An important part of writing simulations, whether they be SOA (Ontario) or UFE is the reading portion. Reading shouldn’t be mistaken for analysis of the simulation but it will require that you pay a lot of attention and your able to identify both the requirements in the case and the evidence in the simulation that can be used in your response. It’s sort of a very active version of reading.

The amount of time you can spend on reading is debatable but in general you should fall within 25-45% of the total case time spent on reading. With 25% being the extreme on one side – you may be missing important detail if you’re reading this fast and 45% of time being the other extreme where you’re not leaving yourself enough time to respond. You want to get into that sweet spot in the middle.

Reading Basics

You’re reading phase should find your the following information in each simulation…

• What are you required to produce in your response? What is expected from you in the case? This is the same as if your boss asked you to produce something in your job but can often be a little hidden. In SOA it is a lot more clear so it’s just important to make sure you understand (this comes in analysis)
• What is your role in this simulation? Each simulation will give you a role you play such as auditor, controller, advisor, etc. It’s important to know and understand your role so that you report from it. You’re not in the business of giving tax advice when you’re playing the auditor role, well, unless a partner in the case asks you to that is.
• Understand the basics of each section of the case. If there are exhibits, make sure you understand what they are presenting. If there is a separate page with a conversation that seems unrelated, make sure you understand what it’s about, it fits in somewhere, I promise!

And what do you do with all this information? You have to make sure it gets on to your outline so that you can use it in your analysis. We’ll cover that starting later this week.

How’s your case reading going?

Chances are that most people are hitting their busy season now so maybe you haven’t had much time to focus on UFE recently. That’s okay and don’t worry about it. It’s too early to start stressing about that. Here’s a bit of a high level roadmap of the course you could take.

January – Brush up on your technical, this is a good time to start reviewing your tax that you probably blew off for CKE (if you’re in Ontario). Nothing too heavy but take some time on the weekends if you can and review for a few hours here and there. If it’s just not in the cards right now, don’t worry about it. If you’re the type that needs to do something, review technical because later on you won’t have nearly as much time for this.

February – Same as January.

March – Same as February, review technical, get it solidified in your head.

April – In my opinion, April is a good time to start looking at case approach and learning the basics of cases. In Ontario this means start with SOA cases. Chances are that if you’re enrolled in one of the big UFE prep programs you’ll be forced into this anyway around this time. This doesn’t mean hitting cases full steam. Do one every weekend, learn from the process. I’ll post some material on this in early April to help you out.

May – Continue practicing cases, one a week is good recommendation. Keep brushing up on any technical that these cases may expose.

June – In Ontario, you’ll have SOA which will keep you busy busy, and you’ll find yourself writing 5 SOA cases a week on average. This is a lot of cases so this is where you’ll really get your method down. Outside Ontario, I’m unfortunately not familiar with the programs, but I imagine you’ll start writing cases more often too.

July – You’ll write less cases in Ontario as you wait for your results. Good time for one last brush up on technical, there will be almost no time in August for technical so finalize it here. Go back to one or two cases a week and learn what a UFE case looks like.

August – August is when you go hard on UFE cases. Most people take the four weeks prior to the UFE an do eight hour days Monday to Friday writing simulations. These will be days of writing and debriefing simulations, you might have some time to review technical but it’s not a good time to study heavy technical so keep that in mind.

September 10 – 12, 2013 – UFE

And that’s it for the average candidate. Those who are anxious can relax a little, plenty of time remains.

If you haven’t seen, some good questions about ways to study in the last week of time available for the 2013 CKE in the comments.

With a little over a week to go, you can check out some of the topics I’ve covered in the past weeks on the CKE. In case you missed it, the 40-60% range on mock exam is reasonable so don’t panic if you’re seeing those kinds of marks. Norgrove, of course, is an exception.

As I’ve mentioned before, I’m a fan of studying by doing mock exams so with just over a week left, and some holidays mixed in there, you should be writing practice exams now over sitting and reading technical which is, in my opinion, often an easier and less active form of studying. I also mentioned, do what worked for you in University, there are multiple ways to the same place.

