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YOUR PERFORMANCE ANALYSIS REPORT

2016 Common Final Examination (CFE) DAY 2 AND DAY 3

Candidate Number XXX

Enclosed is your performance analysis report for the September 2016 Common Final Examination (CFE). This report analyzes your performance on Day 2 and Day 3 only. Day 1 is reported onseparately.

Section A of the report contains an analysis by assessment opportunity (AO) of your performance foreach simulation. Section B contains a detailed analysis of your performance by competency area, and Section C contains a summary of the reviewers’ general findings and an analysis of your performanceby essential CPA enabling skills, following the CPA Way.

This report is intended to highlight areas in need of improvement, not just to explain why you failed theexamination. Where the reviewers were able to, they provided recommendations for improvements,whether or not you met the passing profile requirements set by the Board of Examiners for the variouslevels of the fair pass model. This means that you may have received several comments on an areawhere you met (but barely) the minimum standard.

You are encouraged to read this report in conjunction with your transcript and the Board of Examiners’Report on the September 2016 CFE.

Section A: Assessment By Simulation

Section A reports the reviewers’ findings by AO for each of the Day 2 and Day 3 simulations. Thechecklist is designed to help you identify which of the commonly exhibited weaknesses displayed by thecandidate population you personally exhibited while writing each simulation. This information allows youto see where you missed a mission-critical AO completely or where you fell short of the entry-levelrequirements.

To help you understand which of the weaknesses you, in particular, exhibited, reviewers have markedXs in the relevant boxes. If you did not address an AO at all, the box labelled “You did not address thisassessment opportunity” will be marked with an X. If you addressed the AO and did not demonstrateany of the weaknesses listed, the boxes will be blank. If you did demonstrate a weakness, the box nextto the weakness will be marked with an X and a comment will be included.

Section B: Assessment By Competency Area

The information in Section B is a re-sorting, first by technical competency area, and then by CPAenabling skill, of the weaknesses noted in Section A. The information presented in Section B allows youto identify whether you exhibited more technical weakness in one area than another.

Keep in mind that the checklist of points under each AO in Section A is made up of the tendenciesexhibited by the candidate population based on the Board of Examiners’ expectations for a competentresponse. By focusing on the areas in which there are several Xs, and by examining the reviewers’comments by competency area rather than by simulation, you will be able to identify which technicalelements of a “competent” response you were lacking. Seeing the AO-by-AO weaknesses sorted bycompetency area will allow you to gain a better understanding of which technical area was weakest andthe nature of the errors that contributed to the standing you received.

Beside each box, you will notice a “skill” description. This skill represents the sorting category that isused to present the reviewers’ findings by the enabling skills portion of Section C of your report.

2016 Common Final Examination (CFE)- Day 2 and Day 3

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The CPA Enabling Skills sub-section is a re-sorting of the reviewers’ specific AO-by-AO comments fromSection A by CPA enabling skills grouping (following the CPA Way). Each grouping is clearly defined sothat you know in which of the essential CPA enabling skills that underlie a professional response yourequire further development. The groupings used consist of the following:

Assess the Situation

Define the issues correctly1.Identify any underlying issues2.Rank the issues (i.e., identify the mission-critical issues)3.

1.

Analyze Major Issue(s) - Qualitative

Technical (applies CPA Handbook or Tax Act correctly, uses correct techniques i.e. cashflow, net present value, etc.)

1.

Link theory to case facts (i.e., go beyond just stating the rules and consider the particularcase facts in the analysis)

2.

Evaluate the alternatives (pros and cons, implications of different options, validity ofoptions, etc.)

3.

2.

Analyze Major Issue(s) - Quantitative

Applies the technique correctly1.Calculates accurately2.Explain assumptions clearly3.

3.

Analyze Major Issue(s) - Integrate situation

Integrate the situational assessment into analyses1.Integrate analysis of one issue into another, from one competency area to another, etc.2.

4.

Conclude and Advise

Make a logical/practical choice – one that flows from the analysis1.Display good judgment considering the decision factors identified2.See the bigger picture and consider impact of one analysis on the overall conclusion3.

5.

Communication: Provide clear explanations (viewpoint and “thinking pattern” are evident) 6.

Ethics: Exhibit professionalism, identify the need for a specialist; know professional limitationsand responsibilities

7.

Section C: General Findings and CPA Enabling Skills

Section C of the report is designed to help you identify your major weaknesses in essential areas suchas communication, role playing, ranking of issues, and other exam writing skills, as well as present youwith a re-sorting of the Section A results by the CPA enabling skill.

For the General Findings sub-section, each of the reviewers has answered the same generalquestions, and their findings are summarized for you. Any questions that have a “NO” response arehighlighted. These are the general areas in which you demonstrated weakness.


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Section A: Assessment By Simulation


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Section A: Assessment By SimulationDay 2 - Tax - TankCo

Assessment Opportunity #1 (FR)

The candidate discusses the revenue recognition for the undeliveredcommercial tanks.

YOU DID NOT ADDRESS THIS ASSESSMENT OPPORTUNITY.Assess the Situation

You identified the revenue recognition issue but your responselacked depth. X

Analyze Major Issue(s)-Qualitative

The accounting discussion should have included a discussion of the relevant accounting standards (CPA Canada Handbook, Part II ASPE, section 3400). Your analysis jumped to a conclusion about the adjustment to make based only on a superficial analysis of the case facts. You said "According to the process of the tank manufacturing, ASPE section 3400.17 a percentage-of-completion accounting method for the revenue recognition is suitable for the situation as the performance clearly consists of more than one act of process and the company can reasonably estimate the price of the product completed. Guideline and analysis show that three of the tanks has been completed at 90% completion as of December 31, 2015 but only recognized the sale of one of the four tanks in the 2015 financials. Sale is under-reported". Specific criteria must be met in order to recognise revenue (performance, measurement and collectability, specifically bill and hold transactions) and you were expected to identify and discuss those and then apply specific case facts to determine whether they were met in order to reach a supported conclusion.

Your discussion of the revenue recognition issue demonstratedtechnical errors. X


After coming to the conclusion that revenue for the three completed tanks held on site could be recognised, you attempted to provide adjustments to correct the financial statements. Your adjustment was as follows: "Adjustment entry#1: Dr Inventory $792,000 Cr Sales $792,000 ($240,000 x 3 x 1.10)". This adjustment demonstrated that you did not understand how to properly record this transaction. The correct adjustment should have involved two steps: first, increase accounts receivable and revenue for the amount of the sale and, second, increase cost of goods sold and decrease inventory for the cost of inventory being sold.

You did not conclude on an accounting treatment for the revenuerecognition of the undelivered commercial tanks or your conclusionwas not consistent with your analysis.

Conclude and Advise

Reviewer's additional comments onstrengths/weaknesses and recommendations forimprovement:

While you attempted to discuss the revenue recognition issue, your discussion was not in sufficient depth, as well your adjustments to the financial statements included some errors, as such you could not demonstrate competence on this assessment opportunity. A discussion of this issue should have included identifying the relevant ASPE standards and applying them to the case facts in order to form a conclusion and provide a proposed adjustment.


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The candidate discusses the warranty provision related to thedefective tanks.


