(Posted August 2023)
It is a common place for September CPA Common Final Examination (CFE) writers to find themselves in mid-August. You may not have seen the performance you expected in your CFE Day 2 and Day 3 practice cases and the pressure is mounting against you. Rather than trusting the process and continuing to practice intentional debriefing by following their study plans, candidates will look for corners to cut and sometimes this is Day 1 of the CFE.
“Day 1 is the easiest day; I do not need to study for it.”
“Day 1 of the CFE will be the same as the Capstone 2 CFE Day 1 practice cases.”
“I will have the Capstone 1 case, so I do not need to prepare for Day 1.”
These rationalizations may feel reasonable in the moment, but they are the reasons why some candidates have to re-write Day 1 of the CFE and we do not want that to happen to you. Do not neglect Day 1. Instead, prepare wisely by taking the time to properly debrief the Capstone 2 CFE Day 1 practice cases.
Also, keep these keys to success at the front of your mind when writing CFE Day 1 practice cases:
Situational Analysis (SA)
Remember to use an “end game” approach when preparing your SA and choose wisely. You must use your SA in your analysis of the major issues, so you want to write about factors that will be the most useful. Do not write the first factors that come to mind; instead, discuss the more critical factors that will build a stronger response to the major issues.
Quantitative Analysis
Candidates often struggle choosing the correct quantitative tool on Day 1 of the CFE. As you debrief CFE Day 1 practice cases, identify what the triggers were in the case for each type of calculation and track those triggers to increase your confidence in selecting the appropriate quantitative tool. When you write, do not jump straight into Excel. Stop and think about what numbers you are given and what is important to your user. If something you need is missing, consider whether you can make a reasonable assumption. If the assumption appears too “forced,” this may suggest a different quantitative tool is needed. Finally, always remember to interpret the results of the quantitative analysis and explain how it is useful for the decision to be made. If financial objectives were given in the case, consider these as well and whether the opportunity contributes to achieving those stated objectives.
Qualitative Analysis
The most common weakness we see is candidates listing case facts, but not explaining the impact on the decision to be made (e.g., why it is a pro or con). Make sure you always state a case fact and then explain the implications of it on the decision to be made. Aim for balance with 3-4 pros and 3-4 cons for each major issue. Stop before you respond to think about what factors are most influential on the decision to be made and address these first.
Conclude and Advise
Conclude at the individual issue level and provide an overall recommendation. Your individual issue conclusions simply address whether the opportunity would be beneficial for the company from a qualitative and quantitative perspective, ignoring all other issues. Write each conclusion after you address each issue. Then, your overall recommendation is written at the end of your response. Here, tell the client which opportunities to pursue and why, and which opportunities to disregard and why. Consider constraints as well as any other big picture or over-arching issues the company is facing. If a decision needs to be made in a timely manner, you should prioritize this in your overall recommendation. While your individual issue level conclusions are focused on only that issue, your overall recommendation is where you will put all the pieces together!
Strategic Focus
Maintain a high-level mindset because Day 1 of the CFE is designed to have a strategic focus. Imagine you are the leader of a country. While you need to consider the needs of each region, you also need to maintain a focus on the country as a whole – where it is going in the future, what risks it is facing, and what it needs to succeed. Day 1 is the same; you need to keep a high-level view of the company as a whole, rather than addressing the major issues as isolated problems to solve.
If you’re rewriting Day 1 of the CFE, consider our May or September CFE Day 1 materials to help you apply these keys to success.