If you have experience working with budgets or forecasts, you should target MA2 in your CPA Canada PERT reporting. It’s an area that anyone exposed to budgets or forecasts can get at least Level 1, if not Level 2. When I’m helping students pass PERT, I’m surprised how few target this area. It’s structured methodically, doesn’t take much character space, and you automatically get exposure to it during the budget season.

If your role doesn’t include budgets or forecasts, you should chat with your manager. Go into their office or send a Teams message asking if you can assist at the next budget cycle. Getting exposed 1-2 times is enough to get Level 1 if written correctly.

Here’s a breakdown on how to answer MA2 in PERT and a full example.

What’s MA2: Preparing operational/financial budgets, plans and/or forecasts

Every company creates a budget. MA2 is all about that: Preparing budgets (or forecasts) for your company. This includes different types of budgets/forecasts:

• Operational
• Master (financial)
• Project (eg construction project)
• Flexible
• Static
• Cash

The type of budget that I’ve seen most success in getting Level 2 is the operational or master (financial) budget. If your exposure is in project budgeting, you will need to write an additional paragraph explaining how your project budget integrates into the overall financial budget for the year.

There are three parts to the process of creating budgets or forecasts:

• (1) Preparing inputs
• (2) Calculating the budget/forecast
• (3) Performing variance analysis.

These 3 parts form the template for your MA2. Let’s break them down.

1) Preparing inputs

The inputs are the specific items you put in the budget. Examples of inputs:

• Activities to perform (eg. research, market analysis, development, product launch, staff training, monitoring)
• Resources required
• Sales price
• Cost of materials and labour
• Monthly expenses
• Capital expenditure
• Debt interest
• Tax rates
• Employee salaries
• Various expenses
• Inventory levels and costs

You need to write that you analyzed inputs for the budget/forecast. Start by picking 2 specific inputs (like the ones above) and write how you analyzed them to see if it makes sense to use them in the budget/forecast. You need to include:

• 1) Examples of inputs
• 2) Sources of input (where did you get the input?). Example: ERP, CRM, project manager, department head.
• 3) Assumptions you made. Example: I considered annual inflation rates and industry-standard salary increases. For sales price, I assumed a steady market demand.
• 4) Reasonableness (how did you know it’s accurate/reasonable?). Example: I cross-referenced the inputs with internal ERP data and external market reports, and consulted with department heads for reasonableness.

2) Calculating the budget/forecast

Once the inputs are ready, the next step is to prepare the actual budget or forecast. In this step, we want to cover these details:

• 1) Scope (are you responsible for the entire budget/forecast, or sections?): Example: As my company is large, I’m responsible for specific sections of the budget: the head office and regional distribution centers.
• 2) Scale (do you prepare for the full company, or operating unit/project?): Example: I prepare for the entire organization.
• 3) Steps (what exactly do you do?). Example: My task involves collecting, analyzing and evaluating data from various departments (eg. HR, accounting, marketing, sales), assessing reasonableness, adjusting for projected changes, and consolidating this information into the final budget. Specifically, I gather data from internal systems like our ERP and CRM platforms, departmental reports, and my direct communications with department heads. The data is in Excel format. I then analyze this data for trends, reasonableness, and potential changes before inputting into the final budget. This analysis helps in accurately forecasting revenues, expenses, and resource needs. My final step is synthesizing all these into a detailed budget proposal, which is then presented to executives for approval. 

3) Performing variance analysis

The third and final step is to perform a variance analysis. This is done after the budget/forecast is finalized and actual results are in. You need to write 2-3 specific examples of variance analysis you did. Common mistake I see CPA students make here is that they miss the implications of their variance analysis. In this step, we will cover these:

• 1) Steps (how do you perform variance analysis?)
• 2) Variance #1
• Implication
• 3) Variance #2
• Implication
• 4) Variance #3
• Implication

How much exposure do you need for Level 2?

For a large company, you can be performing budgeting/forecasting for few complex sections. For a smaller and medium-size company, you need to be involved for the majority of the budget/forecast.

Frequency and complexity are important too.  You will need to write what judgement factors you used for evaluation and the frequency (monthly, quarterly, annual). We’ll add this to the bottom of the template.

MA2 template and full example

Below is a template and full example covering MA2. It’s important that you don’t directly copy the example below. This is is against CPA Canada’ s plagiarism policy. Use below as a reference and write your own original example.

1) Inputs: I start the budget preparation and evaluation task by analyzing inputs:

• Examples of inputs: I analyze sales price (revenue) and wages expense.
• Sources of input: I gather the inputs from the company ERP, CRM,  and holding meetings with department heads.
• Assumptions. In my analysis, I considered annual inflation rates and industry-standard salary increases. For sales price, I assumed a steady market demand.
• Reasonableness: I cross-referenced the inputs with internal ERP data and external market reports, such as economic forecasts by StatsCan, to assess reasonableness. I checked the consistency of these inputs against historical data trends and future forecasts.

2) Calculating budget

• Scope: As my company is medium-size, I’m responsible for the entire financial budget.
• Scale: I prepare for the entire organization.
• Steps: My budget analysis and evaluation task includes collecting and analyzing inputs from various departments (eg. HR, accounting, marketing, sales), adjusting for projected changes, and consolidating this information into a comprehensive budget. I gather inputs from the internal systems (ERP and CRM), departmental reports, and my direct communications with department heads. The data is in Excel format. I use two tabs in Excel: the first has the inputs and the second has the draft budget. I use VLOOKUP and Pivot table to calculate the budget. I analyze inputs for trends, reasonableness, and potential changes, before calculating the draft budget. My analysis helps in accurately forecasting revenues, expenses, and resource needs. My final step is synthesizing all these into a detailed budget proposal, which is then presented to executives for approval. 

3) Variance analysis

• Steps: Once the actual results are ready, I perform VA by comparing the budgeted figures against the actual. I do my analysis in Excel using formulas such as VLOOKUP, XLOOKUP and Pivot table. I identify and quantify differences to find areas of financial overperformance/underperformance and to adjust future budgets, thus helping the company meet its targets.
• Variance #1: I evaluated wages expense budget vs actual. I looked at each department’s actual salaries and compared to the budget, considering factors like overtime, new hires, and turnover rates. I found that overall wages were higher than budgeted due to increased overtime in the distribution centers.
• Implication: I recommended increasing hiring for the next fiscal period. The implications of my analysis on the business are improved cost management, meeting customer delivery targets, and more accurate staffing projections for next FY.
• Variance #2: I evaluated revenue budget vs actual. I analyzed sales volumes, pricing strategies, and market conditions that impacted our revenue. I found that actual revenues were below budget, mainly due to lower-than-expected sales volumes.
  Implication: I recommended revising pricing strategies and sales targets. The implications of my analysis on business are enhanced revenue forecasting and strategic sales planning, specifically lowing the price of low-performing products for market penetration.
• Variance #3: I evaluated marketing expense budget vs actual. I compared the budgets of 4 marketing campaigns against the actual spend and the effectiveness of these 4 campaigns. I found that 2 campaigns outperformed in terms of ROI while the other two underperformed.
• Implication: I recommended reallocating funds to high-performing campaigns next FY. The implications of my analysis on the business are more efficient use of marketing resources and improved ROI on marketing activities.