You identified the warranty provision issue but your response lackeddepth. X


The accounting discussion should have included a discussion of the relevant accounting standards (which could have included general standards on liabilities, or specific standards relating to contingencies or revenue recognition). Your analysis jumped to a conclusion based only on a superficial analysis of the case facts. Your entire discussion was: "Amount of the return is required to be recorded in the financial statements. This is becuase the cost of the replace is realiably measure as $400 per tank. Number of tanks that have been replace are also determined 82 tanks (30 already replace and 50 committed to be replaced). So it is probable to reflect the amount in the financial statements as for users' fair decisions making ." Specific criteria must be met in order to record a liability and you were expected to identify those and then apply case facts to determine whether they were met in order to reach a supported conclusion.

Your discussion of the warranty provision issue demonstratedtechnical errors. X


After concluding that the warranty provision needed to be recorded, you attempted to provide an adjustment to correct the financial statements. The adjustment you provided was for $32,800 which included the 32 tanks that had already been replaced. Any adjustments would only have been required for the 50 additional tanks that might prove to be defective. It is always worthwhile to consider the impact of your adjustment to determine if it achieves the financial reporting objective your analysis addressed.

You did not conclude on an accounting treatment for the warrantyprovision or your conclusion was not consistent with your analysis. Conclude and Advise


While you attempted to discuss the warranty issue, your discussion was not in sufficient depth to demonstrate competence on this assessment opportunity. A discussion of this issue should have included identifying the relevant ASPE standards and applying them to the case facts in order to form a conclusion and provide a reasonable proposed adjustment.


The candidate discusses the accounting treatment for the lawsuits.



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You identified the lawsuit issue but your response lacked depth. X


The accounting discussion should have included a discussion of the relevant accounting standards (CPA Canada Handbook, Part II ASPE, section 3290). Your analysis jumped to a conclusion that no adjustment had to be made based only on a superficial analysis of the case facts. Your whole discussion here was: "The recognition of lawsuits is correct in accordance to ASPE Contingent liability. Only the cost of the deductible is accrued as the amount per claim is probable and determinable with a $20,000 deductible per claim. 21 numbers of lawsuits are determined with new, resolved (paid out), and dropped out. In case of any case that the likelihood of occurance is high, the estimated settlement amount and the date of the settlement can also be determined and most likely to be happened in a year, it is required to accrued and liability and proper disclosed." Specific criteria must be met in order to record a contingent liability (must be both likely and estimable) and you were expected to identify those and then apply case facts to determine whether they were met in order to reach a supported conclusion.

Your discussion of the lawsuit issue demonstrated technical errors. Analyze Major Issue(s)-Qualitative

You did not conclude on an accounting treatment for the lawsuits oryour conclusion was not consistent with your analysis. Conclude and Advise


While you attempted to discuss the lawsuits, your discussion was not in sufficient depth to demonstrate competence on this assessment opportunity. A discussion of this issue should have included identifying the relevant ASPE standards and applying them to the case facts in order to form a conclusion and provide a proposed adjustment.


The candidate discusses the accounting treatment for the deferreddevelopment costs.


You identified the development costs issue but your response lackeddepth. X


The accounting discussion should have included a discussion of the relevant accounting standards (CPA Canada Handbook, Part II ASPE, section 3064). Your analysis jumped to a conclusion about the adjustment to make based only on a superficial analysis of the case facts. You said "Costs pertain to research cost must be expensed for the year that is correct". Specific criteria must be met in order to record an internally-generated intangible asset and you were expected to identify those and then apply case facts to determine whether they were met in order to reach a supported conclusion.


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Your discussion of the development costs issue demonstratedtechnical errors. X


You identified that the non-refundable deposits were distinct from the remaining R&D costs. However, you stated: "However, non-refundable deposit on equipment that is part of administrative cost of the development expenses should not be capitalized becuase the cost spend is only for one-time and is not providing any future economic benefit after a year." Given that the deposit was to be used to acquire equipment, this would eventually form a part of the cost of the equipment itself - or, at the very least, would be a prepayment of a future period cost. This was the one cost that should not have been written off.

You did not conclude on an accounting treatment for thedevelopment costs or your conclusion was not consistent with youranalysis.

Conclude and Advise


While you attempted to discuss the accounting treatment for the research and development costs, your discussion focused on an incorrect analysis of the non-refundable deposits and, therefore, did not provide sufficient depth on the rest of the costs. A discussion of this issue should have included an identification of the handbook criteria, an application of these to the specific case facts, and a supported conclusion based on this analysis.


The candidate assesses the impact of the accounting issues on thebank covenants.


You did not provide an overall calculation of the debt-to-equitycovenant or the borrowing base.

Analyze Major Issue(s)-Quantitative

You calculated one of the debt-to-equity covenant or the borrowingbase, but not both. X


You calculated the "debt-to-equity covenant", but not the "borrowing base". On the requirements page for your role, CPA is asked "to evaluate the impact of the adjusting entries on TankCo’s compliance with the debt-to-equity covenant and its borrowing base." This meant that you were required to recalculate both of these figures (not just one) and conclude on the results of your calculation. The information provided did not indicate that one was more important than the other.

You calculated the debt-to-equity covenant and/or the borrowing basebut did not adjust it for the identified accounting errors.

Analyze Major Issue(s)-Integrate Situation


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Your calculations demonstrated technical errors. Analyze Major Issue(s)-Quantitative

You did not conclude on your analysis.Conclude and Advise


Your response on this assessment opportunity did not adequately address both of the financial covenants described in the loan agreement. It was necessary to understand the impact of the accounting errors on both covenants and conclude on the outcome for your client.


The candidate discusses the potential impairment of the commercialtank division.


You identified the impairment issue but your response lacked depth. X


The accounting discussion should have included a discussion of the relevant accounting standards and an application to the case facts. Your analysis only focused on the CPA Canada Handbook criteria. You said "This asset is generated and acquired from the acquisition of a commerial tank division in 2012. $2 million value of the Goodwill has been recorded positing in the financial since then. It is subject to impairment test to ensure if the value of $2 million is still applicable to reflect such value and whether the unit is still cash-generating producing value flow to company. According to ASPE 3064.74, if the carrying amount of the reporting unit has exceeds its fair value, the impairment loss shall be recognized in an amount equal to the excess. The goodwill recognized shall not exceed the caarrying amount of goodwill. A goodwill impairement shall not be reverse if the fair value of the reporting unit subsequently increase." While a precise conclusion may not have been possible on this issue, an explanation of the situation (specific case facts identifying the indicators of impairment), identification of the applicable accounting standards, and application thereof to the case facts could have helped you form a preliminary conclusion in a more supported manner.

Your discussion of the impairment issue demonstrated technicalerrors. X



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Your discussion skipped steps in the analysis, leading you to ignore key technical concepts. The process for impairment under ASPE requires, first, identifying whether indicators of impairment exist for the reporting unit and then, second, testing that reporting unit for impairment. Your analysis jumped straight to an impairment test, without considering whether indicators of impairment were even present, which is a necessary step before performing the test. While you did identify the need to impair the commercial division, you then recommended to record a write-down equal to the difference between the total of the working capital and the book value and resale value of the equipment since you said "Working capital $810,000 + Production equipment $390,000 = $1,200,000. So the value of the Goodwill is suggestable to be $1,200,000. Compared this value to $2,000,000, $800,000 should be considered an impairment loss of the asset". The CPA Canada Handbook provides guidance for determining the value of the reporting unit as a whole and comparing this to the net assets in the reporting unit, which could be used to explain the impairment test.