I’ll be checking the comments, and others do too, so feel free to discuss any last minute stuff there. Otherwise, happy studying.

I’d like to just take a sec to say a big thanks to everyone who has been coming in, and often leaving positive feedback about UFE Blog. I’ll be around over the next year as we get closer to UFE 2013 so I hope you’ll keep finding this useful. Feel free to get in touch and let me know anything specific you want covered.

Merry Christmas and Happy Holidays!

Today’s post is dedicated more towards students studying for the CKE (Core Knowledge Exam) in Ontario which takes place Thursday January 3, 2013. Students from other provinces may also find this a useful strategy to measure themselves against so feel free to read on.

Many candidates will have recently started working for accounting firms or CA Training Offices (CATOs) and naturally, many of you will start thinking immediately about the grueling process ahead that will take you through a number of hurdles until you get to challenge the UFE.

Don’t panic just yet. Even if you’ve been out of school or forgotten a lot of your accounting courses.

Many students seem to have a bit of an over reaction and it’s important that you recognize from the beginning that studying for the UFE is a measured process that will take you through the next year with breaks to recover at various steps. It will often be unpleasant and involve a lot of hard work, but it doesn’t mean that the next year is going to be nothing but studying long nights. In fact, myself, and many others have a great time during this year, meet a lot of great people and I still look back fondly on my UFE year. So that said, let’s look at the CKE.

The CKE is entirely a multiple-choice exam and it tests all the “technical” therefore the purpose of the CKE is for you to have solid technical by the time you take the test in January. This, for some, is therefore their most difficult exam and I including myself in this group. I wasn’t very fond of the CKE because I hate memorizing technical (I’m not a big memorization guy) and it’s not an open-book test like the SOA or UFE so I had no choice. I also don’t like multiple-choice, I find accounting to be a little ambiguous sometimes and this kind of thing doesn’t lend itself to being tested by multiple choice. I’ve heard the better you are with technical the more difficult such multiple choice tests can be. Of course I could just be telling myself that to feel better. 🙂

So you’ve got three months left to get ready. What do you do?

1. Take a CKE Prep Course if you can

I highly recommend a CKE prep course which will cover everything you need to know for the CKE. I took the PASS course but the ICAO also offers their own course. These are starting very soon (if not yet) so go… like now.

If you choose not to take a course you’ll need to learn about the coverage of the CKE and create your own course. I will try to post something very soon about how you might do this and of course I’ll be offering up a lot of notes here myself as we go.

You should spend October, November and some of December brushing up on your technical. You’ll need to read, practice problems and understand technical. What I don’t recommend you do is practice writing MC exams yet during October, November and the first part of December.

The prep courses generally run every weekend (8 hours per weekend day) and depending how you are with your technical you might have to do a night or two a week of additional review, especially come November and December where you may also want to devote a full week or two of evenings studying.

2. Practice writing CKE Mock Exams

There are a limited number of CKE Mock Exams out there. You want to save them for the few weeks prior to the CKE Exam.

The following CKE Mock Exam packages are the ones I’m aware of:

• Densmore CKE Practice Package (~600 questions) (Or 6 exams total) – These questions are, on average, considered slightly easier than the real CKE.
• Norgrove Package (~225 questions) (Or just over 2 exams total) – These questions are, on average, considered very difficult but helpful in studying and learning in depth.
• Dunlop CKE Question (~300 questions) (Or 3 full exams) – These questions are, on average, considered the most equivalent to the actual CKE.

As you can see, there is only enough out there for about 11 full 100 question exams. This is plenty but if you start doing these exams right now or before December you may not have enough left to judge how you are performing after you’ve relearned all your technical. So therefore I recommend working these into your December study strategy and not before! You will be surprised how well you remember most of the questions after you do them.

What about Christmas/New Years?

Sorry to tell you, but this is one of those sacrifices you will have to make this year. Chances are, that unless you’re really feeling great, you’ll need to do some studying over the Christmas/New Years holidays. Doesn’t mean you can’t take some days off in there but it will weigh on your mind this year.

