What is the CPA CFE? A day-by-day breakdown

VANCOUVER – I get quite a few messages on LinkedIn from prospective CPA program students enquiring about the Common Final Examination (CFE). They seem to know the basics — that it’s the final exam of the Chartered Professional Accountant Professional Education Program (CPA PEP) — but that’s about it. Most people want to know what, exactly, they will have to face at the end of their CPA PEP journey. I suppose they may be contemplating whether they can pass this fabled exam and whether it’s worth starting the CPA journey at all. 

Therefore, in a series of five blog posts, I am going to break down not only what the CFE consists of but how it is marked. As someone who passed the CFE last year and is now a CPA, I will also discuss how I prepared for the CFE and the strategies I used to pass it on the first attempt. 

So, without further ado, what is the CFE? 

An Overview of the CFE

As noted, the CFE is the final exam of the CPA program. In order to “sit the CFE,” you must pass the following:

• Core 1
• Core 2
• Two Elective Modules (choice of assurance, tax, finance or performance management)
• Capstone 1 (group case presentation)
• Capstone 2 (CFE preparation) 

The CFE is a three-day exam, back to back. It is separated into Day 1 and Day 2/3. Day 1 is marked individually while Day 2/3 are marked combined. You have to pass both Day 1 and Day 2/3 in order to pass the exam. 

If you fail either Day, you will have to re-sit the CFE the next year, though you only have to re-sit the Day you failed. Now let’s go into more detail about each day. 

Day 1

Day 1 of the CFE is a large case study based on the case study worked on during Capstone 1. The Day 1 case study will take the same company information from Capstone 1, but advance the company forward a few years and introduce a new set of strategic and operational issues that need addressing during the exam. 

The exam is four hours in length and is marked primarily on your ability to assess the current goals and constraints the company faces, analyze the major strategic and operational issues, make a supported conclusion, provide advice to management and communicate professionally. 

It is important to remember that you are not marked for your technical ability on the Day 1 exam. This is not to say you won’t need to do technical analysis (you will) but the key to success is your ability to analyze issues, link them back to the company’s goals and constraints, and provide a sound recommendation based on your analysis, all while communicating professionally. 

Many people make the error of assuming Day 1 is easy, as you are not marked on your technical skills. This is a big mistake! I see a lot of people fail Day 1, perhaps even more than Day 2/3. 

Day 2

Day 2 of the CFE is another large case study, this time of a company you have never heard of. Day 2 is unique in that the exam questions you face depend on the elective you chose to sit for the CFE. People taking assurance will face different questions than those taking finance, for example. Everybody, however, has the same case study. 

The exam starts with common questions which everybody must face. These are almost always financial reporting questions but could also be management accounting. The rest of the exam is focused on your elective choice, which, for me, was performance management. 

The Day 2 exam is five hours in length due to the fact the case study is massive. You could feasibly spend 90 minutes just reading and planning before even starting to write! 

Day 2 is a technical skills exam. You are predominantly marked on your technical ability and even more importantly your technical skills in the elective subject you chose to sit. You must be an expert in your elective field for Day 2 of the CFE. (You will see why when I discuss how the CFE is marked in a future post.) 

Many people fear Day 2 of the CFE due to the length of the exam, the amount of material covered and the importance of displaying expert knowledge in the elective subject. While Day 2 for me was probably the hardest technical day, I actually found Day 3 the most stressful exam of them all. 

Day 3

Day 3 of the CFE is another four hour exam, broken down into multiple short cases. Typically, you will be provided with three or four 45-90 minute cases that will total four hours. 

The most difficult part of Day 3 is time management; if there is any exam that you struggle to finish, it will be this one. While shorter cases may be easier to comprehend, it is surprisingly difficult to keep your answers concise enough to stay within the allotted time for each case study. Many people in the 2018 Day 3 didn’t finish or, like me, rushed through the third and final case, throwing anything they could onto their response to get marks. 

Day 3 is also the exam that will cover practically every topic in the CPA program. Unlike Day 1, where the focus is not technical, and Day 2, where the focus is mostly on your elective subject, Day 3 covers all competency areas in the CPA. You really have to display sufficient competency in all areas to pass the CFE overall. 

One of the cases could cover financial reporting, management accounting, tax and assurance in the space of 75 minutes, so your breadth of knowledge is really put to the test on Day 3. Due to the time constraints of the exam, you also don’t have a lot of time to pause and think. This is one hell of a fast-paced exam! 

In part two of this series, we will look at how the CFE is marked, which in turn dictates your strategy. Good luck on your journey to becoming a Canadian accountant. 

Andrew Knapman, CPA, is Canadian Accountant's student blogger. He lives in Vancouver, B.C.and passed the Common Final Examination in 2018. Connect with Andrew through his LinkedIn profile. The views expressed in this guest blog are his own.