While you attempted to discuss the accounting for the goodwill, your discussion was not in sufficient depth to demonstrate competence on this assessment opportunity. A discussion of this issue should have included identifying the relevant ASPE standards and applying them to the case facts in order to form a conclusion and identify appropriate next steps.

Assessment Opportunity #7 (TAX)

The candidate calculates the 2015 year-end taxes payable.


You attempted a calculation but your response lacked depth. X


While you calculated taxable income, you did not complete the analysis by determining taxes payable for the year. In addition to being a specific request from the client, it would also have been useful to the client to know how much they would have to pay in taxes for the year, especially in light of the potential sale of the business.

You attempted an analysis of capital cost allowance but yourresponse lacked depth.


Your calculation demonstrated technical errors. X



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In your calculation of taxable income or net loss for tax purposes for the year, you added back capital cost allowance (CCA) and the deduction with respect to cumulative eligible capital amount (CECA), and did not add back financial statement depreciation, in the computation of net income for tax purposes, instead of adding back depreciation and deducting CCA and CECA. As well, you made the following comment with respect to the use of the losses: "However, given that CCA according to the Appendix C shows $1.7 million where the net loss is only $114,000. CCA depreciation is deemed to be nil in according to Income Tax Act (ITA) that not matches of income could have incurred for the expenses. Artifical loss is deemed to be zero. Therefore, taxable income is still nil as a result. The non-tax deductible items such as 50% deductible meal and entertainment, insurance payment, and the club dues have all added back will not be affected the taxable income as a result". You should revisit the tax rules with respect to capital cost allowance and tax losses, as they would not be restricted in the context of an active business loss.

Your calculation did not integrate the results of analyses performedelsewhere in your response.




Your response lacked the necessary breadth of issues, and included some errors. As such you were not able to demonstrate competence on this Assessment Opportunity. This analysis should have included a calculation of taxable income with a number of adjustments, as well as a conclusion on taxes payable or loss carryovers.


The candidate discusses whether the fiberglass tank costs qualify forScientific Research and Experimental Development costs and the taximplications.


You identified the SR&ED issue but your response demonstratedtechnical weaknesses.


You identified the SRED issue but your response lacked depth. Analyze Major Issue(s)-Qualitative

You identified the SR&ED issue but did not determine the quantitativeimpact. X



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You provided a qualitative discussion of the SR&ED costs, stating "Pre-marketing and non-refundable deposit are expensed for the year as they are not part of producing future economic benefit, and considered as one-time expenses so they do not to promote income more than one year, and shall be expensed in the year", but did not perform any calculations to address it from a tax perspective as scientific research and experimental development (SR&ED) expenditures. Specific information was provided in the case about the costs incurred so a calculation would have helped demonstrate how the SR&ED program works.

Your discussion of the SR&ED issue demonstrated technical errors. Analyze Major Issue(s)-Qualitative


On the requirements page for the tax role, it was stated that "TankCo is in the midst of developing a new fibreglass tank, which has involved a lot of research and development activities during the year. Management would like to know if there is special tax treatment for research and development costs, and has requested a report discussing how these costs should be treated for tax purposes." It is not clear if you missed this direction or lacked the technical knowledge to complete it - the majority of your discussion in this section of your response was addressing the manufacturing and processing (M&P) deduction, which was not relevant here at all. A discussion of this issue should have included identifying the SR&ED program, considering whether the fibreglass tank research would qualify for it, and integrating the figures provided into a calculation of the impacts.


The candidate discusses the options for the legal structure of the newfiberglass business to optimize tax and business considerations.


You attempted a discussion but your response lacked depth. X


You identified the alternative structures available, but provided only a superficial analysis of the general differences between the three and did not apply them to the specific case facts. The information provided suggested that things like start-up losses and SR&ED ITCs would likely have an impact on the structure chosen so a generic analysis would not have been useful to the client on its own. You also spent time discussing whether or not TankCo was a CCPC, and what that means, which was not relevant to this specific analysis (since it was already established).

Your discussion demonstrated technical errors. Analyze Major Issue(s)-Qualitative



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Your response lacked the necessary breadth of issues, as it focused almost entirely on the M&P deduction (which was of little relevance) and on the administration costs of each entity, and also included some errors. As such you were not able to demonstrate competence on this Assessment Opportunity.


The candidate provides an estimate of the corporate income resultingfrom liquidation.




While you identified the tax impacts of some of the assets to be disposed of, you missed several assets which caused a significant impact to the results of your calculation. While the land and building had the most significant dollar values, none of the assets was considered more important than others because they would all need to be disposed of in this transaction.



Your calculation determined capital losses on depreciable property (building, equipment) and claimed them against other gains. Capital losses on depreciable property are denied under the Income Tax Act - only capital gains are recorded on depreciable property, in addition to recapture and/or terminal losses, as applicable. Your calculation also made errors with respect to the disposition of Goodwill for nil proceeds. Under either the historical or the new rules in the Income Tax Act, a terminal loss would have been claimed on the remaining balance in the CEC account. As well, your calculation used net book value to determine taxable income, rather than the cost bases for tax purposes. The Income Tax Act has very specific treatments for the disposition of capital assets and of depreciable assets, which vary greatly from the guidance provided in the CPA Canada Handbook.

Your calculation did not integrate the results of analyses performedelsewhere in your response.



While you attempted to calculate the after tax proceeds from liquidating TankCo, your discussion was not in sufficient depth, and contained too many technical errors, to demonstrate competence on this assessment opportunity. A response to this issue should have included a calculation of the taxable income associated with the disposition of each of the company assets.


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The candidate provides an estimate of the after-tax proceeds, CDA,and RDTOH for the corporation in the event of liquidation.

YOU DID NOT ADDRESS THIS ASSESSMENT OPPORTUNITY. X Assess the Situation

You attempted a calculation but your response lacked depth. Analyze Major Issue(s)-Quantitative

Your calculation demonstrated technical errors. Analyze Major Issue(s)-Quantitative


On the requirements page for the tax role, it was stated that "Rob and Sarah have asked CPA LLP to estimate TankCo’s net income for tax purposes resulting from the disposition of the corporation’s assets, as well as the after-tax proceeds that would be available in the company after a sale of TankCo’s assets (assume for this purpose that the fibreglass tank project remains inside TankCo, and is not moved into a separate entity before the sale)." Both components of this request were required, as one would not be useful without the other. It is not clear if you missed this direction or lacked the technical knowledge to complete it. A response to this issue should have included a calculation of the taxes payable from the dispositions, as well as the capital dividend account and refundable dividend tax on hand adjustments.


The candidate provides an estimate of the after-tax proceeds for thechildren in the event of liquidation.




Your calculation determined an amount to be paid to Rob and Sarah with respect to TankCo shares, but simply listed the amounts without considering their nature, namely as dividends. Given the opening GRIP balance, and the additions that should have resulted from the recapture on the building, there was certainly an ending balance in the GRIP account before the wind-up. At the time of the wind-up, the dividends should have been allocated between eligible and other-than-eligible dividends, given the significantly different effective tax rates of these. As well, your analysis failed to reduce any potential taxable dividend on wind-up of TankCo by the amount in the capital dividend account, which could have been paid out tax-free. Your entire analysis on this issue appears to have been: "GRIP account of $600,000 can elect to issues eligible dividend to shareholders."


