Students Andrew Knapman CFE Strategy

Day 1 strategy for the Common Final Examination (CFE)

Part three of a five-part series from Andrew Knapman, CPA

Author: Andrew Knapman

VANCOUVER – How do you pass the CFE? What’s your Common Final Examination strategy for becoming a chartered professional accountant? In this, the third part of a five-part series on the CPA PEP CFE, I will share with you my strategy for Day 1. Having passed the CFE myself last year, I will then go on to discuss strategy for Day 2/3. 

Back in the old UFE days, I’m told you could develop a strategy that would be consistent for each day of the UFE, no matter the question. If you followed the strategy each day and had the necessary technical knowledge, you would pass. Unfortunately, the CFE isn’t so easy. You now need a different strategy for each day, and sometimes a different strategy for each competency area! 

Don’t worry, it sounds more daunting than it really is, so let’s look at Day 1. 

CFE Day 1 Strategy

The Day 1 case follows on from the case study you completed in Capstone 1. You will be presented with the same company but X years in the future, facing a new set of strategic and operational decisions. In all likelihood you will be faced with three to five strategic issues and two or three operational issues. Let’s assume four and two respectively, which is common. Now let’s look at how to approach this four-hour exam, step by step.

Andrew Knapman, CPA
Andrew Knapman, CPA, passed the Common Final Examination in 2018.

Reading & Planning: 1 Hour

I’m not going to teach you how to plan a case as it is the same for every case you write. The CPA Professional Education Program will prepare you for this and everyone has their own style. My planning was ad hoc compared to what PEP teaches, so I’m in no position to advise here. A general rule of thumb is to stick to around 25 per cent of the exam time to read the case and plan your response, hence one hour. 

Situational Assessment: 30 Minutes

Cutting to the chase, the key to succeeding on Day 1 is to have a strong situational assessment. You will know these pretty well by the time you reach the CFE, but a strong situational assessment for Day 1 should always include:

  • Identify the mission & vision of the company.
  • Identify any goals and objectives of the company or its shareholders.
  • Identify any constraints or covenants the company faces.
  • Identify key success factors for the industry (as many as possible, but at least four or five!).
  • Perform an updated SWOT analysis (as many points as possible for each factor!).
  • Perform a financial assessment (discuss financial position, solvency position, compare sales, operating costs and profitability with prior years). 

The beauty with this is you can know a lot of it before going into the exam, so it won’t take too long. Do not skip out on this though as the remainder of the exam should be constantly linking back to your situational assessment. If you look at a marking guide for Day 1 cases, you will see a good response will incorporate multiple factors from the situational assessment in the analysis. Basically, if you don’t keep linking your responses to your situational assessment throughout the exam, you will probably struggle! 

Strategic Issues: 1 Hour, 45 Minutes

Strategic issues in Day 1 are usually “should they, shouldn’t they” situations in which you analyze whether the company should or should not do something. This is where the bulk of your marks will come from on the exam but, again, if you read a marking guide for Day 1 cases, the marking is very subjective. For example, in my Day 1 practice cases the typical marking guide for each strategic issue were as follows:

  • Student incorporates at least four situational assessment factors in the analysis.
  • Student prepares a reasonable quantitative analysis.
  • Student prepares a reasonable qualitative analysis.
  • Student provides a supported conclusion and recommendation based on the analysis. 

That’s it! Very generic, nothing specific. If you look at a marking guide for Day 2/3, it is totally different, and you have to hit the nail on the head to get marks. So with this in mind, for EACH strategic issue, do the following:

  • Introduce what the strategic issue is, including important facts from the case.
  • Perform a quantitative analysis, stating assumptions made. Discuss the findings in the report and conclude on quantitative findings..
  • Perform a qualitative analysis of pros and cons (three of each, minimum!) and conclude on the qualitative findings. Try to link as many pros and cons back to the situational assessment as possible! This is where you will get marks for incorporating the situational assessment into your response! For example, if moving ahead with a strategic option will align well with the company’s vision, SAY IT! If the strategy does not align with key success factors of the industry, SAY IT! You MUST keep linking back to the situational assessment as much as possible, I cannot express that enough. I think this alone is why many people fail Day 1.
  • Conclude with the overall findings and make a recommendation. Should they move ahead with the strategy or not? WHY? Again, link your response to the situational assessment. If the strategy doesn’t meet the objectives of the shareholders, say it! 

If you follow this template for each strategic issue and keep linking your responses back to the situational assessment as often as possible, I have no doubt you will pass Day 1. 

Operational Issues: 30 Minutes

It’s difficult to advise about operational issues as they are generally smaller issues and could really be about anything. Your response to operational issues should be far shorter than strategic issues as there generally isn’t a decision to be made between two options. It could be something like providing advice for dealing with a weak internal control or recommending a bonus structure for employees. 

You do not have to link back to the situational assessment here so much (though it wouldn’t hurt) and you probably won’t need to perform both a quantitative and qualitative analysis like in a strategic issue. 

I would simply introduce the issue, provide a simple analysis if one is necessary, conclude on the analysis and make a recommendation. You don’t want to spend more than 15 minutes per operational issue. The marks are really in the strategic issues so spend your time there. That being said, don’t neglect operational issues either! 

Overall Conclusion: 15 Minutes

If time permits it is always good to provide an overall conclusion on all of the issues discussed. This should include:

  • Summarize each recommendation made, explaining why and how it links back to the situational assessment.
  • Provide advice for mitigating any issues from implementing the strategy.
  • Discuss financing if necessary.
  • Discuss updating the mission/vision if necessary. 

I don’t think an overall conclusion is worth many (any?) marks but it will certainly help provide a more professional response overall and will give you marks towards strong communication. 

And that’s it! This is the exact strategy I followed on my CFE and it got me through. The nice thing is, it works regardless of what is on the Day 1 case. As mentioned, the key is preparing a solid situational assessment and frequently referring to it throughout the exam. 

In my next blog posts, I will recommend a strategy for Days 2 and 3. In the meantime, you may wish to read my earlier post in this series: What is the CPA CFE? A day-by-day breakdown and How is the CPA CFE marked? 

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. Image from

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