Frequency: I’ve performed the above budget analysis and evaluation for 2 annual budget cycles.

Complexity: My budget and variance analysis are complex because they required research, interpretation, and judgment. The budgets are complex because they involve multiple departments, variety of expense categories, and the need to balance short-term operational needs with long-term strategic goals. This complexity was higher last year due to dynamic market conditions (high interest rates) and internal company factors, such as layoffs and new ERP system implementation, which required me to update the spreadsheets and the budgeting models to match the new system outputs.

—

The above is a level 2 example because it has 2 annual budget cycle exposures and it follows the PERT guidelines as needed. Level 1 example will follow the same format, but it would have less frequency (1 cycle) and lower complexity. The above example is ~4,300 characters, which is within the 5,000 limit.

More PERT templates and examples

Full CPA PERT templates and examples are available at PER Review success program.

Pass the Performance Management (PM) elective in the CPA Canada PEP program can be challenging. Candidates often face dilemmas regarding the best strategies for tackling cases effectively. Below are some common questions I receive, with practical strategies to improve your exam results.

1. Depth of first read-through of case

I suggest to start your PM case with a brief overview. This means flipping through the pages, eyeballing the information. As you’re doing this, focus on the number of appendices, the titles of appendices, tables/graphs/charts, and any potential hidden Assessment Opportunities (AOs). Indicators of hidden AOs are question marks or phrases like “Can you please…”.

Use a highlighter or pencil to write your assumptions about each appendix. For example, if the title of the appendix is “Board Composition”, write: “SG – WIR BOD”. This step helps to get a general sense of the case without getting bogged down in details.

2. Narrative and Appendices

After flipping through the pages, the next step is a detailed read of the narrative and any appendices that continue the narrative, such as “industry information”. Your goal here is to gain a clear understanding of the AOs. While you’re doing, you’re also creating an outline. When it comes to outlining cases, simplicity is key. The outlines, or “skeletons,” should be concise, made of headings and bullet points. This helps to keep a structured yet flexible framework to build your answer.

Once this is done, quickly read remaining appendices with 2 goals:

• (1) Identify hidden AOs
• (2) Connect each appendix to identified AOs

Notice that you don’t read the remaining appendices in detail at this stage yet. You’re quickly reading it to find hidden AOs and connecting each appendix to your identified AOs.

Once this is done, your next step is to create a time budget and allocate time for each AO. Once the time budgets are ready, you will read each appendix in detail and solve the AOs simultaneously. 

In summary, here are your steps to solving the case:

• Step 1: Overview (flip through)
• Step 2: Detailed read of narrative (and industry information) and create case outline
• Step 3: Quick read remaining appendices
• Step 4: Create and allocate time budgets
• Step 5: Rank AOs
• Step 6: Detailed read of appendices and solving simultaneously.

3. Recognizing and prioritizing AOs

Identifying whether something is an AO or not can be tricky. For example, you may read in the narrative: “The company is concerned with meeting profitability targets and opening two new stores”.  Is this an AO? Maybe. We need to look for more clues.

For example, is there a dedicated appendix with profitability targets? If yes and this required has its own appendix, it’s very likely a separate AO. If not, you need to focus on more clear-cut AOs and leave these questionable AOs for later.

Good strategy to handle these questionable AOs is to focus on obvious AOs first and leave questionable ones for the end (“ranking”). Start by solving all obvious AOs, then when you have 5-10 minutes left at the end, solve these questionable AOs. If they end up not being real AOs, it’s not a big loss, since you had spare time. If they end up being real AOs, you protected yourself against an NA and may even get RC since you spent a few minutes solving them.

In summary, the key to PM elective cases is smart reading, efficient planning, concise outlining, and prioritization of AOs. By using these strategies, you’ll be better prepared to tackle the complexities of CPA Canada cases and effectively pass your exam.

Extra resources

Extra PM resources are available at PM Lessons course.

Members of the Chartered Institute of Management Accountants (CIMA) can now apply to become a Canadian CPA under the new Memorandum of Understanding (MOU) issued by CPA Canada. Your only obstacle is to pass the Common Final Exam (CFE) Days 2/3.

Who’s eligible?

To be eligible, you must be:

• Designated: Be fully qualified CIMA member
• Member in good standing: Obtained a membership through completion of the accounting body’s qualification process and not through a recognition agreement with another accountancy body
• University degree: You must hold a university degree recognized by institutions, such as the International Association of Universities or World Education Services (WES), in addition to completing the CIMA program.
• Designated abroad: Obtained your designation while not a resident of Canada (details below).

Do I need to take exams?

Yes, you’re required to pass CFE Days 2 and 3. A maximum of 3 attempts is allowed; failing thrice results in deregistration.

You’re also encouraged to take Capstone 1 and Capstone 2 modules by CPA Canada. However, I don’t recommend taking these modules, because the preparation these provide is geared towards domestic students, not international accountants. For example, Capstone 1 teaches a case study which is tested only on Day 1 of CFE; however, CIMA members are exempt from Day 1, which makes Capstone 1 irrelevant.

Do I need to show proof of work experience?

CIMA members with over 2 years of post-qualification experience are exempt from experience assessment. Those with less than 2 years will undergo a review of their practical experience, both pre- and post-qualification. You can contact me for resources and consultation if you need assistance in understanding how your practical experience aligns with the Canadian CPA requirements.

What if I’m a resident of Canada?

CIMA members who completed/passed the Management Case Study while having been a resident of Canada, or become a resident of Canada, or returned as a resident to Canada, must demonstrate either:

• University degree from a recognized institution outside Canada, obtained through full-time in-person classroom instruction.
• Minimum of 3 years of full-time practical accounting experience outside Canada.

How do I apply?

• Step 1: Start by contacting the CPA body in the province where you intend to work.
• Step 2: Provide necessary documents, including proof of CIMA membership and work experience.
• Step 3: The provincial CPA body will guide you through the assessment and any additional requirements.
• Step 4: Study and pass the CFE Days 2/3 exams.

What’s the format of CFE Days 2/3?

CFE Days 2 and 3 test using a case-study approach. There are no objective format questions, such as multiple-choice questions, only cases. CFE Day 2 is 5 hours long, while CFE Day 3 is 4 hours long. To pass CFE Days 2/3, you must pass both days; passing an individual CFE day will not exempt you from re-writing that day in the next attempt.

Read the blogs posts below on Days 2/3 for further details:

• CFE Study Guide
• Day 2 Format
• Day 2 Study Tips
• What Role To Choose

What challenges will I face?

