The answer to this question is probably worth a good chunk of change to students. Unfortunately, I don’t know anymore than the next guy. What I can suggest, though, is that you take a look at the last two year’s UFE Reports for some hints of areas where students performed poorly and to get some ideas of what the CICA may test a little more heavily. I admit, that in 2010 when I wrote the UFE, I didn’t do this but you’ll have no excuse because I’m going to give you the summary version here. I’ve removed as much specifics as I can so you should be able to go through this without “spoiling” any case solutions.
2010 UFE Report
Let’s start on page 6 which forms part of the Executive Summary of the report:
Candidates demonstrated stronger communication skills for the second straight year. They continued to limit their use of short forms, acronyms, and bulleted lists. This resulted in clearer discussions and improved the overall flow of the candidates’ responses.
Although the UFE Report mentions this as a positive thing, I’m going to highlight that they are looking for strong communications skills. This essentially means limiting the use of acronyms/short forms to only the most obvious (remember the audience of your report), avoiding using template responses and lists.
Page 6 also brings on the first warning sign:
As for major detractors, the Board would like to highlight serious concern regarding candidates’ lack of technical knowledge in the area of taxation.
Page 7 continues the warning:
On the 2010 UFE, there were three primary indicators in taxation. In general, candidates avoided these taxation issues and often left the analysis of these issues until the end of their responses. The taxation responses were often very brief and, therefore, displayed little competence.
How I would read this is that you may see a situation on the UFE where the topic should be easily searchable in the Tax Act and you should go look there rather than just spit out generalities about the topic. Whether you feel like this is worth doing at the time or how much time you should dedicate is a judgment call during the exam since I find the Tax Act time consuming to navigate. I have to admit, that this warning applied to me. I wrote the UFE in 2010 and although I did look in the Tax Act for one of the topics, the remainder of my response may have been too general.
The report next covers information about the nature of the UFE and roles in the 2010 UFE where the next warning appears on page 7:
However, the importance of ranking remains a concern. Candidates appeared to spend more time on issues they understood and were comfortable discussing. Candidates were generally able to identify issues, even in areas where they were not as knowledgeable (such as taxation issues), but they had difficulty discussing these issues with any depth. As a result, their responses on these issues tended to be very brief, and candidates did not display the required competence.
This is a familiar warning from years past where it was even more strongly worded. Essentially what they are saying here is that you can’t avoid the complex or tougher issues. You should be ranking the issues accordingly and tackling them based on their rank rather than picking and choosing the issues you are more familiar with. Complex issues are there on purpose and in order to show competence you need to hit enough of them.
Page 7 continues on to discuss roles:
The roles assigned and scenarios presented to the candidates on the 2010 UFE continued to be varied, with only two simulations presenting a traditional assurance role … The one exception … [in one case] candidates were asked to develop due diligence procedures … [and] Some candidates struggled to fulfill this role and, instead, fell back into the traditional auditor role.
Expect the roles you take in the simulations to continue to be varied and unique. I would also brush up on due diligence procedures for this years UFE.
Page 8 begins to discuss specific issues with individual competencies:
Overall, candidates understood the assurance roles assigned and the issues presented, but often struggled with the details of the assignments. In particular, candidates sometimes struggled to provide valid and relevant procedures for the scenario presented.
I felt like the 2010 UFE was the UFE of procedures and that in every case you had to develop procedures. Although the warnings abouts procedures seemed to be harsher in years past, continue to expect the UFE to ask you for many so you should be very comfortable developing procedures for a variety of scenarios. One of the complaints is that procedures candidates provide are too general as the board mentions below.
Candidates are encouraged to always consider the effectiveness of the procedures they provide. Procedures should address the risk area identified. In addition, when presenting an audit plan to an audit committee or a client, candidates should explain why the procedure is necessary, in other words, how it would successfully address the client’s assurance needs.
I couldn’t have put it better myself so we’ll continue to Page 9 where PMR is discussed.
It is worth noting that the accounting issues in these scenarios were relatively simple. In the future, the complexity level of the IFRS accounting issues presented will likely increase.
2010 was the first year of IFRS testing so you should expect the complexity to go up. Page 10 adds to the PMR discussion.
Reporting is an essential part of the profession, and candidates would benefit by becoming more familiar with important reporting tools, such as the MD&A.
Based on this, it would not surprise me if the 2012 UFE had a larger focus on reporting issues. I might get a little more familiar with some of these topics if it’s not something you’ve looked at in a while.
Page 10 contains some additional specific feedback on the tax problems but I think the summary above covers the issue adequately. Page 11 discusses the remaining competencies as well as the pervasive qualities indicators but I don’t feel like there is much value added here so you can go take a look yourself if you’re interested.
Tomorrow we’ll do a review of the 2011 UFE Report. What do you think we’ll see on the 2012 UFE and why?