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Addressing the big picture issues is crucial in CPA Canada’s CFE Day 1 exam. It’s often misunderstood by students and taught incorrectly by educators, but it’s necessary to correctly address it to successfully pass Day 1. Let’s take a look at what is big picture, how it’s tested in Day 1, and how you should address it.

What is big picture (BP) issue?

A big picture issues is a major, pervasive issue that impacts all other issues. We use several terms for it:

• Big picture issues
• Overarching issues
• Pervasive issue
• Constraint
• Strategic direction issue

All of the above mean the same thing: constraint that the company is facing which must be taken into account in your recommendations.

Examples of BP issues include:

• Cash flow constraints
• Lending constraints
• Covenants
• Management time constraint
• Strategic direction
• Upcoming IPO
• Employee morale
• Internal conflicts
• Fraud

Note that the BP issue in Day 1 is not the same as you had in Capstone 1.

Quantitative and qualitative BP issues

Historically, Day 1s had either quantitive or qualitative BP issue. Examples of quant BP issues include financial resources availability, cash flow constraint,  lending restrictions, and covenants. Examples of qual BP issues include management time constraint, strategic direction, upcoming IPO, employee morale, internal conflicts and fraud.

However, new Day 1 CFEs tend to have both types of BP issues: quant BP and qual BP.

How to formatting your response in Day 1 CFE

In the CFE Day 1 exam, you must correctly identify the BP issues and address them in all your recommendations and the overall recommendation. For example, if you have quant BP of cash availability (eg $5M), then you must write in your strategic issue recommendations how the issue impacts the cash flows (does it reduce or add to $5M? Can they afford to accept it?) and in the overall recommendation. I also recommend discussing it separately with your quant analysis.

If your exam has both BPs (quant and qual), then you must again discuss them in all your recommendations and the overall recommendation, plus you have to discuss qual BP in operating issues. For example, if the company has cash constraints of $5M (quant BP) and it’s undecided on the strategic direction (qual BP), you need to: 1) first discuss how each strategic issue impacts both of these BPs in all your recommendations, 2) then you need to create a separate section in your operating issues, titled “Strategic direction,” and discuss qual BP there.

Extra resources

BP issues are taught poorly in Capstone 2 module. In there, the practice cases don’t have both BPs, while the actual CFE exams nowadays do. I recommend reaching out to me if you need support understanding this concept.

Extra resources are available at CFE Review courses.

Let’s say you are faced with IFRS 15 revenue recognition question on the CPA Canada PEP exam or CFE, and it involves discussing Appendix B. How do you go about integrating it into the IFRS 15’s 5-step model? Let’s take a look at it in this post. 

Understanding the importance of the IFRS 5-step revenue model

In CPA Canada’s Handbook, IFRS 15 standard consists of 5 steps:

1. Identify the contract with a customer (further reading: How to Format Step  1)
2. Identify the performance obligations
3. Determine the overall transaction price
4. Allocate the transaction price to the performance obligations
5. Recognize revenue as the entity satisfies a performance obligation

Some AOs need to be solved by simply listing the 5 steps, analyzing with case facts, and concluding. However, more complex AOs require discussion and integration of Appendix B items.

What is Appendix B?

IFRS 15 Appendix B is called Application guidance. Its purpose is to help users with treatment of non-routine revenue issues. Given the complexity of revenue, knowing when to recognize revenue is not as simple as listing the 5 steps; there are many nuances and exceptions.  Appendix B was created to give additional guidance to revenue recognition.

In CPA Canada exams, you would use Appendix B when faced with non-routine revenue recognition AOs. For example, you would use Appendix B for:

• Sale with a right of return
• Warranties
• Principal versus agent
• Loyalty points (customer options for additional goods)
• Non-refundable upfront fees
• Licensing
• Consignment arrangements
• Bill-and-hold arrangements

There are more Appendix B items, which are listed in my FR technical study notes, but the above are the most commonly tested.

How do you integrate App B to IFRS 15 analysis?

There is no set rule on which IFRS 15 step you must integrate, it depends on the nature of the Appendix B item. Some items are integrated into step 2 , while others are integrated into step 4 or step 5.

For example, below is a screenshot from CFE 2015 Day 2 case K-Med, where Appendix B consignment was integrated into step 5:

 

Here is another example from CFE 2019 Day 2 case Elcar, where Appendix B customer options for additional goods (i.e loyalty points) was integrated into step 2:

Do I need to discuss the 5 steps all the time?

I recommend to discus the 5-steps all the time, including the integrated App B items into one of the steps.

Conclusion

The integration depends on the nature of the Appendix B item. Think about which step it relates the most and slot it there. Step 2 , step 4 and step 5 are the most common places to integrate.

Extra resources

Extra resources are available at FR technicals.