Unlike the CIMA exams, which focus on management accounting, strategic management, and finance, CFE Days 2/3 test a broader spectrum of competencies, including: financial reporting, assurance, taxation, management accounting, finance and strategy/governance. This comprehensive approach requires more study time and understanding of various exam scenarios. Your main obstacle will be learning Canadian financial reporting (ASPE, in addition to IFRS), Canadian taxation rules, and how to manage your time (because CFE exams are extremely time constrained). 

CIMA exams emphasize strategic decision-making and management functions, whereas the CFE requires an integrated approach, testing on multiple competency areas simultaneously. You must learn how to approach, outline, and correctly answer the exam cases within the time constraint.

As an experienced CPA Canada examination coach, I can provide you resources and strategies to effectively navigate and pass CFE Days 2/3. You can reach out to me for questions and check my CFE Review course for details.

As a designated CPA in Canada, you’re probably aware of the continuing professional development (CPD) requirements necessary to maintain your membership. In this post, I’ll guide you through understanding CPD and how to fulfill your requirements fast and cost effectively.

Understanding CPD hours

CPD stands for continued professional development. It’s a mandatory element for keeping your Canadian CPA membership, and it’s consistent across all provinces. The idea behind CPD is straightforward: as a CPA, your knowledge must remain current in a world where industry standards, regulations and technology are constantly changing. So you’re required to take courses or seminars every year to keep your knowledge fresh. This is CPD in a nutshell.

There are two requirements: (1) yearly minimum requirement and (2) 3-year “rolling” requirement. There are also two categories of CPD: verifiable and unverifiable.

To meet the (1) yearly minimum requirement, you must get a yearly minimum of 20 hours, split evenly between the two (ie, 10 hours verifiable, 10 hours unverifiable). You’ll learn the difference between the two soon.

To meet the (2) 3-year “rolling” requirement, you must get 120 hours in total in three years.

For example, let’s say you got 20 hours in Year 1 and 20 hours in Year 2. So far, you have 40 hours in total and you’re meeting the requirements. In Year 3, you must get 80 hours to get total 120 hours and meet the (2) 3-year “rolling” requirement. If you get only 20 hours in Year 3, you’ll still meet the yearly minimum requirement, but you won’t meet the 3-year rolling requirement, because you’ll have 60 hours in total. 

So I suggest getting 40 hours a year. Getting 40 hours per year (20 hours verifiable, 20 hours unverifiable) guarantees that you won’t need to catch up in any of the years and you’ll always have 120 hours in a 3-year rolling period.

Verifiable vs. Unverifiable CPD

Unverifiable CPD hours are the ones you are not required to prove through documentation: think of activities like reading industry publications, participating in informal learning, watching educational videos, or self-study. Although no evidence is required, honesty is crucial, and you should be prepared to present a log of these activities if audited.

Verifiable hours, on the other hand, require some sort of evidence. This could be certificates of completion from online courses or attendance records from events like seminars or workshops. Activities such as networking or non-accounting related courses don’t count as verifiable nor unverifiable.

Ethics CPD Requirement

Within the 3-year rolling requirement, you must also complete at least 4 hours in ethics verifable CPD. For example, you can take courses, audiobooks, webinars or seminars on:

• Ethical business culture
• CSR
• Whistleblowing
• Anti-money-laundering
• Bribery and corruption
• Regulatory updates
• Corporate codes of conduct
• Independence/conflict of interest

Verifiable: Where to get CPD Hours

Audiobooks and online courses are the fastest and most convenient method for getting verifiable hours. They offer convenience and flexibility, allowing you to learn on the go, such as when you’re commuting to work.

Both CPA Canada and provincial CPA bodies offer courses, however they tend to be pricey. Luckily, you’re not required to take CPD from CPA Canada nor provincial bodies, you can take CPD from any reputable online source.

For example, you can get CPD from the following sources:

• Courses and audiobooks
  • LinkedIn Learning
  • Udemy
  • FastCPD by Gevorg, CPA (coming soon)
• Webinars
  • Eventbrite
• Conferences and seminars
  • Accountex
• Formal education programs (ie. microcredentials, certificate, diploma, or degree at a local college/university)
  • University of Toronto
  • University of British Columba

Unverifiable: Where to get CPD Hours

For unverifiable hours, digital publications and online videos are the easiest ways of getting CPD:

• CPA Canada publications (eg Pivot journal, news, articles)
• Canadian Accountant (news publications)
• LinkedIn articles (accounting, tax, audit and other CPA related subjects)
• YouTube (educational videos related to CPA competencies)
• PERT mentorship
• On-the-job training (for example, you get trained at your workplace on new software, systems, procedures or techniques)

What is NOT considered CPD?

The following don’t qualify for unverifiable nor verifiable CPD:

• Activities that are unrelated to CPA competencies
• Taking language courses
• Networking (for example, social functions, lunches, dinners, etc., these don’t count as CPD, unless you can show there was learning involved, like there was a speaker during the event)
• Volunteering (exception is if the volunteer work is related to one of the above verifiable activities. For example, you can volunteer to be in the Capstone 1 panel and this qualifies for verifiable hours)

Affordable and fast CPD by Gevorg, CPA

I’m excited to announce that I will be releasing engaging and affordable verifiable CPD audio courses in the coming months. Please bookmark this post and check back in December 2027 for updates.

The Capstone 1 Amuzu Parks Inc. (API) case will be tested in September 2024 Common Final Exams (CFE) on Day 1. The original Capstone 1 case has been made available to candidates enrolled in Capstone 1 and released publicly by CPA Canada.

How do I prepare for API case for the CFE Day 1?

On CFE Day 1, you will be presented with the same API case and you will be required to analyze and answer new strategic and operational issues.

Follow these strategies:

• Step 1: Study the Capstone 1 original case well: It’s important that you know the Capstone 1 case inside-out. You will encounter the same users and similar industry challenges. I suggest making notes of the following key situational analysis factors:
  • Users
  • Mission, vision and values
  • Key success factors (KSF)
  • Strengths, weaknesses, opportunities and threats (SWOT)
  • Board objectives
  • Quantitative analysis
• Step 2: Know the Capstone 1 strategic issues: In Capstone 1, API was facing 4 major strategic issues and several minor issues. In the Day 1 CFE exam, you’ll get 3-5 new strategic issues.
• Step 3: Make note of the timeline: CFE Day 1 case is several years in the future and there are new issues to analyze. It helps to stay organized by creating a timeline of events as you are reading the case.
• Step 4: Understand key stakeholder preferences: API case has several users who have opposing views. It’s important that you understand these user preferences as these will repeat in the CFE Day 1.

I strongly recommend practicing with supplemental mock exam cases. In Capstone 2, you will get 3 practice versions of the API case. However, most writers find that this is not enough and feel unprepared.

