1 x $ 254,00


    1 x $ 254,00

SUBTOTAL: $ 754,00








Musings on The First CFE Report – The Good, The Bad and The Ugly | Part 4: The Ugly

Published April 8, 2016 by Ira Walfish

In this final blog of our four-part series, The Good, The Bad and the Ugly, let's take a look at The Ugly, from the 2015 CFE. For part one, click here. For part two, click here. For part three, click here.

Unfortunately, with every new system, there are some kinks to work out.  Most are tolerable and eventually get fixed.  However, we have noticed two particularly disturbing points that really should be corrected, in our humble opinion.  They are:

1)     Poor Evaluation Guides

In 2003, the UFE adopted a new marking scheme, in which candidates are slotted into one of five levels – "competent", "reaching competent" etc. – for each assessment opportunity (AO), formerly known as primary indicators.  These five levels have continued with the CFE, with minor word changes.  In addition, of course, there is a complete and thorough solution provided for each AO. 

However, candidates need to know what they must do to attain each of the levels.  So, the CFE Report provides a box for each AO with a description of what the candidate needs to do to attain the level.  So far so good.

Then there's a problem: the level of detail in this one or two lines of description is sorely deficient.  For example, here is a typical AO:

Reaching Competence – The candidate considers one qualitative factor associated with the opportunities

Competent – The candidate considers at least two qualitative factors associated with the opportunities

I guess this does tell the candidate that 1 qual factor is RC and 2 is C, but is simply mentioning the qualitative factor sufficient?  How much depth was the marker looking for?  Did the qualitative factor have to be explained?  Correctly explained? 

Or how about this one:

Reaching Competence – The candidate discusses an issue related to the undertaking of the engagement or project.

Competent – The candidate discusses the significant issues related to the undertaking of the engagement or project and attempts to assess the risk of material misstatement.

Um, okay, how much discussion was necessary here?  Which are the significant issues?  Anyone have a dart board or coin???

Candidates are simply not told enough to discern what is needed to be done to score a C vs. an RC.  So candidates waste valuable time in studying trying to guess.  In fact, we have to publish a book, flushing out the guides and providing proper detail (based on our opinion) to help candidates properly mark their own cases.

Given that this is such an important piece of the passing profile, it is simply absurd that candidates are not provided with the proper level of detail.  Obviously, the markers have significantly more detail when they mark as even professional markers could never possibly attain consistency in their marking, if they were provided with the level of detail candidates are provided with.  So, how in the world are candidates supposed to mark their responses when they write a past CFE for practice, using a a level of detail, that professional CPA markers would never tolerate?

So, let's give the CFE Board a "pass" given that it is only the first year of the new system and this fell through the cracks and let's make the following request: 

"Please give candidates proper detailed evaluation guides that will allow them to mark their responses in a meaningful way, properly understanding the difference between the levels"

2)     Financial Accounting – What Happened???

This may be a result of the initial growing pains, but what in the world happened with financial accounting in the 2015 CFE? We are referring to the lack of depth in the accounting issues!  We noticed a significant decrease in the complexity of these issues, when compared to historical UFEs. 

Now, we realize candidates are probably thinking – "hey, this is great!"  However, before jumping to the conclusion that the level of financial accounting has taken a nose dive, please please consider the following:

This could be a one-time occurrence, due to the fact that it was the first CFE. It is very possible (and we would say "hopefully likely") that the depth level of financial accounting will increase in future CFEs, so this strategy would not be wise.

In fact, if this continues over several years, we envision that the CFE's reputation will suffer, and will be taken less seriously, something all CPA's should be concerned with, given that it will reduce the value of a CPA. 

CPA Canada has been strenuously arguing from Day 1 of the possible merger of the three accounting designations that the standard of the exam will NOT decrease.  Well, in our opinion, this is exactly what has happened in the first CFE, particularly in financial accounting.

We sincerely hope that this is simply an aberration because it was the first CFE and this will dramatically improve on a go forward basis.  We trust that this will be corrected quickly.  Don't get fooled by the first CFE!


1.     Financial Accounting – Assume that the level of financial accounting will rise in the future and that financial accounting issues will have greater complexity and more case facts and depth, than the first CFE.  In fact, in our CFE prep comprehensive course in the summer, we will continue to reflect financial accounting at a much higher level in our cases, notwithstanding what happened in the first CFE.  If this lower level of testing continues we will make changes, but one year does not make a trend. Our advice: expect a higher level of depth in financial accounting and prepare accordingly! 

So there you have it – the good, bad and ugly in the first ever CFE!  We hope these discussions have given you food for thought and a better appreciation of the CFE, with practical recommendations and action points that will give you an edge, when writing the CFE.