Solving CPA Canada cases can be confusing. In some assessment opportunities (AOs), you provide an answer based on logic and case facts, such as sources of financing, management accounting questions, board of director issues, audit procedures, data analytics, and so on. In other AOs, you are required to reference authoritative materials, such as ASPE, IFRS, ASNPO, ITA, and CAS. For these second kind of AOs, a common concern I get from candidates I’m teaching is whether they need to cite the exact standard number and exact paragraph in the response to get competent (C) grade. In this blog, we’ll look at how to format AOs when referencing to the CPA Canada Handbook.
Do you need to give the exact paragraph?
The short answer is no, you don’t need to provide the exact ASPE or IFRS standard and paragraph in your response. Instead, you can simply refer to the criteria itself, whether it’s ASPE or IFRS or ASNPO, to support your answer effectively.
Let’s look at an example. Using CFE Day 2 case Ferguson Real Estate (FRE) as an example, for a lawsuit AO, you can see below it says: “Per the ASPE section on contingencies, a contingency exits when…”
You’ll notice it doesn’t give the exact ASPE standard numbers nor does it give the exact paragraph where the recognition criteria are found. This is acceptable. The Feedback Guide doesn’t require it either:
Needless to say, if you do give the standard number and paragraph number in your response, you won’t lose marks, you’ll just lose precious case writing time.
Why is it not required?
The main reasons for this include:
- Objective of CPA exams: The objective of CPA Canada exams is to assess your understanding of accounting principles and your ability to apply them in cases. Knowing the standards is good, but the examiners are more interested in evaluating your your ability to apply case facts and answer “so what”. This is why you won’t see specific marks identifying the section of the framework.
- Focus is on analyzing and recommending: CPA Canada exams give cases that require you to analyze problems and make recommendations. The emphasis is on your ability to apply the accounting treatment rather than memorizing standard numbers and paragraphs.
- Time management: CPA Canada exams are intentionally time constrained, requiring you to manage your time efficiently to complete all sections. Spending time searching for specific standard numbers and paragraphs just for the sake of referencing is not smart. Instead, focus on understanding the Handbook structure.
What about Assurance and Tax referencing?
For most Tax and Assurance AOs, the same rule applies and you don’t need to reference the exact standard and paragraph numbers. However, there are some exceptions.
For example, you may get a Tax AO that requires you to reference a specific part of the Income Tax Act (ITA) to describe the type of transaction, such as Section 85 or Section 86. Below is an example where the answer references Section 86 to speak about reorganization:
This is rare, in 80-90% of Tax AOs you don’t need to reference the standard, you can simply say: “As per ITA,…”.
Here’s another example for Assurance. To speak about the special engagements, we are expected to reference the CAS standard:
Below is the feedback guide for this AO:
Will you get C if you don’t reference these standards?
There are some exceptions in Tax and Assurance, but will you still get C if you don’t reference in these specific type of AOs? The answer yes, you’re very likely to still get a C. The reason is that the exam markers apply professional judgement to grade your papers, in addition to the solution keys. A competent marker will see that you referenced the right sections, even through you didn’t write the exact paragraph number or standard name, so they still give you the C grade. So you should focus on putting the correct criteria itself and don’t worry about putting the paragraph numbers just for the sake of referencing.
Extra resources
While it’s important to have a solid understanding of ASPE, IFRS and other standards for CPA Canada exams, you don’t need to worry about memorizing specific standard numbers and paragraphs. Focus on understanding the Handbook structure, applying criteria correctly with case facts, and communicating your case clearly and concisely. By doing so, you’ll be well-prepared to tackle any AO that comes your way, both in the exams and in your future career as a CPA
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