Where can I get extra API mock exam cases?

I released one (1) original Amuzu Parks Inc. (API) supplemental mock exam practice case to help you better prepare for the CFE Day 1. The mock exam case is a realistic simulation of what you may get on your exam and cover typical AOs that you may find in your Day 1. The package includes the API mock exam case, marking guide and the solution.

Head over to the cases section of my website for a free preview.

 

 

 

The Capstone 1 Neptune Point Fisheries Inc. (NPF) case will be tested in May 2024 Common Final Exams (CFE) on Day 1. The original Capstone 1 case will be made available to candidates enrolled in Capstone 1 and released publicly later by CPA Canada.

How do I prepare for NPF case for the CFE Day 1?

On CFE Day 1, you will be presented with the same NPF case and you will be required to analyze and answer new strategic and operational issues.

Follow these strategies:

• Step 1: Study the Capstone 1 original case well: It’s important that you know the Capstone 1 case inside-out. You will encounter the same users and similar industry challenges. I suggest making notes of the following key situational analysis factors:
  • Users
  • Mission, vision and values
  • Key success factors (KSF)
  • Strengths, weaknesses, opportunities and threats (SWOT)
  • Board objectives
  • Quantitative analysis
• Step 2: Know the Capstone 1 strategic issues: In Capstone 1, NPF was facing 4 major strategic issues and several minor issues. In the Day 1 CFE exam, you’ll get 3-5 new strategic issues.
• Step 3: Make note of the timeline: CFE Day 1 case is several years in the future and there are new issues to analyze. It helps to stay organized by creating a timeline of events as you are reading the case.
• Step 4: Understand key stakeholder preferences: NPF case has several users who have opposing views. It’s important that you understand these user preferences as these will repeat in the CFE Day 1.

I strongly recommend practicing with supplemental mock exam cases. In Capstone 2, you will get 3 practice versions of the NPF case. However, most writers find that this is not enough and feel unprepared.

Where can I get extra NPF mock exam cases?

I offer one (1) original Neptune Point Fisheries Inc. (NPF) supplemental mock exam practice case to help you better prepare for the CFE Day 1. The mock exam case is a realistic simulation of what you may get on your exam and cover typical AOs that you may find in your Day 1. The package includes the NPF mock exam case, marking guide and the solution.

Head over to the cases section of my website for a free preview.

 

 

 

Similar to prior CPA Canada Common Final Exams (CFEs), the September 2023 CFE had two Day 1, one Day 2 and three Day 3 cases.

The following Day 1 cases were tested:

• J.R. Pets Inc. (JRP) v1 (Download)
• CanDo Fitness Ltd. (CFL) v2 (Download)

The following Day 2 and Day 3 cases were tested:

• Day 2 (Download)
  • Bold Plant Foods Limited (Bold) (300 minutes)
• Day 3 (Download)
  • Do-It-Yourself with Help Inc. (DH) (75 minutes)
  • Freemont Community Health Centre (Centre) (80 minutes)
  • Paradise Resorts Inc. (Paradise) (85 minutes)

For the May 2024 CFE, the following Day 1 cases will be tested:

• Neptune Point Fisheries Inc. (NPF) v1
• Kingsdale Tea Inc. (KTI) v2

For the September 2024 CFE, the following Day 1 cases will be tested:

• Amuzu Parks Inc. (API) v1
• J.R. Pets Inc. (JRP) v2

Where can I get the solutions?

CPA Canada will release the official solutions to September 2023 CFE cases in May 2024.

Will I get these cases in Capstone 2?

If you are registered for the Capstone 2 module for Spring 2024, you will NOT receive these cases at the module. You should download using the links above. If you are someone challenging the exam, such as an internationally trained accountant applying under MRA/MOU, please also download using the links above.

How do I prepare for the CFE?

There are several prep methods for the CFE. You will need to focus on these three items:

1. Technical knowledge
2. Case writing skills
3. Strategy

I speak a lot about these items on my YouTube channel and webinars. You can check out my latest webinar.

Technicals:

• Know the key topics on each of the competencies
• Distinguish depth from breadth
• Debrief

Case writing skills:

• It’s all about following the CPA Way
• Know your case inside out
• Integrate throughout the case

Strategy:

• Prepare a study plan
• Obtain study materials
• Get support and resources

Pass the CPA Canada CFE Exam

I’m Gevorg. I’m an instructor and a CPA exam coach. If you want coaching with me, sign up for my CPA CFE Review Course, for a comprehensive prep package.

In this article, you will learn Unit 1 of the CPA Canada’s Core 1 module. If you’re new to Core 1, I recommend reading the CPA Core 1 Module guide for introduction on the module and blueprint for the exam. I suggest downloading the Core 1 syllabus here. 

Core 1 – Unit 1: Summary

Core 1 module is 8-weeks long, each week with a corresponding unit covering various technical topics and assignments. Unit 1 contains the first set of technical readings and assignments. 

• 1: Technicals
  • 1.1 Financial Reporting
    • Accounting Principles, Assumptions and Concepts
    • The Conceptual Framework
    • Accounting Standards
    • CPA Canada Handbook
    • Revenue — ASPE
    • Revenue — IFRS
    • Revenue — Specific Applications
    • Inventory
    • Property, Plant, and Equipment
    • Current Liabilities
    • Investment Property
  • 1.2 Assurance
    • Assurance and Audit Defined
    • The Regulatory Framework for Assurance
    • Client Acceptance and Continuance
    • Planning — Introduction to Audit Planning
    • Planning — Risk Assessment
    • Planning — Going Concern Considerations
    • Planning — Fraud and Other Risk Considerations
    • Planning — Approach and Strategy Considerations
    • Planning — Materiality
• 2: Assignments
  • 2.1 Practice case: Power Plan Inc (PPI)
  • 2.1 Integrated problem (IP) #1

Unit 1: Technicals

Financial Reporting (FR)

Accounting Principles, Assumptions and Concepts
This topic contains basic information about accounting principles and concepts.
How can it be tested? The most common way of testing this chapter is asking you about the elements of F/S. For example, you can be asked to compare different classes of assets, such as assets vs income, liabilities vs expenses, and different equity items. You would quote sections from the Handbook to answer this. A case may ask you to prepare F/S adjustments and their impact on equity. An issue may also ask you to perform an analysis on GAAP vs cash basis of accounting (cash-based vs accrual-based accounting). This will require you to discuss the comparability, timeliness and understandability of the reporting framework. Measurement is also a common topic tested here, which requires you to assess different methods of measurement, such as fair value vs cost.

