Musings on the First CFE Report – The Good, The Bad and The Ugly | Part 1: Intro

Published March 18, 2016 by Michael Levi

It is finally here.  The first published CFE report has recently been published and students across Canada have lots of fun reading ahead of them. 

We have spent a considerable time pouring over the CFE to make sure that our CFE preparatory courses really provide insight and guidance to CFE candidates.  Along the way, we have gleaned some insights from the report that we think you might find interesting.

Some of these insights we think you'll like.  We are calling these insights The Good.  Some are not so good, and these are The Bad.  And a few are just The Ugly.  

Let's start with some neutral observations in this piece and over the next three weeks, we'll focus on the "good, bad and ugly," one for each week.

At the end of each blog we will provide a few action points you can walk away with, to make our comments useful and practical when you are studying. 

NEUTRAL OBSERVATIONS

1)     Expect Changes

There is a strong temptation to look at the first CFE and think future CFEs will be similar.  Students want predictability and comfort.  The problem is that there is a strong probability that the opposite will happen.  In fact, if one looks at the 2003 UFE, when the marking system underwent a major change, it only took a couple of years for the UFE to undergo significant change again.  Bottom line: it takes a few years for changes in the exam to stabilize and don't think 2016 will be identical to 2015 – it likely won't!

2)     Financial Accounting vs. Management Accounting - Day 2

Not surprisingly, financial accounting was the common area on the comp, on day 2.  This could flip to management accounting in future years.  Will it alternate perfectly - i.e. one year financial and the next management and then back to financial etc.?  Not sure, but it sure won't be financial accounting every year.

3)     Gotta Love Management Accounting

Also not surprisingly, management accounting is now being tested much more heavily than in the past.  It is now a depth area with financial accounting and will have much more of an impact on passing the exam than under the UFE legacy exam.

4)     Weird Assurance

Candidates choosing assurance as their depth role on the Day 2 comp were surprised to see a required on an auditor's responsibilities for an IPO and related prospectus!  Not exactly an everyday issue.  Testing unusual assurance Handbook Sections is probably something candidates should expect.  Why?  Because there are only so many standard assurance topics the CFE can test.

ACTION POINTS

1)     Expectations - Don't fall into the trap of thinking that one year makes a trend.  We DO NOT yet have any trends and candidates will be much better mentally prepared expecting changes rather than sitting at the CFE in May/Sept. 2016 wondering why it looks different than it did in 2015.  Perspective matters!

2)     Handbook - Be familiar with the Handbook - both in financial accounting and in assurance.  This is especially important now in assurance where they may continue to test unusual and relatively unpopular Sections.

Stay tuned for next Friday's Musings on the CFE - The Good.  Until then, happy studying!