So congratulations on embarking on this exciting year. I’ll be around here at every step and I hope you’ll drop in and make UFE Blog part of your study routine. Feel free to drop me a line or follow me on Twitter or Facebook where I’ll be posting as well.

Most people will be into their UFE study period now and possibly be seeing their first UFE mock marks. If they are not what you hoped, don’t worry too much yet, most people quickly improve in the first week or two before leveling off.

Today’s topic is something you will almost definitely see on the UFE, and probably more than once so it’s good to master it from the beginning. The Audit Planning Memo.

Although there are some different approaches out there, the most common elements and approach of an Audit Planning Memo is the RAMP approach (Risk, Approach, Materiality and Procedures). For most audit planning memos you don’t need to discuss all three and often two or three is enough with a discussion of risk and procedures being the most important.

Audit Risk Discussion

It’s important, first of all, to state what the audit risk is exactly based on the case facts. Generally the risk is either high or low but it can also be medium at times. If you’ve forgotten, audit risk the risk that the financial statements are materially misstated after a clean audit opinion is given an is usually calculated as Audit Risk = Inherent Risk * Control Risk * Detection Risk.

Next, you must support your conclusion by specific evidence from your simulation. The amount of evidence depends on the simulation but a general rule of thumb is that you should support your conclusion with at least three specific risks from the case. This is only my opinion so use your own judgment and experience to determine how many is enough! If prior year risk is mentioned or the risk is changing from a prior year, it is important to be specific about what has changed to increase or decrease the audit risk this year.

Some examples of risks:

• New management or ownership may introduce new biases to misstate
• Complex accounting issues may be prone to error
• Weak controls discovered or problems reported by employees with the financial information

Audit Approach

This is often the least discussed area because most UFE simulations don’t have significant approach issues. You have three options here and must state which you will take and support it with case facts. The three options are substantive approach (you will be reviewing transactions), controls reliance (you are relying on the controls) or a combined approach (for some areas you will rely on controls).

If there are very weak controls all around you will take a substantive approach and support it with information from the case as to why. If all controls are functioning fine you can take a controls reliance approach but this will probably never occur so you are most likely to take a combined approach which will rely on controls in some areas and take a substantive approach in the weak areas.

Materiality

Materiality is usually the easier to score a quick few points over audit approach. Materiality is a number which is based on the financial statements so you must calculate it and state why you are calculating it this way. Materiality is mostly linked to users of the financial statements and not risk so when discussing materiality it is important to discuss how it relates to users of the financial statements. Quick reminder: an amount is material if it could influence the decision of a user of the financial statements. Typical materiality amount go-tos are 5% of Net Income from continuing operations or 0.5-1% of total assets but obviously use your judgment at the time.

Some examples of issues around materiality:

• New users of the financial statements – they may have a lower or higher materiality than previous users
• Loans or covenants are involved which are based on the financial statements – amounts which breach these covenants are material
• Whenever there is a sale or purchase of a company occurring, materiality is often a factor since the purchase price is based on the financial statements

Last thing: with all of the above, I want to stress that it’s important to use case facts often and clearly when discussing each element. Generic discussion or knowledge “dumps” are seldom rewarded on the UFE so get in the habit early of using lots of case facts in your discussions.

Come back tomorrow where I’ll tackle procedures, the most important part of the RAMP and a critical element of scoring well on the UFE.

Did I miss anything? What else do you include in your Audit Planning Memos and why?

UFE Quants are one of those places you can get stuck on forever. Especially if you’ve gone wrong somewhere along the way and now you realize it and panic trying to fix it. Oops.

Don’t panic. There is always more to the case than just quants and often the analysis is even more critical than the numbers.

Quants are usually just one indicator or part of an indicator (can take you to a C from an RC), even the ones that seem very important. They should be allotted the appropriate amount of time based on this. It’s easy to take too long on a quant and then not have enough time to tackle another two assurance indicators which don’t need much information from the quant itself. You will, at times, need to just drop working on a quant midway through and move on. Don’t feel bad about this, and as you mark your cases during your study period, you might be surprised how independent the quants are from other indicators.

