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

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

How do pre-loaded tables impact CFE?

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

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

Will CFE be harder?

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

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

What are my CFE strategies now?

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

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

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

Extra resources

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

Extra resources are available at CFE Review courses.

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

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

Can you claim part-time work experience in PERT?

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

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

Can you claim PERT experience from multiple jobs?

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

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

Extra resources

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

Extra PERT resources are available at PER Review courses.

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

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

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

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

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

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

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

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

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

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

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

Second example of strategic direction overarching issue:

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

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

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

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

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

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

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

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

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

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

Should you even practice with Capstone 2 Day 1 cases?

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

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

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

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

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

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

Conclusion

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

Extra resources are available at CFE Review course.

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

You can read about basics of Day 1 here. 

Day 1 marking

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

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

Quant vs qual

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

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

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

Writing all quant/qual at once

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

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

Conclusion

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

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

Extra resources are available at CFE Review course.

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

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

Step 1: Access Knotia

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

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

Step 2: Click on CPA Canada Standards

Knotia has several authoritative resources:

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

Both are available during the exam.

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

 

Step 3: Expand Accounting section

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

Step 4: Choose IFRS, ASPE or ASNPO

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

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

Special notes

IFRS:

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

ASPE:

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

ASNPO:

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

PSA:

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

Are EBooks, Handbook and Knotia the same thing?

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

Extra resources

FR resources are available in my CPA Canada tutoring programs.

CPA Canada’s CFE Day 1 is 4 hours long. It contains usually 4 strategic issues, 2 operational issues, and 1 or 2 big picture issues.

Before heading into the exam center, it’s a good idea to have a strategy on how you’re going to approach and solve the Day 1 case. This strategy should be formulated during your prep time and practiced until it becomes second nature.

I described the basics of Day 1 here. So in this blog post, I’ll explain the Day 1 approach that I teach my students.

Day 1 approach

Step 1: Overview the case

First, we flip through all the pages. The goal is to understand what the exam paper is all about:

• How many pages are there?
• How many appendices?
• What are the titles?
• What are the appendices made up of (quant, qual or both)?
• How long is the board dialogue?

This is a quick process that takes 1 minute max.

Step 2: Read narrative, board dialogue and F/S

Now that we know what the case is all about, we read the narrative (first few pages), the board dialogue (which is usually Appendix I) and F/S (if given). All of those are read in detail.

Step 3: Build the outline as you’re reading step 2

You can have either paper or computer outline. Whichever you choose, you should build an outline. It helps to capture the case facts, keep things organized, and saves you from re-reading the case.

Here in step 3, we build the outline. This is done simultaneously as we are doing step 2.

At this point in the approach, you should know all the strategic issues, operational issues, and the big picture issues.

Step 4: Quick read the appendices

Here in step 4, we “quick read” the remaining appendices. The goal is to find what issue each appendix belongs to and if there are any important case facts that might affect all other issues (ie, hidden big picture issues). Don’t read in detail, take 30 sec – 1min max per Appendix.

If any appendices affect SAF (for example, the big picture constraint), then go back to your outline and add the new information to it. This happened in the May 2022 CTI v1 case.

I recommend spending on steps 2, 3 and 4 (combined) 1 hour and 20 minutes.

Step 5: Finalize time budget

It’s time to allocate your remaining time budget and start solving the AOs. Exact time allocation techniques and time budget templates are available in CFE Review.

Step 6: Read appendix in detail & solve

Finally, we read each appendix in detail and solve the AOs.

Summary

Here’s the summary:

• Step 1: Overview the case
• Step 2: Read narrative, board dialogue and F/S
• Step 3: Build the outline as you’re reading in step 2
• Step 4: Quick read appendices
• Step 5: Finalize time budget
• Step 6: Read appendix in detail + solve

Extra resources

Extra resources are available at CFE Review course.

In CPA Canada CFE Day 1, it is typical to have 4 to 5 strategic issues. In some cases, there could be a strategic issue that have multiple options within it. For example, the issue may require you to analyze: keep vs drop, make vs. buy, repair vs replace.

In this article, I’ll discuss the best approach on how to format these issues.