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Your discussion demonstrated technical errors. Analyze Major Issue(s)-Qualitative

Your calculation demonstrated technical errors. Analyze Major Issue(s)-Quantitative



On the requirements page for the tax role, it was stated that Rob and Sarah "would also like to know the amount of money each shareholder would be left with after the corporation’s after-tax proceeds have been distributed and their personal taxes have been paid." It is not clear if you missed this direction or lacked the technical knowledge to complete it. A response to this issue should have included a determination of the deemed dividend on wind-up, and a calculation of the personal taxes owing as well as the after-tax proceeds.


The candidate discusses some of the tax issues associated with thedeath of an individual and discusses filing requirements.


You identified the death of the taxpayer but your response lackeddepth. X


Your sole discussion with respect to the filing requirements was as follows: "She is highly recommended to get a clearance certificate to ensure her tax liability have been fulfilled with CRA". You did not discuss any of the filing deadlines or of the technical rules upon the death of a taxpayer, such as the deemed disposal of the various assets owned by the deceased taxpayer.

Your discussion of the death of the taxpayer demonstrated technicalerrors.




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On the requirements page for the tax role, it was stated that Rita "has requested that CPA LLP explain the tax issues associated with Lou’s death and ... [s]he would also like to know what returns will need to be filed for Lou, and what opportunities may be available to minimize his taxes payable." It is not clear if you missed this direction or lacked the technical knowledge to complete it. A discussion of this issue should have included identifying the deemed disposition of all assets on death, the eligibility of the TankCo shares for the lifetime capital gains deduction, and the filing deadlines of the returns.


The candidate estimates the tax liability on death of an individual.




While you identified the tax impact of several of Lou's assets or income items, you did not integrate these into any sort of calculation. Beside all of the deemed disposition assets you wrote "deem to nil" which was not supported or explained. In some instances, you wrote "not an income generated unit; stop loss rule kicks in" even when there was a gain on the property. Your calculations should include sufficient support to be understood. The deemed dispositions should have been integrated into a calculation of taxable income.



In your calculation, you demonstrated technical errors on the nature of personal tax credits. Personal tax credits are multiplied by the appropriate credit rate (typically 15%, or a combination of 15%, 29%, and/or 33% in the case of charitable donations) and then deducted from taxes otherwise payable. Non-refundable credits are limited to reducing taxes payable to zero. You actually deducted the personal tax credits in computing taxable income.


On the requirements page for the tax role, it was stated that Rita "has requested that CPA LLP explain the tax issues associated with Lou’s death and estimate Lou’s 2016 federal tax liability." Although you attempted to determine the taxable income and taxes payable, you made several significant technical errors, and omitted several large items, which prevented you from demonstrating competence on this assessment opportunity.

Overall Comments

Was the response well organized with a logical flow? Yes


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Your response was well organized and easy to follow. You used headings and separated your discussions by assessment opportunity, which was a logical way to respond to this case. However, on AO#10, you attempted a calculation of the corporate income resulting from liquidation but your work was difficult to follow. Your calculation was not clearly presented or labelled, or did not have a logical flow. Using Excel to prepare a calculation with clear rows and columns identifying the assets to be sold is a useful way to present a sale of assets transactions. For example, a common presentation format would have columns for asset description, proceeds, adjusted cost base, undepreciated capital cost, aggregate investment income, active business income, capital dividend account additions/deductions, and refundable dividend tax on hand additions/deductions.

Did the candidate understand their role?Yes

You appeared to have understood your role and addressed most of the partner's requests.

Was the response easy to read and understand?Yes

Your response was written efficiently and was possible to understand. You used complete paragraphs which allowed you to have thoughts that were complete and clear. Although it did not detract from the overall understanding, your response contained a number of grammatical errors, which made it difficult to read at times. For example, you wrote, "Tax implication on such setting do not have much as a result as this will be filling as TankCo as a whole tax filling entity". You should take the time to ensure that significant grammatical errors are addressed in your response.

Did the candidate focus their response on the appropriate issues?Yes

You did a good job focusing your response on the significant requests and issues in this case and your response did not contain any unrelated issues.

Did the response appear balanced?Yes

Your response was well-balanced and you seemed to have allocated an appropriate amount of time to each of the assessment opportunities, except for Assessment Opportunity 11 which you did not address.


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Day 3 - Case #1 - PlayAssessment Opportunity #1 (MA)

The candidate analyzes which pricing alternative maximizes cashflows.


You did not provide an analysis of both of the pricing alternativespresented. X Assess the Situation

Your excel response only included a direct copy of the first table from Appendix II of the case. There was no analysis prepared with this data. Alternative 2 "Junior-Master Builder", which was also presented in Appendix II of the case, should also have been analyzed.

You did not include a sufficient number of elements in yourquantitative analysis of the pricing alternatives. X Assess the Situation

For the Pay as you Play option, you only included the revenue from the new program as copied exactly from the case. Other elements that should have been included were the revenue from current customers and the additional admin costs. For the Junior and Master builder option, you did not attempt any analysis. Elements that should have been included were the revenue from current customers, revenue from the new program, and the cost of the additional blocks.

Your quantitative analysis of the pricing alternatives containedtechnical errors.


You did not compare the pricing alternatives to the status quo. X


You did not complete your analysis. Your excel was incomplete, you should have completed both analyses and then compared them to the status quo. CPAs are expected to "assess the situation" as part of their analysis and, while not specifically directed to compare to the existing status quo revenue, it was important to consider whether the new alternatives were better or worse than the existing pricing strategy.

You did not provide a conclusion that was consistent with youranalysis. Conclude and Advise



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You barely addressed this assessment opportunity. The requirement was provided on page 1 of the case, which stated, "“The Wrights are also considering whether PCI should provide different pricing options. They would like to know which alternative maximizes cash flows [ Appendix II] " In this case you needed to prepare calculations with the data provided, including the new revenue, revenue that will continue from current customers who do not switch plans and the costs related to both options and compare them to the current revenue.

Assessment Opportunity #2 (MA)

The candidate analyzes whether outsourcing the sanitization processis a viable option, from a quantitative perspective.


You did not include a sufficient number of elements in yourquantitative analysis of the cost of outsourcing the sanitizationprocess and keeping it in-house.


You did not properly incorporate the concept of one-time costs intoyour analysis. X


In Appendix I, the Wrights provided information about cash flows which would only occur at the start of the Clean Crew contract, including severance, counselling and proceeds from selling the equipment. You prepared only a one-year cash flows and the counselling and proceeds from the equipment sale were included. It is important to consider these costs so the Wrights know how they are incorporated, but you needed to separate them from ongoing costs. This could be done by showing cash flows in two columns. One column would be the first year and the other would be ongoing cash flows. included. In addition, you inappropriately included the original cost of purchasing the equipment for $250,000. This cost is not relevant as it was incurred several years ago. You also attempted to include tax shields on this irrelevant cost.

Your quantitative analysis of the cost of outsourcing the sanitizationprocess and keeping it in-house contained technical errors. X


In addition to inappropriately including sunk costs, you included $30,000 salary for only one employee even though the case indicated 8 employees were required for current operations. You used the high volume of production of 120,000 units per month, which is acceptable, but you should have adjusted for the extra staff this level of production would require. (one more staff for each 25,000 above the regular production of 90,000 per months)

You did not compare the cost of outsourcing the sanitization processto the cost of keeping it in-house. Conclude and Advise



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Overall, your calculations included the appropriate costs but they also included the technically inappropriate items of the sunk cost of the equipment and related tax shield. You also needed to clearly separate the non-recurring items for the Wrights. Your calculations were labelled and easy to follow but you also overcomplicated the approach by calculating some items monthly and others annually and then summing them up. It would likely be more effective to calculate each component on an annual basis and then just add up the one column.