The Conceptual Framework & Accounting Standards
Accounting standards are the commonly accepted way of reporting financial accounting information in Canada. There are three common accounting standards: ASPE, IFRS and ASNPO (Accounting Standards for Not-for-Profit Organizations). There is also PSA (public sector accounting), but these are not usually tested in Core 1.
How can it be tested? You may get a Core 1 case where it doesn’t explicitly state which framework the company reports under, but may provide details such as the company is public (IFRS) or private (typically ASPE), that will lead you to analyze the appropriate framework to use. You would be required provide a recommendation on whether a private company should adopt ASPE or IFRS. This would require you to consider the company’s resources, usefulness to investors and creditors, and use of decision making. An issue may also require you to compare different FR issues under the two frameworks.

CPA Canada Handbook
This topic covers the basic of the CPA Canada Handbook (HB). Become familiar with the structure of the HB. Each standard begins with paragraphs that discuss the objective and scope of the standard, followed by definitions of key terms used within the standard.
How can it be tested? The most common way the HB is tested is through assessing under corresponding frameworks such as IFRS, ASPE, and ASNPO. Financial reporting (FR) issues will require criteria for definition, recognition, measurement assessment, and so on, that will require you to reference and locate the applicable standard. The handbook can be accessed in Knotia and during the CPA exams.

Revenue — ASPE
Revenue recognition is a very popular topic tested in Core 1. Revenue recognition is the process of recording the revenue that a business earns. It’s about recognizing sales at the time when a company truly earns it, rather than when the money is received. Under ASPE, this is part of section 3400.
How can it be tested? The most common way this is tested is through recognition and measurement rules. For example, for the sale of goods or services to a customer, you may be asked to determine when revenue can be recorded. In this case, you would discuss the three major HB criteria: performance achievement, collection, and the amount of consideration. For measurement, you can be asked to evaluate the percentage of completion method vs the completed contract method and which one is more appropriate using case facts. Revenue may also be tested in the form of interest, royalties, right of return, and various other scenarios.

Revenue — IFRS
Similar to above, this is revenue recognition topic, but this time under IFRS standard. This is covered under IFRS 15.
How can it be tested? The most common way this is tested is through recognition and measurement rules. Typically, IFRS 15 is tested through revenue transactions related to multiple deliverables / distinct performance obligations. For recognition, you would evaluate recognition using the five-step model of HB criteria. For measurement, you would allocate the transaction price, and assessing if revenue is satisfied over time or at a point in time using case facts. It is also common to see measurement tested through discount offers and loyalty programs.

Revenue — Specific Applications
This topic deals with how exactly revenue can be applied. In both ASPE and IFRS Revenue sections, non-routine or complex applications are common given the complexity of revenue recognition process.
How can it be tested? There are 15 common ways you can be tested on revenue. For example, may be asked to determine gross vs net reporting for principle-agent arrangements, consignment arrangements, long-term contracts, bill-and-hold, loyalty points, and so on. For measurement, you can be asked to determine how right of return, rebates and volume discounts to be recorded. Using case facts, calculate this and recommend AJE.

Inventory
Inventory financial reporting is about tracking and valuing the goods a company has on hand, which can be products waiting to be sold or materials to create those products. Inventory is covered under ASPE 3031 and IAS 23.
How can it be tested? The most common way you’ll get tested is through definition and measurement rules. For example, the AO may ask whether an item is an inventory vs PPE. In this case, discuss the definition using the HB. For measurement, you can be asked what’s included in the initial cost and if the inventory is measured at lower of cost or NRV. Using case facts, calculate this and recommend AJE.

Property, Plant, and Equipment
Financial reporting for Property, Plant, and Equipment (PPE) involves accounting for the tangible assets that a company uses to produce goods or offer services over the long term. PPE is covered under ASPE 3061 and IAS 16.
How can it be tested? The most common way this is tested is through definition and measurement rules. Definition can be applied through purchase of an asset, or through an additional major component. For measurement, you can be asked what the total capitalization should consist of (delivery, installation, etc.) and subsequent treatment for depreciation method.

Current Liabilities
Current liabilities are short-term financial obligations that a company needs to settle within one year or within its normal operating cycle. Current liabilities are covered under ASPE 1500, and many sections under IFRS including IFRS 9, IAS 32 and IAS 37.
How can it be tested? The most common way this is tested is through presentation and understanding the timing of economic resources for measurement. For example, you may be asked to reclass bank loans between current vs non-current or determine current measurement for unearned revenues and warranties.

Investment Property
Investment property is real estate assets purchased with the intention of earning returns through rental income or appreciation in value, rather than for use in daily business operations (like headquarters or manufacturing building). Investment Property is covered in IAS 40, and there is no specific guidance under ASPE.
How can it be tested? The most common way this is tested is through definition and measurement. For example, you may be asked to determine if a purchased property meets the characteristics of an investment property using the HB criteria. For measurement, you can be asked to determine the initial measurement at the purchase price plus any costs to prepare the location. You may also be asked to evaluate the choice of the fair value model vs the cost model for subsequent measurement.

Assurance (AS)

Assurance and Audit Defined
The focus of this topic is providing guidance on the purpose and types of engagements.
How can it be tested? Common way for this to be tested could be through a high-level comparison of an audit vs review engagement, and the differences in the level of assurance. Another common way material in this chapter can be tested is understanding the stages of an audit, the parties involved, and the level of communication. For example, this can include describing to management their responsibilities vs the auditor’s responsibilities. You may also be asked to describe the various components of an auditor’s report, including the critical area of the audit opinion and the different results.

The Regulatory Framework for Assurance
This section introduces the standards in the CPA Canada Handbook – Assurance (Canadian Standards on Quality Management, Canadian Auditing Standards, Other Canadian Standards, etc.). The most common section is Canadian Auditing Standards (CAS).
How can it be tested? The most common way this is tested is through various issues requiring criteria/technical discussion from the CAS. Another common way for this section to be tested would be on emerging issues, such as crypto-assets. The handbook can be accessed in Knotia and during the CPA exams as follows:

Client Acceptance and Continuance
This is the first stage of audit. This is the process of accepting a new client, or deciding to continue with an existing client. In Client Acceptance, the auditor decides if they should work with a new client, looking at things like honesty and risks. In Continuance, the auditor checks if they should keep working with a current client, seeing if anything major has changed. Both steps help make sure the auditor can do their job fairly and without any problems, keeping the audit trustworthy. Client Acceptable and Continuance is covered in CSQC1, CAS 210 and CAS 220.
How can it be tested? The most common way to be tested on this is to assess prior to an audit if the audit firm can take on the new company as a client. For example, you would be required to discuss and analyze using case facts the client integrity, the competence/resources of the engagement team, and independence issues. Independence is often a key topic to be tested, in relation to both parties as well as individual team members. Another way this chapter can be tested is through helping a company understand the initial steps of the audit, which would include acknowledgement from management on responsibilities, an engagement letter, etc.