Multiple Options – Quants

For each strategic issue, a quantitative and qualitative analysis is required. The same is true when a strategic issue contains multiple options. Each option will need a corresponding quantitative and qualitative analysis.

For the quantitative component, the following steps should be taken:

• Excel appendix should have a clear title and headers to separate each option.
• In Excel, choose the right technique/calculation approach and find ways to save time on set up. For example, if there are multiple product production options, you can set up your common inputs for each as the rows, and your products as the columns. This will help you avoid duplication of headers for each separate calculation.
• Include short support for calculations.
• Summarize results of each option’s quants in your memo. Include assumptions and other considerations
• Conclude which option is better and why.

At least 2-3 assumptions are needed for each quants you prepare. Be sure to have a balance between the different options if applicable.

Example

Using Creative Toys Inc. (CTI) as an example, the first strategic issue is that the doll head division has low margins, and the board wishes to make this more profitable by automating the manufacturing or outsourcing the production to one of two suppliers. We have 3 options within 1 issue (manufacture, outsource #1, outsource #2).

For the quants, we provide NPV calculation for each scenario and conclude in the memo. The first option is to update the equipment and we write a separate interpretation of the results:

The second and third options are for outsourcing. We write a conclusion for each:

Multiple Options – Qual

For the qualitative component, the following steps should be taken:

• Using bullet form, write 4-5 pros and cons (total) for each option. 
• Ensure there is a balance between pros and cons for each (i.e. not all pros or all cons).
• Integrate AT LEAST 4 situational analysis factors. There should be a balance in linking factors to each of the options within the AO.

Example

Continuing from the earlier example, for the qual, we write pros and cons for new manufacturing equipment vs outsourcing. We would write 4-5 pros/cons for manufacture vs outsource and 4-5 pros/cons of outsource #1 vs outsource #2.

Notice how we combine the pros/cons by writing “Pros of X/Cons of Y”. This is an effective way to cover both options.

Extra resources

Overall, when an AO contains multiple issues, tackle each one as a sub issue with it’s own quantitative and quantitative analysis, and conclusion. Be sure then to create an overall conclusion that considers each of the issues. 

Extra resources are available at CFE Review course.

Update: CPA Canada 2024 pass rates are now available, you can find it at this updated post.

CPA Canada has now released the 2022 PEP and CFE exam pass rates. The 2023 pass rates will be released in February 2024.

2022 CFE Pass Rates

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

CFE Offering	Cumulative Pass Rates
	First Attempt	Second Attempt	Third Attempt
May and September 2022*	71.3%	n/a	n/a
May and September 2021*	73.6%	n/a	n/a
September 2020	75.8%	n/a	n/a
September 2019	76.3%	87.4%	n/a
September 2018	77.6%	87.5%	90.8%
September 2017	77.6%	88.1%	90.6%
September 2016	76.8%	88.6%	91.4%
May 2016	68.7%	75.4%	79.9%
September 2015	82.9%	94.6%	96.6%

*In 2022 and 2021, there were two offerings of the CFE. The 71.3% and 73.6% pass rates are the combined averages of both the May and September CFEs. Overall, there is a decrease of 2-3% year-over-year, with 2022 CFE pass rate of 71.3%.

2022 PEP Pass Rates

CPA PEP Module	2022 Pass Rate	2021 Pass Rate	2020 Pass Rate	2019 Pass Rate
Core 1	74.0%	77.1%	81.9%	79.4%
Core 2	82.5%	85.3%	86.2%	84.3%
Taxation	87.5%	88.1%	88.0%	88.1%
Assurance	89.7%	90.5%	89.1%	89.2%
PM	89.5%	90.9%	90.7%	90.6%
Finance	87.2%	89.1%	89.0%	89.9%

There is a notable decrease in Core 1 pass rate, while other PEP modules decreased by about 1-2% in 2022.

PEP and CFE Exam Coaching

My name is Gevorg. I’m an instructor and CPA exam coach. If you need helping passing your CPA Canada exams, contact me for consultation or check out my courses.

 

 

If you’re a student re-writing the Day 1 exam, you have taken Capstone 2 long time ago,  or you’re an internationally trained accountant who opted not to take Capstone 2, then you will be missing the new feedback guides and the three Day 1 practice cases from Capstone 2.

