial analysis in either or both quantitative and qualitative of strategic options.

Here’s an example of a student integrating their financial analysis into their quantitative analysis in DHC Version 1 case:

Above student tied strategic issue analysis back to their financial analysis by explaining how it will impact DHC’s ratios overall. 

Quant BP issues can also be integrated within either or both quantitative or qualitative. Here’s an example of a student response from CPA Canada Day 1 KTI, Version 1 exam:

In this example, the student integrated the supply constraint of having limited tea leaves available due to KTI’s two contracts expiring from their SAF into their quantitative analysis. The impact on the tea supply is calculated under the scenario that KTI doesn’t renew the May 2025 contract. There would be 1.6M kg in additional tea available to KTI, which is favorable given their limitation on tea supply.

The student also integrated the supply constraint within their qualitative analysis in the scenario the contract is renewed as follows:

Conclusion

Remember the key differences between financial analysis and quantitative BP constraints: financial analysis assesses how the company is doing financially, using ratios and trends, while quant BP issues are constraints that must be considered in your analysis of all strategic options and all recommendations. Both financial analysis and quantitative constraints should be mentioned in your SAF and then integrated, either or both within your quantitative and qualitative analysis of each strategic option. 

Extra Resources

CFE pass rates are lowest on record at 67.3%. 

Check out Gevorg’s CFE Review – Day 1 with Marking. This highly rated tutoring program boasts 91% pass rate and provides supplemental mock CFE Day 1 case, live classes, on-demand video lessons, templates, handouts, technical study notes, to help you become a CPA.

 

As you’re studying for the CPA Canada Common Final Exam (CFE), you’ll notice that Day 1 of the exam is structured differently from that of Day 2 and Day 3. 

The Day 1 exam is considered indirect, which means the assessment opportunities (AOs) aren’t as clearly laid out for you. For example, instead of being told directly to do a NPV calculation for your quantitative analysis, you may need to figure out which financial tool to use based on the information you’re provided.

Likewise, identifying the big picture issues, such as the cash constraint, is also a key challenge on Day 1, because this may require you to read between the lines to uncover it.

What is cash constraint?

A few years ago, passing Day 1 was simple. You had to prepare a Situational Analysis Framework (such as KSF, SWOT, etc.), analyze 3-4 strategic issues, analyze 1-2 operational issues, and prepare an overall recommendation.

Day 1 exams are now more complicated. CPA Canada Board of Examiners has introduced several layers of big picture issues. These are overarching, pervasive issues that affect all other issues. They relate to strategic direction of the company (referred to as “SD”), interrelation of issues (which we call “IRI”), non-monetary constraints and cash constraints. This cash constraint big picture issue means that the company has limited financial resources for investments. For example, they may have $2M available, while strategic issues may require $4M or $5M or higher. It’s a constraint you have to be careful to not recommend over the limit. You can think of this like a credit card limit that should not be exceeded.

Why is finding cash constraint important?

Simply put, you need it to pass Day 1. Cash constraint is a big picture issue that you need to tackle in order to score a “Yes” on the “Conclude and advise” AO.

Below is the feedback guide for the Conclude and advise AO from a Day 1 case, which shows how you’ll be marked.

When your overall assessment is determined, you must score a Yes on Conclude and advise to score a Clear Pass.

Below is what will see in your Automatic Feedback Report, if you don’t address the big picture issue and you’re unsuccessful at passing the Day 1 exam:

How to spot the cash constraint?

You might find that the cash constraint is mentioned directly in the case or you might have to dig a little deeper. Here are some places in the case where you can look for information about a cash constraint:

• 1) The narrative (introduction)
• 2) Transcript of the board meeting 
• 3) The company’s financial statements, if provided
• 4) Appendix with financing information, if provided

Below are examples to help you understand better.

1) The narrative

Often, you’ll find the cash constraint mentioned in the first few pages of the case.

Below is an excerpt from the first page of the CPA Canada JRP Version 2 Day 1 case. The highlighted section below tells you that JRP only has $5M available for investments – that’s your cash constraint!

Here’s another example from NPF v1 case:

2) Transcript of the Board Meeting

Sometimes discussions among BOD members reveal cash constraints. In the below excerpt from the CPA Canada API Day 1 case, Jacob, one of the founding shareholders of API, points out the company’s cash constraint. He mentions that although there is $20M available for financing, any new investments must generate enough cash flow to cover the debt. That’s a clear sign of a cash constraint.