Assessment Opportunity #3 (GOV)

The candidate evaluates the qualitative factors related to theoutsourcing of the sanitization process.


You did not identify a sufficient number of factors to be considered inthe decision to outsource. Assess the Situation

Your discussion of the factors that needed to be considered in theoutsourcing decision lacked depth (i.e. use of case facts, impact,etc.).


You did not provide a balanced discussion, focusing on only the risksor the benefits related to the outsourcing option.


You did not provide a consistent recommendation on whether theoutsourcing option should be chosen. Conclude and Advise


Overall, your response on this assessment opportunity was reasonably well done. You provided a balanced discussion of the risks and benefits regarding the outsourcing option with Clean Crew and provided Sam and Sarah with a consistent recommendation. You addressed several factors in your analysis of outsourcing, including Clean Crew's reputation, the fact that Clean Crew uses the same process, the ability to control quality and the lack of control over delivery of the blocks. Other topics you could have addressed were PCI staff lay-offs, the age of Clean Crew as a company, and the impact of the demands of Clean Crew's other clients.


The candidate discusses the sale of the Wright family's Torontohome.



20 / 56

You did not discuss the principal residence exemption. Analyze Major Issue(s)-Qualitative

Your discussion of the principal residence exemption lacked depth[ i.e. use of case facts, technical knowledge, etc.]. X


You identified the principal residence exemption by stating "Current home do not cause any tax implication on disposition of primary resident." ] but needed to also convey that, because they own two properties, the Wrights have to designate one of them as a principal residence, and that this would allow any average gain incurred during the time the property was designated to be exempt from taxation.

Your discussion of the principal residence exemption containedtechnical errors.


You did not take the cottage into consideration in your discussion ofthe principal residence exemption. X


While you identified that the house could be eligible for the principal residence exemption, you needed to consider which of the two properties should be designated, since they owned two properties, both of which are likely eligible based on the information provided. Instead you discussed taxation of the cottage as follows: " However, the cottage do cause a taxable-capital-gain tax implication upon the cottage sold. This is becuase the cottage is the second home of your property. So the purchase price you have bought in 2005 for $250,000 is the Adjust Cost Base (ACB) original price. If you decide to sell your cottage now and the market value is $750,000 with the applicable 5% commission on sell prices, the deemed proceed of the selling price will become $712,500. " This analysis would only have been true if the principal residence exemption did not exist. Further, the Wrights are only considering selling the house so this commentary does not address their current plans.

You based your discussion on the total gains rather than the averageannual gains on the house and the cottage in your discussion ofwhich residence to designate as the principal residence.


You did not provide a reasonable recommendation on whichresidence should be designated as the principal residence. Conclude and Advise


You did not attempt to calculate the average annual gains on the two properties. In addition to identifying the principal residence exemption, you should have calculated the average annual gains for both properties and make a recommendation as to which property to designate, based on the calculation.


21 / 56


The candidate discusses the tax implication of moving expenses.


You did not address whether or not the proposed move would beeligible for the purpose of deducting moving expenses. Assess the Situation

You did not address the deductibility of a sufficient number of movingcosts.


Your discussion of whether the proposed move would be eligible forthe purpose of deducting moving expenses lacked depth [ i.e. use ofcase facts, technical knowledge, etc.].

X Analyze Major Issue(s)-Qualitative

Your response stated: "Moving expenses may be eligible if the kilometer from the work is over 80km, all related expenses for such future income-generated allocation can be expensed and written off. " which was unclear to the client because you have not explained it. It is not clear whether they need to move 80 km closer to work, 80 km away from their current house or 80 km from their current workplace. It is important to interpret the legislation so that Sam and Sarah understand that the move must be to move closer to their place of work in order to deduct moving costs. As a minor note the threshold is 40 km rather than 80 km. You also need to incorporate case facts such as how far Sam and Sarah are planning to move and whether it is closer to their work.

Your discussion of the tax rules around the eligibility or limitation ofdeducting moving costs contained technical errors.


Your discussion of the tax rules around the deductibility of specificmoving costs contained technical errors. X


You stated: "all related expenses for such future income-generated allocation can be expensed and written off." This is not true. The ITA specifies which items are deductible and which are not. Sales commission, professional movers, utility connections and legal fees are deductible and renovation costs and house hunting costs are not deductible.


While you attempted to discuss whether the moving costs are deductible, you did not specifically analyze the individual moving expenses. As the Tax Act provides guidelines which permits only certain moving expenses to be deducted, you were expected to determine whether each of the specific costs met these guidelines. In addition, you needed to be more precise about when costs are eligible for deduction and apply case facts to see if Sam and Sarah were eligible. Sarah would have been eligible as she would have moved more than 60 km closer to a new workplace (Clean Crew) where she would perform quality control checks on the sanitization process.


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Assessment Opportunity #6 (FIN)

The candidate discusses the investment options available to theWright family.


You did not address all three investment options in your analysis.Assess the Situation

Your discussion of the investment options lacked depth (i.e. use ofcase facts, technical knowledge, etc.). X


In your response, you stated " Buying land is a good investment yet there are tax consequence you need to pay attention. " This could have been further developed by explaining that the value of the land is dependent on whether or not it can be rezoned at the time the Wrights need the funds or that real estate is not a liquid asset. You identified that the bonds are low risk when you wrote " Government bond do not contain high risk by earning interest income annually. ", but this could have been developed further by supporting it with case facts such as the fact that it has a beta of zero and / or the bonds are guaranteed by the government. You identified that the mutual funds are high risk when you wrote" Compared this to government bond, the risk is considered to be higher than option 2 becuase public list market share do not have gauranteed income" , but this could have been developed further by discussing that the beta of 4.5 is very high compared to the overall market average of 1.0 and / or that the underlying assets are exposed to the risks inherent in the mining industry, volatile commodity prices, foreign currency, and foreign government regulation in South Africa.

You did not provide a balanced analysis of the risks and rewards forall of the investment options. X


You did not focus on either risks or rewards. Instead you focused on the potential tax implications of the investments. For example, you stated; " The intension is to short sale for profit, Canada Revenue (CRA) will not consider this bare land as a taxable capital gain as your intension is for sale for profit. So the disposition will be deemed for 100% taxable instead of 50% capital gain as a result."

Your discussion of the investment options contained technical errors. Analyze Major Issue(s)-Qualitative

You did not provide a recommendation on which investment optionshould be chosen, or your recommendation was not reasonableconsidering the objectives of the Wright family.

Conclude and Advise



23 / 56

Overall you did not appear to realize that the client asked for investment advice, from the finance technical area and you focused on tax treatments. The case already included two opportunities to discuss taxes (proposed sale of the home and deductibility of moving expenses) When the Wrights asked which investment they should choose, you should analyze the risk and the return features of them and then select which best fits their needs. Your recommendation did consider risk briefly, but this should have been the overall focus rather than taxation.

Overall Comments


Your response was well organized and easy to follow. You used headings and separated your discussions by each issue addressed, which was a logical way to respond to this case.