Planning — Introduction to Audit Planning
This is the second stage of audit. It’s about creating an audit plan and audit strategy. In CPA Canada cases, we use the format RAMP to answer audit planning questions. RAMP means: Risk, Approach, Materiality, and Procedures.
How can it be tested? The most common way to test material from this chapter is through development of the audit strategy and audit plan. You can be asked to discuss the scope, timing or direction of an audit, or to review the appropriateness of the planning process thus far by reviewing another auditor’s work. This section introduces the audit planning memo: 1. Risk 2. Approach 3. Materiality 4. Procedures (remember acronym RAMP) which are assessed in detail in later chapters.

Planning — Risk Assessment
This is the continuation of audit planning topic above. This is the first part of RAMP, which is Risk assessment. The audit risk model and risks of material misstatement are covered in CAS 200 and CAS 315 accordingly.
How can it be tested? This is often tested as part of the audit planning memo (APM) question. You may be asked to prepare the risk assessment from scratch, or to assess the reasonability of the audit risk prepared by a junior staff member. For example, you will be discussing the impact of control weaknesses, financial reporting issues, covenants, etc. on the risk for the audit and how this impacts the accuracy of the financial statements. This is then used to determine an overall financial statement level (OFSL) of low, medium or high. Note that in most CPA cases, this will be high.

Planning — Going Concern Considerations
Going concern in audit refers to the idea that a company will keep operating for the foreseeable future, usually at least the next 12 months. Auditors look at company’s financial health, debts, income, and other factors to decide if there are any big worries about company closing down. If the auditor has concerns, they might note that there’s a “going concern issue,” which is a warning that the company might not be stable enough to keep going as it is. Going concern is covered in CAS 570.
How can it be tested? The most common way this is tested is in discussing the auditor’s responsibilities in the audit related to going concern, and the implications on the auditor’s report. This type of AO can often be implicit, and would require you to identify events or indicators of going concern, whether they be financial (adverse financial ratios, reliance on short-term financing, operating losses, etc.) or operating indicators (key management departures, labour issues, loss of market share, etc.). For example, if you determine a going concern is present, you may also be asked to discuss additional procedures, including assessing the appropriateness of management’s assumptions.

Planning — Fraud and Other Risk Considerations
Fraud in an audit refers to intentional deception that leads to false information in the F/S. It can be false revenue, hiding liabilities, or incorrect expenses to make a company look better than it really is. Auditors are looking for clues that there may be fraud, by checking records, talking to management and staff, and various other techniques. Fraud is covered in CAS 240.
How can it be tested? The most common way for this topic to be tested is to determine if there is a risk of fraud within a company. Note that this is often commonly an implicit AO, but that there will be several indicators signaling potential fraud. You will be required to describe the fraud triangle using case facts: incentives and pressures, rationalization and attitude, and opportunity. Additionally, it is common for you to have to describe how fraud risk affects the risk of material misstatement, and the auditor’s response to fraud (professional skepticism, additional procedures on key risk areas, communication of findings). A common example of fraud can be seen in cases is through Related Party Transactions.

Planning — Approach and Strategy Considerations
This is the second part of RAMP, which is Approach. The approach is covered in CAS 330.
How can it be tested? It’s often tested as part of the audit planning memo question. You may be asked to prepare the approach from scratch, or to assess the reasonability of the approach prepared by a junior staff member. The most common way for this to be tested is to determine which type of approach should be used: substantive and combined. This would include an assessment of the control risk and identifying any control weaknesses and strengths. Another way this chapter can be tested would be an assessment on opening balances (CAS 510), use of an export where you will need to discuss evaluating the appropriateness of management’s expert’s work, or using the work of internal audit (CAS 610).

Planning — Materiality
This is the third part of RAMP, which is Materiality. Materiality is covered in CAS 320.
How can it be tested? It is often tested as part of the audit planning memo process. You may be asked to determine materiality from scratch, or to assess the reasonability of materiality prepared by a junior staff member. As part of determining materiality, it’s important to identify the users (investors, creditors, owners, etc.) and discuss their objectives to identify a benchmark (normalized profit before tax, total assets, etc.). Another common way this can be tested is to determine how FR issues/adjustments impact the overall materiality and performance materiality.

IP#1

The IP (integrated problem) for unit 1 follows a manufacturing company of custom furniture reporting under ASPE. The company is founded by Lisa, who is starting to think about retirement, and also considering selling her business in the short-term.

To approach this problem, you are taking on the role of financial advisory services. You are being asked to review some financial reporting issues, which will require you to discuss criteria from the handbook. Because you are dealing with a furniture company that sells to customers, it’s important to watch out for any revenue recognition and classification / valuation of equipment.

An important takeaway from this IP is that there is a covenant compliance to consider. The impact of the covenant should be considered with each adjustment to the financial statements. The first week is unique as the IP also includes completing the workshop survey.

PC#1 “Power Plant Inc” (PPI)

Case Intro
Power Plant Inc. (PPI) follows a gardening company owned by two sisters, that provides services to both residential and commercial properties. For this case, you are representing a senior on the PPI review engagement.

Typically, the weekly PCs will have 5-6 AOs. For PPI, there are 6 AOs.

Common Triggers
The company currently operates in two types of properties. When dealing with different sectors or products, coupled with the increase in costs the industry/PPI has faced, this can be a common trigger that profitability may need to be reviewed for each of the segments.

Due to the financial stress PPI is under, they have terminated their full-time accountant and replaced them with a part-time bookkeeper that does not have a strong technical knowledge. This is typically a trigger to keep an eye out for FR discussions, as there are likely to be errors with how they were prepared.

Because your role is a part of the review engagement, be on the lookout for Assurance related requests.

Handbook Sections
PPI does follow ASPE standards. The following sections should be reviewed:

• CAS 200 and CAS 315 – Audit Risk Model and Risks of Material Misstatement
• CAS 320 – Materiality
• CAS 330 – Approach
• ASPE 3063 – Impairment of Long-lived Assets
• ASPE 3400 – Revenue
• ASPE 3031 – Inventories

Watch-Outs
It’s always a good idea to track the current month the task is taking place, as well as the year-end so any adjustments can be accounted for in the correct period, and you can account for any proration.

Similarly, to the IP for this week, an important takeaway is that there is a covenant compliance to consider.

Common Mistakes
While most requireds you will find within the first page of the case, this is not always the case. For this PC, the covenant is mentioned in a note on page 2, so it’s important for candidates to read through the entire case first before allocating time to each AO and completing their plan.

Time-Savers
As you are reading the case, it’s a good idea to identify / highlight background information that could be applicable to qualitative AOs, to ensure you do not have to reread the case. For example, in PPI, there were several facts in the first page that were useful for the risk assessment required.

To save time on FR AOs, consider what is the issue at hand. For example, if the issue is valuation, it is not required to discuss definition criteria. It’s critical to assess if the issue is classification (definition), or recognition, or valuation, so the necessary information can be discussed. You can also be brief with your issue statement to keep it concise (1-2 sentences).

