Today is a guest blog post from Gus Patel who successfully completed the 2013 UFE
It’s that time again! If you haven’t already gotten a chance to read the 2013 UFE Report, we have and that means the yearly What’s going to be on the UFE post.
As in prior years, the theory is that the UFE tends to reflect observations made in past UFE Reports so it is a good idea to read this article in conjunction with last years’ What’s going to be on the UFE – 2013 edition. We will again take the same approach this year and not go into specifics of each case (UFE Blog wouldn’t want to spoil the fun!) but provide some general guidance on the trends and what to look for going into the 2014 UFE. As a disclaimer, the UFE Blog has no insider knowledge on the 2014 UFE, and it is of the discretion of the candidate to implement a balanced study plan to cover all aspects that may be tested in this year’s UFE. It is of our opinion that the UFE Report provides some key insight and guidance on what to watch out for.
Without further delay, let’s dive in…
Overall, the introduction in the Executive Summary of the report tells us that the Board of Evaluators concluded:
- The 2013 UFE contained 2 fewer primary indicators than 2012, but same number of primary indicators as 2011 UFE.
- The overall level of direction provided on the 2013 UFE was comparable to 2012 UFE, and there was one less PQ indicator, however there was a highlight point that future exams will continue to have a mix of directed and non-directed indicators (thus may not be a trend).
- Overall candidates’ performance in 2013 was weaker than in the prior year. Funny enough, the report made several references to the 2013 UFE being easier than the 2012 UFE, being a writer of both I would tend to agree with this, but I wouldn’t take this as a trend that the 2014 UFE will be easier by any means.
Some other noteworthy points summarized:
- Candidates are doing a better job at applying Handbook guidance to case facts and not using a “copy/pasting” approach, however some canadidates are not recognizing the need to apply handbook guidance at all in their discussion (Page 6).
- Consistent with 2012 UFE Report, another warning, that candidates were continuing to employ a dangerous exam-writing strategy that candidates were looking for a specific number of issues on each indicator, even though there were numerous issues outlined in the simultations (Page 6).
- Candidates performed stronger on quantitative analysis, however were struggling when asked to quantitatively compare options (Page 7).
- There is a lack of clarity and documentation of calculations, many candidates’ calculations were not well organized, which often resulted in omitting items from analysis and technical errors, this includes the need to document calculations and explain why items may have been excluded (Page 7).
- Lack of comprehension and integration of case facts, there was a trend of responses to what members of the board thought were evidence of reading the simulations too quickly which resulted in misunderstanding of the simulations (Page 8).
- The unusual roles assigned in the simulations to candidates in the 2013 UFE continued to be varied with only 2 simulations being traditional assurance roles (i.e. expect to see varied roles in 2014!) (Page 9).
What does this all mean and how should I take this going forward?
- Remember to take the read and outline stage seriously, including understanding your role and the required. If you are in a unique role, you need to not only act and respond as if you are in that role, you need to consider your users (whether or not they are sophisticated) and as such, you need to tailor your response accordingly.
- Don’t fall into the trap that discussing a specific number of issues only (i.e. 3 accounting issues always and move on). When outlining you need to bring all your case issues to your outline and look at how many issues there are within an indicator, it is your job to rank these issues and allocate your time to discuss a sufficient number – this could be 3 on one case or 6 on another, so do not get too comfortable with a specific number.
- There will be a need to track calculations carefully when outlining as well as documenting them clearly so that the marker can understand how you are arriving to your conclusion, remember, the marker’s can’t read your mind or your cell calculations for that matter, so it is necessary to clearly show your work.
- Remember, to display “competence” and get that “C” you need to have a strong technical knowledge base but also be able to apply the technical in a useful way to the users, do not just jump to conclusions for your issues.
Comments by Competency Area
Candidates’ performance in Assurance was weaker than in the prior year. The Board noted last year that candidates’ performance in 2012 was down from the previous year due to them struggling with some of the unusual roles they were given in Assurance, and the same can be said for this year (Page 9).
Here we see again another comment about the “unusual” roles, the theme here is that you really need to adapt based on the required given and consider who the end user of the information is.
… Candidates had difficulty dealing with indicators on which they were asked to look into reporting options and describe procedures that could be performed under the different reports (Page 10).
I think it’s safe to say that you should continue to expect emphasis on special reporting options along with some procedures.
Performance Measurement and Reporting
The report introduced this section stating again that candidates performed poorly in comparison to 2012 in this indicator, and discussed at length that the major issue here is to make sure you are properly analyzing an issue without just jumping to the conclusion.
The Board also noticed that some candidates avoided the more complex issues and discussed the easy ones from a technical perspective only
Remember, even though there are some challenging PMR issues presented in all UFE cases, you must rank the cases and address the major issues rather than pick and choose the ones you find easiest.
The Board noticed a slight decrease in the overall performance of taxation responses (Page 11).
Once again, candidates have a tendency to deal with the easy issues and leave the more complex ones aside, instead of taking the opportunity to demonstrate their knowledge through a discussion of issues requiring more depth of analysis (Page 12).
I completely empathize here, Tax was not my strong point by any means, but sometimes the UFE forces you to discuss these issues regardless of your strengths or weaknesses – if you are noticing yourself running out of things to discuss within a tax indicator, chances are you are addressing the more minor issues and ignoring the major ones.
Without giving case specifics away, there was a note that there was a lack of quantitative analysis within one of the indicators, and candidates often struggled with how to incorporate facts into quantitative analysis.
It is important to keep in mind that integration is important on the UFE, including integrating some of your previous calculations into your next ones since the results of one calculation can feed the input of another.
Canadidates struggled with two main elements (in Finance). First, they had a difficult time providing consistent calculations. Many candidates included elements that applied to both options in their calculation for only one of the options, or they included elements that applied to only one option in their calculation for both options. Second, candidates had a difficult time accounting for the time value of money (Page 13).
It is important to outline properly and ensure that you are “slotting” case facts to the right indicator, and in this case, to the right calculations. Without mentioning specifics, time value of money was a funny comment, as it was mentioned twice in the report. I took another look at the specific case which had this issue and no surprise that the writers’ results here were dismal. Luckily enough most of you will take on this case prior to the 2014 UFE as part of your study program, when you do, make sure you debrief the indicator well.
Another comment from the above is to make sure that you apply case facts consistently when making comparisons. You cannot compare two options if you include/exclude different items from each.
Governance, Strategy, and Risk Management
Candidates seemed comfortable discussing the risks and drawing on case facts to support their discussions. However, there was still room for improvement, as candidates sometimes had difficulty explaining the implication to the company of the risk they had identified or providing a viable recommendation to address the risk identified (Page 13).
Remember, it is always necessary to discuss why the company cares that you’ve identified this weakness by linking it to either a key success factor or a financial or non-financial indicator that the company is concerned about. Make sure to develop reasonable recommendations that would cover off the control weakness and also take into account the size and nature of the company (i.e. do not make grand recommendations that a big company could do if who you are reporting to is a family run business).
Pervasive Qualities and Skills
This year, candidates seemed to do a better job of identifying the issues; however, they had difficulty discussing them in enough depth (Page 14)… they didn’t always support their suspicion or provide a recommendation of what the next course of action should be (Page 14).
Recurring theme in the PQ section, writers are getting better at seeing the big picture but are not always supporting their identification of the issue or providing a recommendation. A good way to format these discussions are using issue, implication, reccomendation format, being sure to provide more than one supporting point to back up the issue.
If you haven’t yet, do go and read the 2013 edition as this is rumored to also heavily influence content on the UFE. Happy studying!