Did the candidate understand their role?No

You did not always provide Sam and Sarah, the users, with sufficient information to respond to their needs. The main area this was observed was in your tax discussions. You spent very little time on the tax questions they specifically requested (the sale of the house and the deductibility of moving expenses) but you spent a lot of time discussing the taxation of investments. You want to consider the extent of data given when determining how much time to spend on an issue. For example, the client provided a lot of specific data about the cost and sales value of the house and the specific moving costs they would incur which you did not bring into your analysis.


Although it did not detract from the overall understanding, your response contained a number of grammatical errors which made it difficult to read at times. For example, you wrote, "Clean Crew (CC) has experiences and contracted to work for medical related field most. This indicates that their quality of the services are met their standard." You should take the time to ensure that significant grammatical errors are not included in your response.

Did the candidate focus their response on the appropriate issues?No

You spent time discussing the qualitative aspects of PCI's pricing alternatives. This was not appropriate as it was not a significant issue, since the case specifically asked which alternative maximized cash flows. It did not require a qualitative assessment. This may have limited the time you had to address other, more significant, requests and issues. Also, note that much more information about Sarah's objectives was provided with respect to the outsourcing option, for which a qualitative discussion was expected. This was 2.5 of your 9-page response. You also attempted a Quantitative analysis of moving when only the tax treatment had been requested, you discussed tax treatment of the investments and you wrote a one-page background introduction which did not address any of the client requests. These items covered another 3 pages of your 9-page response. Approximately half of the narrative response was items that were not requested by the client.

Did the response appear balanced?No


24 / 56

As discussed above "unrelated issues" half of the response was on items that the client did not address. On the quantitative side, only the outsourcing of sanitization issue was fully attempted and there was no attempt at the pricing calculations beyond copying data from the case.


25 / 56

Day 3 - Case #2 - Dogani Inc.Assessment Opportunity #1 (FR)

The candidate discusses the accounting for the exchange of theparcels of land in accordance with IFRS.


Your discussion of the non-monetary transaction issue lacked depth(i.e. use of case facts, technical knowledge, etc.).


Your discussion of the non-monetary transaction issue containedtechnical errors.


You did not provide a recommendation on how to record the non-monetary transaction that was consistent with your analysis. Conclude and Advise


You did not address this assessment opportunity in a financial reporting context, only in a tax implication context. The requirement was provided on page 1 of the case, which stated, “The partner asks you to discuss any significant financial reporting issues that will need to be addressed by management”. Information regarding the details of the land exchange with REEL was provided in Appendix I. Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to address them.


The candidate advises on whether the information that Gale isproposing to give to the bank will be useful in securing the loan andsuggests what other information the bank may require.


You did not address a sufficient number of items that Gale isproposing to give to the bank in your discussion. Assess the Situation

You did not adequately explain whether the items that Gale isproposing to give to the bank would be useful to the bank.



26 / 56

You did not provide reasonable recommendations on how the itemsGale is proposing to give to the bank could be improved. Conclude and Advise


You did not address this assessment opportunity. The requirement was provided on page 1 of the case, which stated: “Gale is planning to provide information to the bank. She would like you to comment on whether this information will be useful to the bank, and to know what other information it might require”. You were then directed to Appendix IV of the case, where details were provided regarding the information Gale is proposing to provide. Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to address them.

Assessment Opportunity #3 (AS)

The candidate assesses the risks related to the audit of DI’s financialstatements as at and for the year ended December 31, 2015.


You did not identify a sufficient number of factors that would affectthe risk of material misstatement for the current year audit. X Assess the Situation

This case presented a number of risk factors that needed to be discussed to assess the risk of material misstatement. In your response, you did not specifically address the risk assessment. You only included a general discussion on "the identified step before an audit plan is taken". This discussion lightly touched on the complexity of transactions that DI had in the current year when you wrote: "However, the complexity of the transactions for this year will consider high, so the overal control risk remain moderate to high", but you did not explain how this would impact the risk of material misstatement. A more complete response would have addressed more risk factors, such as the fact that there is a new controller, an accounting error was found in the financial statements, it was a first time audit, there is a new bank loan, or that Gale mentioned that a few control exceptions had been found.

Your discussion of the factors you identified that would affect the riskof material misstatement for this audit lacked depth (i.e. use of casefacts, impact, etc.).


You did not provide an overall assessment of the risk of materialmisstatement that is consistent with your analysis. Conclude and Advise



27 / 56

You did not adequately address this assessment opportunity when you discussed "the identified step before an audit plan is taken", instead of a focused discussion on the risk of material misstatement. The requirement for the risk discussion was provided on page 1 of the case, which stated, “The partner also asks you to assess the risks related to the audit”. Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to fully address them. Although you touched on a factor that would affect the risk of material misstatement (complex transactions) your discussion overall lacked breadth, considering the many factors that were presented in the case that would affect the risk of material misstatement. Ensure you allocate enough time to address the key requirements of the case.

Assessment Opportunity #4 (AS)

The candidate suggests an audit approach and determines materialityfor the audit of DI’s financial statements as at and for the year endedDecember 31, 2015.


You either did not suggest an audit approach or did not determinemateriality for the audit. Assess the Situation

Your discussion of the suggested audit approach and/or materialitylacked depth (i.e. use of case facts, technical knowledge, etc.). X


Your response did not adequately address materiality for the DI audit. You briefly addressed materiality in your discussion, but greater depth was expected in this area in order to explain and support your suggested materiality level. You attempted a calculation of materiality (which contained technical errors), but a stronger response would have also discussed how the users (i.e., bank and owners) would affect the materiality level, and why the basis used was chosen for the materiality calculation. Your response also did not adequately address the audit approach for the DI audit. You did not specifically address the audit approach, but discussed it in your "identified step before an audit plan is taken". You wrote: "Internal contol is assessed as moderate as a controller is in place and his/her accounting treating is correct as far as known (analysis and evaluation will show in the following paragraphs). However, the complexity of the transactions for this year will consider high, so the overal control risk remain moderate to high." You later wrote: "Proposed combined test of control and substaintive testing is recommended for the strategy", but this was not linked to your control discussion. This discussion was not adequate, as it did not incorporate the key case facts that would have impacted the chosen approach, such as the fact that the controls had been designed by an external party, the controls were likely outdated, or there were control exceptions noted. You could have also discussed the required approach for auditing opening balances.

Your discussion of the suggested audit approach and/or materialitycontained technical errors. X


You calculated materiality, but your calculation contained technical errors. Your calculation contained a normalizing adjustment for an estimated salary of $3,120,000 that was not supported, and this skewed your materiality figure. The correct response would have normalized the income for the recorded gain on the land exchange ($100,000).


28 / 56


While you attempted a calculation of materiality for the DI audit, you did not provide sufficient depth in your discussion, as you did not provide a discussion of items impacting materiality. Your calculation was also skewed because of an incorrect adjustment. Your discussion of the audit approach was not sufficient, as you did not support your recommended approach with the most relevant case facts. In any discussion of the audit plan, it is important to provide sufficient depth in all the elements of the audit plan in order for your discussion to be complete.


The candidate discusses the tax issues noted by the client.


You did not address a sufficient number of tax issues.Assess the Situation

You did not focus your response on the most significant tax issues.Assess the Situation

Your discussion of the tax issues lacked depth (i.e. use of case facts,technical knowledge, etc.).