However, you don’t need to enroll into the full Capstone 2 module to get those. Instead, you can purchase the Capstone 2 review materials separately.

1. How do I get Capstone 2 materials?

Follow the steps below.

Step 1: Contact your local CPA body

Send an email to your local CPA school and request the Capstone 2 review materials. For example, for CPA Ontario, the email is: PEPEnrolment@cpaontario.ca

For CPA Western, here’s the link to the Capstone 2 Review Materials Module (RMM) (bottom of this page):  https://www.cpawsb.ca/current-learners/cpa-pep/modules/

Step 2: Complete forms and pay the fee

Your CPA body will ask you to complete enrollment forms. You’ll receive a similar email to below:

Hello [Candidate],

The cost for the Capstone 2 review materials for $[see below]. This includes access to all of the materials in the module such as the cases, solutions, feedback guides, debriefing videos, flash cards and webinars. Not included is access to the National Marking Centre Hotline or discussion boards, workshop attendance and no feedback on the cases. This enrolment is non-refundable.

To enrol, please complete the attached enrollment form and return with signed copies of the Candidate Training Guide Contract and the Academic Code of Conduct as soon as possible. Access to the materials will be uploaded to D2L within 3-5 business days of the enrolment date. Once we received the requested documents, we will enroll you and our Finance Team will post the invoice for the enrolment fees.

As per CPA Ontario’s website, the fee is currently $250 + HST.

Step 3: Get the materials

They will provide you the new Capstone 2 materials, including the missing Day 1 practice cases (3 versions) and the new feedback guides.

Step 4: Study

Use the feedback guides to understand the CFE case marking scheme.

2. Are there more practice versions for Day 1?

In addition to the three from Capstone 2, you can get supplemental Day 1 exam practice versions. You can also get sample answers to prior year’s versions for extra practice (available if the Day 1 case was previously tested).

Financial Reporting (FR) can be a challenging subject to grasp, and many CPA candidates find it difficult to identify the relevant CPA Canada Handbook section and paragraphs in their exam cases. This blog will guide you through a more straightforward approach to understanding FR references, helping you make the most of your study time and improve your exam performance.

FR sections in the Handbook

To begin, it’s essential to know that the FR standards in the CPA Canada Handbook are divided into the following general sections:

• Definition
• Recognition
• Initial and subsequent measurement
• Disclosure/presentation
• Other sections (eg Appendix A, B)

In some Assessment Opportunities (AOs), we write just the definition, while in other AOs, we write just recognition, and in others, a combination some of the above (for example, definition + recognition + initial measurement).

While applying logic to determine which paragraph to refer to is helpful, it’s not always straightforward. For example, if we have an AO where users are unsure if an asset is Property, Plant, and Equipment (PPE) or inventory, it makes sense to discuss the definitions of both and conclude which one fits better. However, this is a simple example and things can get complicated in the Common Final Examination (CFE) cases.

Understanding triggers is key

For more complex FR AOs, you need to look for triggers. Examples of triggers include:

• Agent: Leads to agent vs. principal section of revenue.
• Lawsuit: Leads to contingency
• Decline in market value: Leads to impairment
• Patent: Leads to intangible assets
• 100% share purchase: Refers to business combination
• Notes receivable: Leads to financial instruments
• Segment: Leads to operating segments

Practice makes perfect

Understanding the connection between triggers and paragraphs is challenging and it’s nearly impossible to learn this by simply reading theory. The key is to write dozens of cases, which will help you learn these trigger-to-section connection over time.

In the beginning, you will get most of them wrong, but that’s okay. As time goes on, you will start to see patterns and identifying the relevant paragraphs will become easier.

Focus on writing cases, take guesses if you’re unsure, learn from the solutions provided and keeping very organized notes.

Conclusion

After practicing several cases (~20-30 cases), it becomes easier to see the connections between triggers and the relevant FR paragraphs. So practice is the key to learning FR and to success in CPA Canada exams.

My FR technical notes show each Handbook standard in point form, divided into sections discussed above. Free preview is available here. Consider adding this resource to your CPA exam studies.