CPA Canada allows candidates to attempt the PEP Core 1 and Core 2 modules three times. At each unsuccessful attempt, candidates can ask for re-marking (appeal). This is done for a fee, and only within a specific timeframe outlined by CPA. In this article, I’ll discuss under what circumstances you can submit an appeal.

Look at the decile ranking

When deciding to submit your Core 1 or Core 2 exam for a remark, it’s important to understand the concept of decile rankings, as this helps to make your decision. It’s important to note that a decile ranking is only provided if you failed the exam.

Decile ranking is a statistical measure that tells writers who were unsuccessful how close they were from passing. If you received a decile ranking between 1-3, this means you were close to passing. If you received decile ranking above 7, this means you were far off passing.

This article shows how to find your decile ranking and examples are available here.

Should you ask for re-mark?

To decide, first check which exam portion you didn’t pass: MCQs, case portion, or both. If you didn’t pass due to MCQs, there is no point in asking for re-marking, because MCQs are objective.

If you did well on MCQs, but didn’t pass the case-portion, then look at your decile ranking. Decile above 2 is further from passing and submitting a remark is not recommended. If you receive a decile 1 or 2, a remark is a possible option for you.

Note that the chances are very low that your remark will be successful (~1% success rate). For this reason I don’t recommended it for most. However, below I’ve given guidelines based on my experience of successful remarks:

• If you received 3 NCs in the case, no matter what your other grades are, I don’t suggest asking for a re-mark.
• If you received 2 NCs in the case, the rest of your results are C, and your decile is 1-2, you can try asking for a re-mark.
• If you received 1 NCs in the case, the rest of your results are C, and your decile is 1-2, you can again try asking for a re-mark.

As noted, the chances are low and you’re better off re-attempting the exam with the help of a tutor.

Extra resources

Extra Core 1 and Core 2 resources are available at PEP Review courses.

In the CPA Canada Common Final Examination (CFE) Day 1, there are two versions of cases offered. The first version (V1) is the new case released in the new Capstone 1, while the second version (V2) is a repetition from the prior year’s Capstone 1. Some candidates have a choice which case to choose. Let’s explore which one to choose.

[Further reading: What Day 1 Cases Will Be Tested in 2026, 2027 and 2028 CFEs?]

Who can choose which case?

For first-time writers, you are required to choose the case in Capstone 1 you completed, unless that case is no longer available. So for the majority of first-time writers, you don’t have a choice, you must choose the new case.

On the other hand, if you were unsuccessful in the previous CFE Day 1, or you are challenging the CFE, you have the option to choose from either v1 or v2 cases available for that CFE sitting.

Which Day 1 case to choose?

There are several factors to consider while choosing between the new V1 and the V2 case:

(1) Pass rate

• • Interestingly, V2 cases have a lower pass rate, according to Day 1 statistics. This suggests that writing new (V1) provides you statistically higher odds of passing the exam.
  • Conclusion: New (V1) is better.

For example, below are screenshots from CPA Canada’s Board of Examiner’s Reports. It shows that new (V1) cases have higher number students meeting the passing standards.

Example 1:

Example 2:

(2) Future proofing

• • Choosing the new (V1) case offers a safety net. In case you don’t pass, you have the option to attempt the same case on your next try. However, the V2 case will expire next CFE, because Day 1s are offered two times only, forcing you to prepare for another new case again.
  • Conclusion: New (V1) is better.

(3) Access time and additional cases

• • Choosing V2 allows early access to Capstone 2 practice cases, since they are already available. This is beneficial because it provides extra time for preparation, compared to the new (V1) case, which you will only receive eight weeks before the CFE, when new Capstone 2 starts. Additionally, V2 offers an extra case to learn from, as the prior exam version is available.
  • Conclusion: V2 is better.

(4) Industry type

• • If you’re currently working in a specific industry, like pets, teas, fitness or toys, choosing a case in a similar industry can give an advantage. Familiarity with the industry lingo can make it easier for you to understand and tackle the Day 1 case.
  • Conclusion: Varies.

Gevorg’s final verdict

Considering the pros and cons, both versions are acceptable. If you’re still undecided, my recommendation is to choose the new (V1) case, given its overall benefits and future-proofing potential. Remember, this is not a one-size-fits-all recommendation. Your personal circumstances, your readiness, and your work experience can come into play in making this decision. It’s best to consult a professional CPA Canada exam coach before making this decision.

Extra resources

Extra Day 1 resources are available at CFE Review courses.

Let’s face it, time management is one of the biggest challenges when to comes to passing CPA Canada’s CFE.  Inevitably, you may be wondering whether you can “skip” some AOs and still pass CFE. Let’s take a look at this strategy in this post.

Understanding AOs in the CFE Days 2/3

The CFE is marked on a curve, which means the passing threshold is adjusted based on average performance. Over the span of two critical days – CFE Day 2 and Day 3 – you’ll get a total of 31-32 AOs. Specifically, Day 2 usually has 13 AOs, while Day 3 usually has 18-19 AOs.