Your discussion of the tax issues contained technical errors. Analyze Major Issue(s)-Qualitative


Overall, your response on this assessment opportunity was well done. You discussed several tax issues, providing the appropriate tax rule and applying case facts to them in order to come to an overall conclusion for each issue. Specifically, your discussions of the personal taxable benefit resulting from the paying of non-business expenses, the limit on the deduction allowed for the luxury sport utility vehicle lease, and the tax impacts on the exchange of land were strong.


29 / 56


The candidate analyzes the make versus buy decision and provides arecommendation to Gale.


You did not provide a quantitative analysis of the make versus buydecision. Assess the Situation

You did not provide a qualitative analysis of the make versus buydecision. Assess the Situation

Your quantitative analysis of the make versus buy decision containedtechnical errors.


Your qualitative analysis of the make versus buy decision lackeddepth (i.e. use of case facts, impact, etc.).


You did not provide a recommendation on whether DI should make orbuy that was consistent with your analysis. Conclude and Advise


You did not address this assessment opportunity. The requirement was provided on page 1 of the case, which stated, “The partner also asks that you address Gale’s email (Appendix III)”. In Appendix III, you were then provided information on the costs of manufacturing or outsourcing body rhythm monitors. Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to address them.

Overall Comments

Was the response well organized with a logical flow? No


30 / 56

Your response could have been better organized, which would have made it easier to follow. For example, you did not discuss the audit planning issues separately, or use headers to organize your thoughts in this discussion. If you had used headings, such as "risk" and "approach", your discussion would have been clearer and you would have been more focused on addressing the requireds of the case. You did use headings for portions of your response, but sometimes they were not representative of your discussion. For example, under your heading of "Financial Reporting Issues" you discussed the taxation issues. This is confusing as it was expected that you would have accounting treatment discussions under this heading. Your materiality discussion was not grouped with your other audit planning discussion, and was therefore not as effective as the discussion did not feel as complete. Having a well-organized response helps demonstrate that you have identified the relevant issues and helps you to ensure that you address all the requirements of the case.

Did the candidate understand their role?Yes

You appeared to have understood your role as you had addressed your memo to the partner and attempted to discuss some of the requireds.


Your response was written efficiently and was easy to read and understand. You mostly used complete paragraphs which allowed you to provide thoughts that were complete and clear, you did use point form for some areas, but your thoughts were still complete.

Did the candidate focus their response on the appropriate issues?Yes

Your response did not contain any unrelated issues to the case, but there were a number of assessment opportunities that were not discussed. This may have been an issue identification issue, or a timing issue. Taking the time to carefully read the case and plan your response is important to ensure that you address all the assessment opportunities in sufficient depth and breadth.


You may have had an issue with time management on this case, as you did not address all of the requirements. Your paper was only 5 pages long, which was well below the average paper length, and this may have been another indicator that time management was an issue. It is important to plan your time on each case and ensure you allocate a sufficient amount of time to each of the significant issues.


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Day 3 - Case #3 - Culinary CrawlAssessment Opportunity #1 (TAX)

The candidate calculates Ivy's business income for tax purposes.


You did not identify a sufficient number of adjustments to Ivy'sbusiness income for tax purposes. Assess the Situation

You did not explain the adjustments made to Ivy's business incomefor tax purposes. X


Although you addressed the PPE/CCA, Home Office, and Telecommunications tax adjustments, some of the analyses were not adequately explained. For the home office adjustment, you should have discussed that a deduction is allowed if the work-space is the individual’s principal place of business; or it is used on a regular and continuous basis for meeting clients, customers or patients of the individual in earning income from business. Additionally, you could have mentioned that the adjustment would be prorated based on the percentage of the home that is used for business purposes. You mentioned, "Home expenses cannot be estimated. Also based on your nature of your business, home office is not required for your business. Therefore, the home office is not a taxable expenses for your business and should be taken out from the deduction." This was not correct and furthermore, you failed to explain in depth, what specifically from the nature of her business led to your conclusion.

Your calculation of the business income for tax purposes containedtechnical errors. X


Although you addressed the PPE/CCA, Home Office, and Telecommunications tax adjustments, some of the analyses and calculations contained technical errors. For the PPE/CCA adjustment, you should have supplemented the calculation with a CCA class or rate that was technically accurate. The computer belongs to class 50 at a rate of 55%, and the furniture belongs to class 8 at a rate of 20%. You discussed amortizing over the useful life using the straight-line basis which is not allowable for tax purposes. For the Telecommunications adjustment, the cell phone and internet would be deductible to the extent that they are used for business. As it was indicated that the cell phone was used 50% for business, it can be assumed that the internet was used similarly. As such, the Cell phone and Internet should have been prorated by 50% to get the appropriate telecommunications deduction. Your calculation did not include the adjustment for the internet expenses and you provided an incorrect technical statement for the cell phone expense by stating, "Cell phone that have already 50% deducted for tax purposes is eligible business expense. So $800 will be reflected on the income statement of the self-employment."


Overall, your response was lacking in both depth and technical accuracy. There were a large number of taxation adjustments and it was critical that you correctly adjusted a reasonable number of these items with adequate depth of analysis. Unfortunately, the adjustments you included contained technical errors and often were missing part of the discussion. This would have helped Ivy in understanding and determining her business income for taxation purposes, as was requested in the case.


32 / 56


The candidate calculates the profitability of the two expansionopportunities.


You did not provide a quantitative analysis of both the lunch tour andthe evening tour. X Assess the Situation

You did not attempt an appropriate quantitative analysis on either the Lunch or Evening tour. For the lunch tour you provided amounts for expected revenue of $300 (6 people x $50), and listed costs at $80 for a guide ($20/hour x 4 hours use) and an annual cost of $2000 in your response but you did not provide a calculation or discussion indicating what you were trying to calculate. Typically it is easier to provide quantitative calculations in excel so you can show your calculations and the concept you are trying to demonstrate.

You did not include a sufficient number of elements in yourquantitative analysis of the expansion opportunities. Assess the Situation

Your quantitative analysis of the expansion opportunities containedtechnical errors.


You did not conclude on which alternative is more profitable.Conclude and Advise


You did not seem to dedicate much time to this AO or adequately discuss what you were trying to address. The case specifically stated, "I can only add one for now, so please let me know which one you think would be more profitable." As such, your focus should have been on the quantitative analysis of the two options. It is important that you read the case carefully and incorporate the appropriate case facts so that you can demonstrate a clear understanding of the Management Accounting concepts.


The candidate calculates the number of customers required on Ivy'scurrent tour to replace her current employment income.



33 / 56

Your calculation of the number of customers needed to replace Ivy'semployment income contained technical errors.



You did not address this assessment opportunity. The requirement was provided on page 1 of the case, which stated, "I’d like to know how many customers it would take on my current tour to replace my current employment income." Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to address them.


The candidate provides an analysis of the pros and cons of thebusiness strategy and environment in which CC operates.


You did not address a sufficient number of pros and cons in youranalysis. Assess the Situation

You did not provide a balanced discussion, focusing on only the prosor cons in your analysis.


Your discussion of the pros and cons lacked depth (i.e. use of casefacts, impact, etc.).


Your discussion focused on the control weaknesses or the expansionoptions, instead of analyzing the pros and cons of the businessstrategy and environment in which CC operates, as requested.