3) Financial Statements (if provided)

If the case doesn’t directly mention a cash constraint, that doesn’t mean there isn’t one! If you’re provided with financial statements, specifically a balance sheet or cash flow statement, be sure to review them. If the case doesn’t mention cash constraint anywhere, you should treat the cash balance on the F/S as the constraint. For example, in DHC v2 exam case below, the cash balance was given in the financial statements and not mentioned anywhere else: 

4) Appendix with financing information (if provided)

This is not the same as “financial statements”, this is financing options. You may be provided with an appendix that details the financing available to the company to fund new investments. Below is an example from the CPA Canada CTI v1 Day 1 case:

 

Conclusion

Day 1 of CFE is more complicated now.  Always remember to take a step back and consider if you need to address any big picture issues, such as a cash constraint. Regardless of whether the cash constraint is made obvious or not, it’s important for you to comment on how each proposal could impact the constraint. The cash constraint should be incorporated into your situational analysis, conclusion for each strategic option and overall recommendation. Not addressing it may hold you from passing Day 1!

Extra Resources

CFE pass rates are now at the lowest level on record at just 67.3%. Capstone 2 provides three mock exam cases, only 2 of which are marked. This provides you with limited practice opportunities for Day 1, with cases that are not accurate representations of the actual exam. 

Check out Gevorg’s CFE Review – Day 1 with Marking. This highly-rated exam tutoring program provides supplemental mock CFE Day 1 case authored by Gevorg, CPA to simulate the actual exam so that you can practice the types of questions that may be asked. In addition, you’ll get access to live classes, on-demand video lessons, templates, handouts, technical study notes, and much more.

 

If you’re preparing for the CPA Canada PEP or Common Final Exam (CFE) in 2025, here are the key changes you need to know about reference materials, testable content, and exam format updates.

Changes to Exam Reference Materials

1) Management’s Discussion and Analysis (MD&A) Removal

You can find the MD&A reference materials in the Knotia Handbook:

Starting in 2025, this MD&A collection will no longer be included in exam reference materials since it won’t be updated anymore. This means you won’t see it during the exams.

However, you’re still responsible for understanding and analyzing management communications under the CPA Canada Competency Map Financial Reporting (FR) 1.4.3. While you don’t need to quote MD&A reference materials from Handbook, you must demonstrate competency in this area. This means MD&A can still be tested on the exams.

Example of how MD&A may be tested on the CPA Canada exams is below, taken from a recent CFE exam case:

2) Tax Shield Formula Update

The exam reference schedule will now include only one “Present Value of Tax Shield for Amortizable Assets” formula, applicable to assets acquired after Jan. 1, 2024. Previously, there were two formulas—one for assets bought before Jan. 1, 2024 (now outdated) and another for less common CCA classes (no longer included).

You can download the latest Exam Reference schedule in CPA Canada’s Certification Resource Centre (CRC).

(Note: As of Feb 2025, the link above shows the old exam reference schedule with two formulas. CPA Canada still needs to update it.)

Testable Standards and Regulations

1) Cut-off Dates

CPA Canada PEP and CFE exams in 2025 will test standards and regulations that were in effect or substantively enacted as of Dec. 31, 2024.

Here’s what’s included:

• IFRS: Standards in effect up to and including Jan. 1, 2025.
• ASPE, ASNPO, and CAS: Standards with an effective date of Dec. 31, 2024, as published in the Nov. 2024 CPA Canada Handbook.
• Tax Legislation: Laws substantively enacted (including those passed in the House of Commons during a minority government) by Dec. 31, 2024.

There were no major changes to IFRS, ASPE, ASNPO nor CAS in 2024. However, you need to be aware of changes issued but not yet in effect, at different proficiency levels. 

2) Taxation: 2025 Changes

The 2024 Federal Budget and the Fall Economic Statement (Dec. 16, 2024) introduced various tax measures, but not all were enacted by Dec. 31, 2024. Proposed but not yet enacted tax measures include:

• Capital gains inclusion rate adjustments (including changes to the lifetime capital gains exemption).
• New immediate expensing rule for productivity-enhancing assets.
• Changes to the SR&ED program.
• Extension of the accelerated investment incentive.
• Temporary extension for charitable donations in 2024.

You may always apply a more current standard than what is required on the CFE and case portion of the CPA PEP exams, but multiple-choice questions (MCQs) follow the cut-off date rules strictly. So you should ignore above tax changes for MCQs.

However, for the CFE and PEP case portions, you can apply these new tax rules, but you’re not required to. For example, if you get a question on CCA for a manufacturing company purchasing new equipment in 2025, you can choose to apply the extended accelerated investment incentive (AII), which gives enhanced first-year CCA deduction. However, since this extension wasn’t substantively enacted, you can also apply the regular CCA half-year rule instead. Either approach would be valid in a case response.

Exam Format Changes for 2025

Starting March 2025, MCQs will only be available digitally in the exam software for Core and Elective exams. You will still receive a printed case, rough notes, and reference schedule in the exam booklet.

Extra Resources

For the 2025 CPA exams, reference materials are changing, but the core principles of testable content remain the same. Ensure you’re familiar with the latest standards and prepare for the digital-only MCQ format in upcoming exams.

For extra support, check out Gevorg’s CPA Canada exam courses for a comprehensive CPA exam tutoring package.