marking

What does it take to pass the CFE? Understanding Levels 1, 2, 3 and 4

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.

 

In conclusion

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!

How does CFE scoring work?

Scoring on the CFE is on an “assessment opportunity” (indicator) basis. Each assessment opportunity is given a mark between NA and CD with only the RC, C and CD worth points.

How you score

For each assessment opportunity (indicator) you’ll score one of the NA – CD scores.

  • Not Addressed (NA) – You did not identify the issue in the case
  • Nominal Competence (NC) – You identified the issue but only covered it superficially. Not much (if any) value added. No evidence of competence demonstrated
  • Reaching Competence (RC) – You identified the issue and covered it, but it was not sufficiently covered to achieve a C
  • Competent (C) – You discussed the issue in a sufficient level to meet expectations.
  • Competent with Distinction (CD) – Your discussion was above what was required. An exceptional response.

You are marked on the number of RC and C scores you obtain, therefore, there is no advantage for the common candidate to strive for better than C. I believe this only becomes a factor if you’re going for a medal so unless you’re pretty certain your medalist calibre this is not something to strive for. You’ll be wasting time that you could be spending getting other Cs.

What are assessment opportunities?

Assessment opportunities try to break down the case into distinct requirements by competency. In each case, the Board of Evaluators asks “What would a competent CPA do?” after which they set the standard and evaluate each candidates performance on each assessment opportunioty. This was similarly defined for the old UFE in the UFE Reports, primary indicators are defined as: Primary indicators of competence [assessment opportunities] answer the question: “What would a competent CA do in these circumstances?” If the issues identified in primary indicators are not adequately addressed, the CA could, in real life, be placed in professional jeopardy or could place the client in jeopardy.”

In conclusion

You have assessment opportunities that test individual competencies. On each assessment opportunity, you score somewhere between NA – CD depending on how you respond. Your overall response is compared against what a competent CPA would do and given a pass/fail depending on how you score. Next step: You should understand how the CFE is marked.

What happens next?

I hope everybody had a good weekend and took some time to let loose and all that good stuff.

There’s not much more left to say about the UFE for the time being. I will point you to a post from last year as to what happens next for those that are curious. Why does the UFE take so long to mark? Who is marking it and when is that happening? All this answered below.

Your UFE – What happens to your response now?

We’ll shortly be welcoming the new cohort of Core Knowledge Exam (CKE) and UFE writers to the blog. Stay tuned!

What happens with your UFE response now?

So you’ve made it through the UFE. What happens between now and December with your paper?

All the simulations from around Canada (and Bermuda) are sent to the marking centre which is in Montreal. Somewhere from 150-200 (171 last year) markers are gathered at the Evaluation Centre to review and mark the responses. Markers are selected based on “marking experience, motivation, academic achievement, work experience, personal references, and regional representation.” (2011 UFE Report, p. 16)

Before live marking begins, the following occurs:

  • Board members, leaders and assistant leaders attend a five-day training session and meeting to review the evaluation guides, review select responses and make revisions to the evaluation guides.
  • Phase 1: markers get familiarized with the evaluation guides on actual responses and then collectively review the results. This phase is intended to make sure all markers are very familiar with the issues in the simulation.
  • Phase 2: markers perform an extended test marking of another set of responses to establish congruence.
Live marking now begins.

The simulations are marked by English-speaking and French-speaking teams in mid-late October. Each simulation is assigned marking teams between 16 and 18 people (in 2011). Lastly, for simulations that are considered “borderline” the marking is performed in late October.

During the marking process, statistics are maintained of each markers assignments and leaders and assistant leaders perform cross marking and monitoring. This is all intended to ensure that responses are marked fairly, consistently and with a high level of quality.

Each response is marked independently by two markers. If there is a discrepancy, a leader or assistant leader performs another marking to determine the final result.

Based on the results of Level 1 and 2, for borderline responses, leaders and assistant leaders mark for secondary indicators at that point for Level 3.

 

I don’t know about you, but this sounds like a pretty rigorous process to me so you can rest confident that you’re exam will get a fair look and is in capable hands.

 

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