Always conclude/discuss based on your quant though. Don’t give what-if’s. Stay consistent, even for incomplete quants.

Last point to think about is that markers cannot see your formulas! It is important to both have the actual numbers as well as the logical flow and explanation in your quant. This was mentioned as an issue in the 2011 UFE Report so you’ll need to fix it this year. Always document your quants so markers can understand what you are doing. Just having a number there with no explanation is as good as not having a number there.

Do you get drawn into long quants? How are you planning to avoid it? Tell us in the comments!

Simulations have ranged between 60 minutes and 90 minutes. It’s tempting sometimes to cheat a little both in the mock simulations you write and in the real thing when you have three exams in a row and what’s a few extra minutes to finish that quant or add a couple more procedures.

Don’t. Don’t do it in your mocks and don’t do it on the real thing where you only get one chance.

Suggested times are there for a reason. Each simulation is trying to test something and the exam designers force you to be concise and test your ranking ability through this mechanism. Each exam is worth the proportion it is worth even if you go over the allotted time. Take 5 or 10 minutes per exam and your last exam is short 10-20 minutes. If it’s a 60 minute exam you’re toast. And maybe that’s the simulation full of assurance or maybe it’s the one with the one governance indicator that you need to get an RC on. You’ll likely be stressed out in the exam and you won’t be thinking about these things.

So don’t. Always practice with strict cut offs and enforce them during the real thing.

Am I being too strict here? What do you think? Let us know in the comments!

In a previous post, Why Folioviews is great, I discussed why you should rely on using The Handbook within Folioviews during the UFE. One of our readers tonight informed us in the comments that beginning this year, the UFE will use a PDF viewer to access reference material instead of Folioviews. Our reader informed us that the search within the PDF viewer is more difficult to work with and therefore candidates should be aware of this and get sufficient practice using this new version of SecureExam.

I haven’t used this PDF viewer before so at the moment, until I try it out, I can’t give any advice on it. Thanks again!

Important Update: The 2012 UFE has stopped using Folioviews. See my update here.

One of the best things about writing the UFE in 2010 was that The Handbook was only allowed in electronic form which was not the case in previous years. I had to learn and use the electronic copy which turned out to be amazingly useful. One of my weaknesses is memorizing long rules and for this, the electronic Handbook is extremely useful. You’ll likely encounter some accounting issue in the UFE for which you can’t remember the exact criteria. Now a days it’s as easy jumping into the Handbook for a few minutes, doing a quick keyword search and finding the criteria. Even better, I understand that you can even copy and paste straight into your case which wasn’t possible when I wrote. How can anybody not be doing this all the time? Yet I still find some people prefer to try to cram the whole Handbook into their heads. It’s an open book exam – no need to memorize the book!

When to use Folioviews?

My advice: Get to know that beautiful electronic Handbook during your study period if you haven’t already and use it often! Why risk memory lapses or digging through Handbook sections for the first time during the UFE? It’s also often faster to find the exact criteria in the Handbook and copy it into your case and fill in the case facts as they apply and then conclude. You don’t want to be fiddling around with Folioviews for the first time during the UFE so I’ll say it again, get to know it during your study period and use it often.

When not to use Folioviews?

While the electronic CICA Handbook available is a beautiful thing, unfortunately the Income Tax Act version of it is not. Unless you are very sure that a specific issue is addressed in the ITA and you know where it is or the exact keyword then I have almost never found it useful. Because of the legislative way that the ITA is written, it’s unlikely you’ll find what you need during UFE time to tackle the issue without wasting a lot of time. You are better off trying to address the issue from memory. Sorry, no shortcuts here!

As always, there are some exceptions and in 2010 I was lucky enough to get one of these when LPP (Listed Personal Property) was an issue. This is one of those where having that keyword available to search can be of some use. Another is specific CCA rates so I would not memorize that list. As I’ve mentioned before, it looks like the CICA might be hinting that you should use this more often so it’s worth fiddling around a little if you haven’t before.

How often have you been using Folioviews? Do you foresee any issues that might arise by using it during the UFE?