31-32 AOs is a lot. The ideal scenario is to cover all AOs (don’t miss any), but due to time constraints, slow typing speed, or unforeseen issues, it might become necessary to prioritize certain AOs over others and “skip” some.

The Art of Prioritizing AOs

In Day 2, you must get Cs on your role AOs and either FR or MA. You don’t need Cs in all AOs, but you need it in the majority of your role and FR or MA. Note that RC won’t help you,  it has to be Cs.

As such, I suggest that you “target” either FR or MA and make sure you get the Cs (either FR or MA). Additionally, study your role really well and ensure you get at least 4-5 Cs in your role .

In Day 3, you should  get a mix of Cs and RCs, aiming to get Cs in FR or MA, depending what you decided to target in Day 2. For example, if you’re targeting FR, then aim to get Cs on FR in Days 2 and 3. This means, in Day 3, you should rank and write FR ahead of other AOs. 

How many AOs can you skip?

As noted, you should try not to skip any. However, if you have to, then:

• Day 2: You can potentially miss maximum of 2 AOs. Preferably, these missed AOs should be from the FR/MA area that you’re not targeting. For example, if you’re targeting to get Cs in FR, then you could skip 2 MA AOs.
• Day 3: You can potentially miss up to 3 AOs. I recommend missing your role AOs. For example, if your role is Assurance, you can miss 3 Assurance AOs, because you already received Cs on it in Day 2.

How many Cs do you need?

As a rough guideline, I recommend getting the following at the minimium:

• FR or MA: Get 3-5 Cs in FR or MA (not combined), in Days 2 and 3 together. For example, 2 Cs in FR in Day 2 and 2 Cs in FR in Day 3 for a total 4 Cs. 
• Role: Get 4-5 Cs in Day 2 role.
• Day 3: Get a mix of Cs and RCs, with max. 3 NC/NAs.

Conclusion

Remember, these are guidelines, not hard and fast rules. Each CFE passing threshold is adjusted based on average performance and ideally you should attempt all AOs. Your success depends on comprehensive preparation, understanding of technicals, and good time management skills.

Stay connected with me for more advice and insights on acing your CPA exams.

Extra resources

Extra resources are available at CFE Review courses.

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

ASPE vs IFRS: Converged

The following standards are converged (exactly the same):

• Inventories IAS 2 / ASPE 3031

ASPE vs IFRS: Minor differences

The following standards have minor differences:

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

Others

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

Extra resources

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

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

How to tell if both quant and qual are needed?

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

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

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

Look at the required’s wording

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

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

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

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

Clearly, both quant and qual are needed.

Look at the information in the appendix

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

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

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

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

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

Conclusion

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

Extra resources

Extra resources are available at PEP and CFE Review courses.

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

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

So what is the correct approach?

Understanding IFRS 15

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

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

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

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

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

Should you discuss the 5 sub-steps?

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

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

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

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

Extra resources

Extra resources are available at PEP and CFE Review courses.

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

Related readings:

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

What’s Core 2?

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

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

Examples of MA topics include:

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

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

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

How long is it?

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

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

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

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

Is there an instructor?

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

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

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

What are the assignments?

Core 2 has weekly assignments that consist of:

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

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

Below is an example of a Core 2 MCQ:

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

Below is an example of Core 2 IP:

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

Below is an example of Core 2 PC:

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

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

Below is an example of a Core 2 FG:

Each row in the feedback guide is graded as:

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

The MCQs are marked automatically by the system.

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

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

How is it graded?

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

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

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

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

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

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

What’s module syllabus?

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

What are the exams?

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

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

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

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

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

How many tries do I get?

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

What are the textbooks?

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

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

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

What should I study?

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

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

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

What’s the Core 2 pass rate?

The Core 2 pass rate is around 83%. 

Why do students fail Core 2?

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

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

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

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

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

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

Do I need a tutor?

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

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

Extra resources

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

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

Related readings:

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

What’s Core 1?

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

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

Examples of FR topics include:

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

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

How long is it?

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

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

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

Is there an instructor?

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

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

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

What are the assignments?

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

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

MCQs are small problems that test on various technical topics.

Below is an example of a Core 1 MCQ:

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

Below is an example of Core 1 IP:

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

Below is an example of Core 1 PC:

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

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

Below is an example of a Core 1 FG:

Each row in the feedback guide is graded as:

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

The MCQs are marked automatically by the system.

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

How is it graded?

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

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

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

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

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

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

What’s module syllabus?

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

What are the exams?

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

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

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

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

How many tries do I get?

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

What are the textbooks?

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

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

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

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

What should I study?

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

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

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

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

What’s the Core 1 pass rate?

The Core 1 pass rate is around 75%. 

Why do students fail Core 1?

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

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

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

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

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

Do I need a tutor?

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

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

Extra resources

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