Marking Guide of CPA Canada CFE Day 1

When preparing to write and pass Day 1 of CPA Canada CFE, you’ll encounter many questions on the exam format. One of the most common questions I receive from my students is how many competent (“C”) grades are needed to successfully pass CFE Day 1. This article will help you understand how Day 1 is marked and which AOs are crucial.

Day 1 marking

Unlike PEP cases and CFE Days 2 & 3, CFE Day 1 is structured and marked differently. In addition to AOs (assessment opportunities), Day 1 has SAs (summative assessments). Unlike other CPA cases, which are marked as competent (“C”), reaching competent (“RC”), and so on, Day 1 is marked as: Yes, No, or Marginal/Partial. So there is no such thing as “getting RC in Day 1” or “getting C in Day 1”, grades will be either: Yes, No, or Marginal/Partial.

Day 1 always has 8 AOs and 5 SAs. The 8 AOs in Day 1 are: Situational analysis, 4-5 strategic issues, 1-2 operational issues, conclusion, and communicationThe 5 SAs are: Situational analysis, overall strategic and operational issues, conclusion, communication, and overall assessment.

Day 1 feedback guide

Using a past Day 1 case , let’s review the marking process.  A standard Day 1 strategic issue is separated into two components: quantitative and qualitative analysis. To achieve “Yes” on the AO, a reasonable attempt in both is required. For the quantitative part, you will get a “Yes” if you make a reasonable calculation. For the qualitative, a “Yes” is given when enough pros/cons are written and there’s depth.

What I find typically holds candidates at “Marginal” is the lack of depth in their qual. Depth means explaining why it’s a pro/con, how does it impact the company, and what it means for the users. This is an important concept and I cover it thoroughly in my Day 1 exam preparation program.

Another challenge I see students make is identifying the correct quants tool. You don’t need a perfect calculation, but you do need to find the right quants tool. A good trick is to use the company objectives and appendix information to find the correct quants tool.

The above example illustrates the marking of strategic issue AOs. For the marking of situational analysis AO, please refer to this blog post.

Your overall Day 1 mark

Day 1 is holistically marked as a pass or fail for the entire Day 1 exam. You will also see Marginal Pass and Marginal Fail when practicing cases, but this mean the same thing as “Pass” and “Fail” when it comes to passing. 

Looking below at the criteria for a “Marginal Pass” (the minimum you must get to pass the exam), you must achieve “Yes” on 1 strategic issue, on communication AO, and “Partial” on all other AOs.  Since you must get “Partial” in all remaining AOs, it is critical to balance time for each AO throughout the 4-hours and not miss any AOs.

It’s also important to avoid any of fatal flaws that will result in an overall failure. These include missing big picture (eg. constraints), not providing useful qualitative/quantitative analysis, not having a balanced analysis, or not providing recommendations / conclusions. For example, all recent Day 1 exams had cash flow constraints. This meant that while several strategic issues were acceptable, they required capital investments above the total cash available. You had to consider what is more aligned with the strategic direction of the company and recommend only those.

In conclusion, doing well on Day 1 of the CPA Canada CFE means knowing how Day 1 is graded and studying smart. Make sure you learn how to write qual in-depth,  how to find the right quants tool, and understand the concept of big picture issues

Extra resources

Extra Day 1 resources are available at CFE Review course.