The pass/fail system on the CFE is not just mark X passes and mark Y fails. On the CFE, you need to demonstrate enough depth and enough breadth in order to pass.
Day 1 of the CFE is a pass/fail mark only while Days 2-3 are marked using the level 1-4 system described below. To completely pass the CFE you must pass Day 1 and then pass Days 2-3 under the level 1-4 criteria below.
Let’s explore what the level 1-4 criteria are.
Level 1 – Your response is sufficient in scope (your overall score is high enough)
Level 1 takes your overall score and compares it to other scores and what was expected from the Board of Evaluators (BOE). This is how you might expect your average exam to be marked. At level 1 on the CFE, if you fall below the cut-off you will not pass and if you are above the cut-off then you do pass… level 1 that is. That’s great but you aren’t out of the woods yet. Your response will need to also pass at level 2.
Don’t forget, not all marks are worth something. Make sure you understand how to score on the CFE.
Bottom line: Your goal is to score high enough that your overall CFE score is above the cut-off to pass level 1.
Most people fail at level 1 (historically on the UFE – we will see if this trend continues on the CFE).
Level 2 – Demonstrate depth in Financial Accounting/Reporting and Management Accounting
This level applies to Financial Accounting (FA) and Management Accounting (MA) ONLY.
This level requires that you demonstrate depth on enough FA or MA assessment opportunities. Assessment opportunities to tackle FA and MA are provided on Day 2 and 3.
What does depth mean?
It means the number of Competent (C-level) responses you give on FA and MA indicators. Therefore, if you score only RC on all FA and MA indicators you will not pass at level 2.
Bottom line: Score enough Cs in either FA or MA.
Alright, so you’re having a good day, you’ve survived the level 1 cut-off and you’ve got enough Cs in FA or MA. Can you walk away with that coveted CFE success letter? No, you’ve got two more hoops to jump through.
Level 3 – Demonstrate depth in your elective ROLE competency
All CPAs are expected to demonstrate sufficient competency in their elective ROLE competency.
This level requires that you demonstrate depth in your elective competency (Assurance, Finance, Taxation or Performance Management). Opportunities to do this are provided on Day 2.
What does depth mean?
It means the number of Competent (C-level) responses you give on elective role response indicators.
Bottom line: Score enough Cs in your elective competency.
If you’ve survived the level 1, 2 and 3 cut-offs there is still one final level you must pass to successfully complete Days 2 and 3 of the CFE.
Level 4 – Demonstrate breadth
This level applies to all six competency areas and essentially means that you cannot skip any single competency.
You must score sufficiently on each and all six of the above indicators in order to be successful at level 4. What does sufficiently mean? It means you have to score RC or higher enough times on each of the six competency areas. Opportunities to do this are provided in Day 2 (sometimes) and 3 (always).
Again, we don’t know how many RCs that means but I suspect it’s at least one each.
Bottom line: Don’t skip any competencies. You must score at least enough RCs in the remaining competencies.
The key takeaways:
Level 1 – Score well enough overall
Level 2 – Get enough Cs in either Financial Accounting or Management Accounting
Level 3 – Get enough Cs in your elective role
Level 4 – Don’t skip any single competency and get enough RCs in all six competencies
You can learn more about this from CPA Canada here.
Anything still confusing you about how the CFE is marked? Ask your questions in the comments below!