CFE Day 2: Proven Study Tips to Help You Pass the Exam

Day 2 of the CPA Canada’s CFE is the one most candidates find daunting due to its length and depth requirements. This study guide will break down the CFE Day 2 exam into key components to help you successfully study and pass Day 2.

You can read about the basics of CFE Day 2 here.

1. Effective case reading.

As you are reading the Day 2 case, you want to keep track of company and background information. This will help provide context as you write your response. This includes timeline (eg. year-end, key events, current date, etc.), users (eg, owners, investors, bank, etc.), industry the company operates, business information (eg financial reporting framework), requireds, and any other key information.

The case may not specifically outline the financial reporting framework at the start. Make note if the company is operating privately or publicly, as this will hint whether the case is ASPE or IFRS.

If you’re using a paper outline, be sure to decipher between the required and the background information by use of margin notes or different highlights. There is a lot of information on Day 2, and it’s critical to understand what is relevant to your plan and what is not.

Be sure to read the “Common” section and only your role. Don’t get caught up in information irrelevant to your analysis. For example, the Common section may give information about the external environment, such as competition, government increasing taxes, rising demand, changing consumer preferences, etc. This is given for PM role writers for their SWOT. If you’re writing other roles, this is not for you.

2. Planning the case.

Whether you prefer to plan on paper or computer, planning is critical to ensure you stay within the allotted time and can complete all AOs. For more resources on electronic vs paper outline, check out this article.

As you read your case, you should be noting down the requireds. You can also make note of any relevant pages or appendices as part of your plan. Your goal in planning is not to decide how you will answer the issue, but instead to determine what the issue is and what format you will answer.

For each AO, you want to allocate a specific amount of time to complete it. This will be unique to you depending on your strengths and typing speed. I suggest for reading and planning to take 1 hour in Day 2. You may choose to allocate 15-20 minutes for each of common issues and 20-25 minutes to each of your role AOs. When setting the amount of time, be sure to consider the time it takes for excel quants and summarizing in memo.

3. Sticking to your time.

It’s important to stick to your time for each AO. Going overtime on one AO will result in reducing valuable time in a different AO and could even result in your not completing each.

Keep an eye on the time as you write and as you start wrapping up your AO when you have 1-2 minutes left. Note that the conclusion is often required for a C and should be included for each AO.

Remember that your analysis doesn’t have to be perfect to achieve a C, it only needs to be reasonable. Don’t overspend your time on an AO by trying to include all facts or quantitative components into your calculation.

Day 2 is a 5-hour exam. Practice each case within this 5-hour limit so you can realistically see how you would perform under exam conditions.

4. Applying the structure.

For each AO, your best chance of obtaining a C is to follow the CPA Way method of response. This includes the following format:

  • Issue – Discuss the issue briefly using case facts. For example: “Company A received $50K for inventory they will ship in May. They have recorded this as revenue. The issue is whether this is the correct treatment.”
  • Standard – More related to FR issues, Assurance or Tax. Discuss the appropriate standards that need to be considered based on the issue.
  • Analysis – Integrate case facts to explain and assess whether the appropriate standards are being met. On Day 2, this step is critical for achieving depth. Make sure you explain how and why certain components are not met. Note that each criteria should have its own analysis.
  • Measurement – Any associated calculations should be summarized.
  • Recommendation – Was the initial treatment correct? If not, what adjustment needs to be made? What is the course of action you are recommending based on your analysis?
  • Impact – Keep in mind any additional factors that may be indicated such as covenants, company goals, or profitability. Note that writing the impact statement is not needed for C. It’s optional to write it.

If you receive an AO that you’re not sure how to answer, use the above framework to help guide your response.

5. Remembering technicals.

Going into the CPA Canada Handbook during the exam will take valuable time. There are many routine AOs that come up frequently throughout your studies and Capstone 2, such as revenue recognition. I recommend that you learn and memorize the criteria for these AOs, so you can spend more time analyzing the standards.

Note that the criteria can be written in your own words, they don’t need to be copied directly from the Handbook. Creating your own study templates can help prepare for this.

Familiarize yourself with the Handbook, however, in the case that you receive a less common, non-routine AOs that you may need to look up. Familiarize means understanding the structure, not memorizing the entire handbook. For example, IFRS 15 has 5 steps, Appendix A, and Appendix B. Step 2 and Step 4 are the most important.

6. Practicing cases.

Practice is the best way to learn time management, technicals, understand which AOs require further study, and the format CPA is looking for. Capstone 2 will provide practice cases, but I recommend that you write additional cases to get exposure to more AOs and technicals.

Try to write some past year CFEs for more technicals. Only few FR and CAS standards have changed in these past exams. The biggest changes were in FR’s revenue recognition and lease standards. In Audit, biggest changes were in special reports.  Although it’s important to write many practice cases, be sure to only write cases you can debrief effectively.

You can find extra CFE Day 2 and Day 3 cases here.

7. Debriefing cases.

Debriefing is key to success on Day 2. The process of debriefing is your main study method, as you learn and understand how to write responses, what criteria to use, and how to integrate case facts.

It’s important to rewrite your response, review technical notes and the handbook to guide your understanding, and create your own case templates.

It’s recommended to mark your own cases even if they are being professionally marked. This will get you more familiar with critically assessing your work and the feedback guide. It will also give you an idea of how you performed while you wait some time for your marked case.

8. Using an AO tracker.

Tracking your AO grades for each competency in Day 2 will help you to map out which AOs are your strengths, and which ones need more review. It also shows your progress over the study period and can be a confidence booster heading into the CFE!

Capstone 2 provides an AO tracker and I have one in my CFE program as well.

Extra resources

Overall, read the case effectively so that you can plan and stick to your time for each AO, follow the CPA Way approach when assessing each AO and be sure to integrate case facts and implications.

Be sure to practice and debrief each case so you can track your progress by each competency. These steps will allow you to build a strong foundation for approach Day 2 of the CFE.

You can get extra Day 2 practice cases and exam resources here.