For FR and Assurance AOs, ensure you are comfortable with how to use the Handbook, and where to find the appropriate sections. This will ensure you are able to access criteria quickly and can focus your allotted time on the discussion components.

Extra resources

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

I’ll guide you through the key aspects of CPA Canada’s Finance elective module, including its structure, assignments, range of topics, examination, and study tips to help you pass.

Related readings:

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

What’s Finance elective?

When you finish both Core modules in the CPA Canada Professional Education Program (PEP), you will choose two elective modules out of four potential options: Assurance, Taxation, Performance Management (PM), and Finance. Completing two electives is required before completing the Capstones 1 and 2, and the Common Final Exam (CFE). Your two chosen electives can be completed in any order.

The Finance module is designed to test on the competencies required to perform financial analysis, including finance policies, investments, and evaluating financing decisions. Finance elective can be taken by anyone, but it’s usually not taken by those in public practice. It’s recommended to take Finance and PM electives together, as opposed to Finance with Audit or Finance with Tax, due to the similarities in PM/Finance competencies.

While previous technical topics in the Core modules can still be tested, the primary competency is Finance.

Examples of Finance topics include:

• Working Capital management
• Sources of Financing (SOF)
• Leasing decisions (NAL)
• Capital Budgeting (incl NPV, IRR, PB)
• Time Value of Money (TVM)
• Cash flow analysis (CF)
• Ratio analysis (liquidity, solvency, profitability)
• Stock-based compensation (SBC)
• Capital structure decisions
• Determining the cost of capital (incl CAPM, WACC)
• Financial markets
• Investment and portfolio diversification
• Derivatives and risk management
• Valuations (incl. asset based, capitalization of earnings, capitalization of cash flows, discounted earnings, discounted cash flow, market based / multiples, intangible assets)

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

How long is it?

The normal Finance module is 8 weeks. However, there is extended version where you can complete it over a 5 -month period. This is good for students who prefer a slower pace of study.

You can also challenge the Finance module, 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.

Is there an instructor?

Similar to Core modules, there is an online facilitator. 

Finance module also has Module Workshop (MWS). This mandatory two-day event has presentations and activities by a session leader. The activities include 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?

Finance module 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. The IPs are short-answer problems that test the technical material learned in the weekly unit. The PCs range from 80-minute to 120-minutes, they are designed to simulate the actual Finance elective exam.

Below is an example of Finance PC:

The IPs and PCs are to be completed using Microsoft Word and Excel, and uploaded to D2L weekly. The deadline is typically Friday night.

Finance module exam tends to be harder than the PCs, so I recommend practicing with retired exam cases and mock exam simulations.

How is it graded?

Unlike Core modules, where you had 5 AOs, Finance module cases have 6 to 8 AOs.

To be eligible to write the exam, 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%

Reaching this 75% threshold is not a challenge for most students. Passing the exam is the hardest part and it should be your main focus.

What’s the 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 Finance syllabus, check here.

What is the Finance  exam like?

The Finance elective exam is 4 hours and consists of 15 MCQs and two cases for a total of 200 minutes. The maximum time for any one case will not be more than 120 minutes and the minimum will not be any less than 80 minutes.

All four electives (Assurance, PM, Finance, Tax) have this examination format (15 MCQ, 2 cases), which is different from Core modules, where you had 75 MCQs and one case. As you can see, the focus is being shifted from MCQs to case writing. In the CFE, it’s only cases.

Below is the exam blueprint that shows the weighing for the Finance MCQs. As you can see, it’s 100% Finance focused.

Similarly, the cases will test mainly Finance, but will integrate 1 or 2 other competency areas (ie, Assurance, PM, FR, SG, MA). While these other competencies can officially make up 50% of the cases, it’s typically around 20-30%, so only 2 or 3 AOs in each case.

All prior learnings from Core 1 and Core 2 are still testable in your exam.

How many tries do I get?

Similar to Core 1/2 modules, you have 3 attempts to pass. However, unlike core modules, after 3 unsuccessful tries, you don’t get de-registered from the elective. Instead, you can switch your elective and try 3 more times in a different elective. 

What are the textbooks?

The Finance module follows the same Learning EBooks as in Core modules. Here is more information on how to download the CPA Canada Learning eBooks.

Unlike Core modules, the “cheat sheet” given in the exam will NOT have the common ratios. You can download and compare Core and Elective cheat sheets (“Examination Reference Schedules”) here.

What should I study?

Because this is an elective level exam, the biggest technical portion is that elective, ie Finance area. I suggest spending most of your time studying the Finance topics. Electives test depth of knowledge, so the complexity of the AOs are higher than what you’ve seen in Cores. 

I give more tips on studying for Finance here.

What’s the Finance pass rate?

The Finance pass rate is around 89%. 

Why do students fail Finance?

Statistically, more students pass Finance than the Core modules (see pass rate above). However, some parts of Finance module can be more challenging. Here are the top challenges most students get:

1) Time management. Like other modules, Finance is a self-lead course, which means you are responsible for managing your time, planning your readings, and understanding the material. Because the exam will have 2 cases, you must monitor your time effectively and not spend too much time on one case and less on the other. There are also lots of calculations like in Core 2. These calculations can be lengthy, so students end up spending lots of time on quants and running out of time in the end.

2) Applying templates/identifying calculations. Because of the volume of calculations in Finance, it’s challenging to think about the problem and set it up in Excel in a short amount of time. Having weak technicals and poor formatting are key challenges. However, there’s repetition of calculations in the PCs, meaning you are going to see the same quants come up multiple times in PCs. I recommended creating templates and step-by-step formulas on how to solve each common calculation. This will help you solve quants quicker during the exam.

3) Bad qual and integration of case facts. Most students think of calculations when they think of Finance, but many of these calculations require some sort of qual analysis. For example, when performing ratio analysis, you will often be asked to discuss the results. This includes saying whether the ratio is optimal or needs improvement, and explaining why. You need to go beyond saying that the company is in good or bad shape, you must show depth of knowledge by discussing what it means (implication, impact) and how to improve (recommendation). A good formula to use is: case fact + interpretation/explanation + impact (operating and financial) + integration. I explain this in more detail here.

4) Not providing recommendations. A big part of this elective is to have understand the company performance, policies, preferences and to give recommendations. For example, when asked to evaluate different sources of financing, you’re often required to provide quantitative and qualitative analysis, and overall recommendation on which one is better for the company. Students often miss recommendation part which drops them to RC.

Overall, time management, incorrectly identifying the quants tool, lack of case facts, and missing recommendations are the biggest reasons students fail. If I had to pick one, quants is the biggest obstacle.

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 Finance 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 Finance resources are available at Finance Lessons course.

Let’s look at CPA Canada’s Performance Management (PM) elective module. In this post, you’ll learn about the module’s: format, assignments, topics, exams, how it’s assessed, and study tips to help you pass.

Related readings:

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

What’s PM elective?

Upon finishing both Core modules in the CPA Canada Professional Education Program (PEP), you will choose two elective modules out of four potential options: Assurance, Taxation, Performance Management (PM), and Finance. Completing two electives is required before completing the Capstones 1 and 2, and the Common Final Exam (CFE). Your two chosen electives can be completed in any order.

The PM module is designed to test on the competencies required for students to contribute to strategic decision making, assessing performance, and managing / mitigating risk to support successful governance. You’ll dive deeper into complex settings and frameworks to improve a company’s performance and sustaining value. This elective can be taken by anyone, but it is not usually taken by those in public practice. It’s recommended to take PM after Core 2 due to the similarities in competencies, both quantitatively and qualitatively.

PM itself is not a competency in the CPA Canada Competency Map. Instead, the technical topics of PM are made up of Management Accounting (MA) and Strategy & Governance (SG). So expect almost all of AOs in the exam to be on these two, with only 1-2 on other areas. MA also includes the new DAIS (Data Analytics and Information Systems) competence. You can be tested on DAIS in the PM module exam.

Examples of PM topics include:

• Vision, Mission, Values
• Pricing Strategies
• Sensitivity Analysis
• Job Costing
• Transfer Pricing
• Budgeting
• Internal & External Analysis (eg SWOT, Porter’s 5 forces)
• Balanced Scorecard
• Performance Measures

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

How long is it?

The normal PM module is 8 weeks. There is extended version where you can complete it over a 5 -month period. This is good for students who prefer a slower pace of study.

You can also challenge the PM module, 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.

Is there an instructor?

Similar to Core modules, there is an online facilitator. 

PM module also has a Module Workshop (MWS). This mandatory two-day event has presentations and activities by a session leader. The activities include 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?

PM module 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 PM MCQ:

 

Below is an example of PM IP:

The PCs range from 80-minute to 120-minutes, they are designed to simulate the actual PM elective exam.

Below is an example of PM PC:

The IPs and PCs are to be completed using Microsoft Word and Excel, and uploaded to D2L weekly. The deadline is typically Friday night.

PM module exam tends to be harder than the PCs, so I recommend practicing with retired exam cases and mock exam simulations.

How is it graded?

Unlike Core modules, where you had 5 AOs, PM module cases have 6 to 8 AOs.

To be eligible to write the exam, 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%

Reaching this 75% threshold is not a challenge for most students. Passing the exam is the hardest part and it should be your main focus.

What’s the 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 is the PM exam like?

The PM elective exam is 4 hours and consists of 15 MCQs and two cases for a total of 200 minutes. The maximum time for any one case will not be more than 120 minutes and the minimum will not be any less than 80 minutes.

All four electives (Assurance, PM, Finance, Tax) have this examination format (15 MCQ, 2 cases), which is different from Core modules, where you had 75 MCQs and one case. As you can see, the focus is being shifted from MCQs to case writing. In the CFE, it’s only cases.

Below is the exam blueprint that shows the weighing for the PM MCQs. As you can see, it’s primarily MA and SG focused.

Similarly, the cases will have mainly MA and S&G, but will integrate 1 or 2 other competency areas (ie, Assurance, Finance, FR, SG). While these other competencies can officially make up 50% of the cases, it’s typically around 20-30%, so only 1 or 2 AOs in each case.

For example, your case may have 5 MA and SG AOs (eg. Outsource – quants, outsource – qual, pricing decision, Porter’s 5 Forces, strategy) and 1 Tax AO (eg. basic personal tax planning advice).

Or it may have 6 MA and SG AOs (eg. Break-even point, BOD issues, performance measures, KSF, variance analysis, transfer pricing), 1 Finance AO (eg. sources of financing) and 1 Assurance AO (eg. basic WIR). This changes every semester and I can provide you tips and estimates on what I think will come up in my PM Lessons course.

All prior learnings from Core 1 and Core 2 are still testable in your exam.

How many tries do I get?

Similar to Core 1/2 modules, you have 3 attempts to pass. However, unlike core modules, after 3 unsuccessful tries, you don’t get de-registered from the elective. Instead, you can switch your elective and try 3 more times in a different elective. 

What are the textbooks?

The PM module follows the same Learning EBooks as in Core modules. Here is more information on how to download the CPA Canada Learning eBooks.

Unlike Core modules, the “cheat sheet” given in the exam will NOT have the common ratios. You can download and compare Core and Elective cheat sheets (“Examination Reference Schedules”) here.

What should I study?

Because this is an elective level exam, the biggest technical portion is that elective, ie PM area. I suggest spending most of your time studying the MA and SG topics. Electives test depth of knowledge, so the complexity of the AOs is higher than what you’ve seen in Cores. 

The key similarity between Core 2 and PM is that PM focuses on S&G and then MA (eg, 70% SG, 30% MA), while Core 2 focuses on MA and then S&G/Finance (eg. 70% MA, 30% SG and Finance). In other words, both Core 2 and PM cover mostly MA and SG. These are the technical areas that you should study and understand.

The SG competency is not difficult to master, because it’s mostly qualitative. You’ll need to have fast typing speed, organized templates (eg. KPIs, balanced scorecard, pros/cons), use case facts often and answer “so what” in your qual. I have more tips on studying and passing PM in this blog post.

You’ll find the MAs longer and more difficult than Core 2. Make sure to brush up on the common MA topics, such as:

• Contribution margin (CM) analysis
• Break-even point (BEP)
• Variances analysis (VA)
• Sensitivity analysis (SA)
• Transfer pricing (TP)
• Activity-based costing (ABC)
• Budgeting
• Decision analysis
• DAIS
• Pricing
• Relevant costing
• Cost allocation
• Process costing

What’s the PM pass rate?

The PM pass rate is around 90%. 

Why do students fail PM?

Statistically, more students pass PM than the Core modules (see pass rate above). However, some parts of PM module can be more challenging. Here are the top challenges most students get:

1) Time management. Like other modules, PM is a self-lead course, which means you are responsible for managing your time, planning your readings, and understanding the material. Because the exam will have 2 cases, you must monitor your time effectively and not spend too much time on one case and less on the other. There are also lots of calculations like in Core 2. These calculations can be lengthy, so students end up spending lots of time on quants and running out of time in the end.

2) Applying templates/identifying the right quants. There are lots of quants in PM, so it’s challenging to think about the problem and solve/set up in Excel in the short amount of time. Having weak MA skills and poor formatting can cause you to fail. I suggest creating templates of common quants to help you with MA mastery. My MA Templates is a good starting point. 

3) Bad qual. While MA and calculations are a big portion of the exam, qual and S&G are even bigger. Students don’t write the qual implications, they don’t use enough case facts, and don’t link to the big picture (user preferences), which results in getting NC/RC.

Overall, time management, incorrectly identifying the quants tool, weak MA skills, and lack of depth in qual discussions 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 PM 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 PM resources are available at PM Lessons course.