You did not address this assessment opportunity. The requirement was provided on page 1 of the case, which stated, "Can you analyze, from a qualitative perspective, the pros and cons of my business strategy and the environment in which CC operates." Ensure that you read the case carefully and highlight any key requirements that you identify so that you have the opportunity to address them.


34 / 56

Assessment Opportunity #5 (ASSU)

The candidate provides an analysis of the current controlweaknesses, and suggests functionalities that could be built into thewebsite and other control processes to fix these weaknesses.


You did not identify a sufficient number of control weaknesses. X Assess the Situation

There were several control weaknesses identified in the case that should have been addressed. These included Customer no shows, Misplaced reservations, Restaurant notifications, Business vs personal assets and Cash collection. The only one that you discussed was the privacy of the customer's personal information but there were many more case specific weaknesses that should have been addressed.

You did not adequately explain the implications of the controlweaknesses you identified.


Your recommendations to solve the internal control weaknesses wereeither too general, poorly explained, impractical, or did not fix theweakness identified.

Conclude and Advise

None of your recommendations involved the use of websitefunctionalities. Conclude and Advise


There were a number of control weaknesses provided in the case that you did not address in your response. You spent time discussing a generic control point that was not specifically identified in the case (personal information and the PIPEDA act). Ensure you read the case carefully to identify the key weaknesses specified by the user so that you can tailor the response to Ivy's situation.


The candidate provides an analysis of the deficiencies in Ivy’s currentdebt structure and provides a recommendation for her upcomingmortgage renewal.



35 / 56

You did not address Ivy's debt structure, or the interest rate related toher mortgage renewal. X Assess the Situation

Although you addressed Ivy's mortgage renewal, you did not address the requirement to provide advice on her debt structure. The requirement was provided in Appendix III of the case, "Do you have any other advice related to my multiple debts?" Some case facts that could have been incorporated into this discussion included, "I’m not even sure whether I made any of the minimum payments last month" and "As I’m still paying off my student loan and am trying to quickly pay down my mortgage, I haven’t managed to pay off my credit cards."

Your discussion of the mortgage interest rate lacked depth (i.e. use ofcase facts, impact, technical knowledge, etc.). X


Although you addressed Ivy's mortgage renewal, your discussion lacked the depth required to demonstrate your understanding of the Finance concept. The decision of which interest rate to choose for the renewal was dependent on many factors, including Ivy's situation, her risk tolerance and expectation of future interest rates. In terms of Ivy's situation and risk tolerance, she has a lot of debt and is in a transition period of her life where she may quit her job and pursue the new business. It would be preferable to have the mortgage renewed before she makes that decision as well as incorporating her debt situation into her decision. For the expectation of the future interest rates, if the prime rate stays around 1%, Ivy would be better off with the variable rate mortgage but if the prime rate increases above 1.5%, she would be better off with the fixed rate mortgage. Either way, the difference is negligible and in the worst case scenario of prime dropping to 0%, the difference between the two options would amount to approximately $6,000 ($400K x (2.5% - 1.0%)) of additional interest paid annually under the fixed rate compared to the variable rate. Furthermore, it would be reasonable to assume that interest rates are going to rise again as the prime rate is quite low at the moment. You restated case facts and provided a conclusion of, "option 2 is more favourable as it is the lowest rate", which is something that Ivy would already know and did not provide additional value.

Your discussion of Ivy's debt structure lacked depth (i.e. use of casefacts, impact, etc.).


You did not provide a valid recommendation on which mortgagerenewal option Ivy should choose. Conclude and Advise


Although you attempted to address Ivy's mortgage renewal options, your analysis of the mortgage renewal was not in a sufficient level of detail to be useful to Ivy. It is important to tailor the discussion to Ivy's situation in order to apply your understanding of the finance concept to the case. Listing off case facts and making a conclusion on the facts she provided lacks analysis and does not show an adequate demonstration of this concept.


36 / 56


The candidate provides an overall recommendation regarding.


You did not integrate a sufficient number of analyses in yourdiscussion. X


You integrated the risk management point of Business Strategy and Environment into your overall recommendation of whether Ivy should quit her day job in your comment “As your employment income is the main stream of your income for living, I do not recommend you to quit the day job.” However, there were several other risk management points that could have been integrated in your overall recommendation. These included the Expansion Analysis, Breakeven Analysis, Control Weaknesses, and Debt Structure.

Your recommendation on whether Ivy should quit her day job was toogeneral or poorly supported. Conclude and Advise

You did not provide a valid recommendation on whether Ivy shouldquit her day job. Conclude and Advise


Although you provided a recommendation of whether or not Ivy should quit her day job, it was not well supported through integration of other risk management points. There were several analyses that you performed throughout the case and it was expected that you integrate them into your overall conclusion. Since you did not address some of these assessment opportunities, it was difficult for you to include a sufficient number of risk management points into your response.

Overall Comments


Your response was organized and easy to follow. You used headings and separated your discussions by assessment opportunity, which was a logical way to respond to this case.

Did the candidate understand their role?No


37 / 56

When you attempted to address the assessment opportunities in the case you did not always provide Ivy, the user, with sufficient information to respond to her needs. The case provided a significant number of facts to be used in your analysis of the assessment opportunities. However, you failed to incorporate these facts into your response. For example, in your analysis of control weaknesses, you did not attempt to address any of the weaknesses outlined in the case. It appears that you may have been running out of time on the case which could have limited your ability to include additional information.

Was the response easy to read and understand?No

Short sentences (similar to point form) was used throughout your response and this sometimes limited the depth of your discussions. For example, you wrote, "In conclusion, evening tour will be more beneficial" without providing Ivy a summary as to why. You should ensure that you always provide a complete discussion to clearly present your thoughts, even when using point form.

Did the candidate focus their response on the appropriate issues?No

You spent time discussing and calculating total taxable income. This was not appropriate as it was not a significant issue as the case specifically asked for business income for tax purposes. This appears to have limited the time you had to address the other, more significant, requests and issues.


You appear to have run out of time on this case since your response was lacking depth and felt rushed. This prevented you from addressing all of the requirements in the case and obtaining sufficient depth. It is important to plan your time on each case and ensure you allocate a sufficient amount of time to each of the significant issues.


38 / 56

Section B: Assessment By Competency Area


39 / 56

Section B: Assessment By Competency AreaThe weaknesses the reviewers identified for each simulation have been re-sorted and presentedhere, by competency area, with the depth areas (Financial Reporting and Management Accounting)shown before the breadth areas (Audit and Assurance, Taxation, Strategy and Governance, andFinance). Within each competency area, the weaknesses are listed by enabling skill. The detailedreviewer comments have not been repeated in Section B. Please refer to Section A to see thedetailed comments.

Financial ReportingDay 2 - Tax - TankCo

Assessment Opportunity #1 (FR)You identified the revenue recognition issue but your response lackeddepth. X Analyze Major Issue

(s)-Qualitative

Your discussion of the revenue recognition issue demonstratedtechnical errors. X Analyze Major Issue

(s)-Qualitative

Assessment Opportunity #2 (FR)You identified the warranty provision issue but your response lackeddepth. X Analyze Major Issue

(s)-Qualitative

Your discussion of the warranty provision issue demonstratedtechnical errors. X Analyze Major Issue

(s)-Qualitative

Assessment Opportunity #3 (FR)You identified the lawsuit issue but your response lacked depth.


Assessment Opportunity #4 (FR)You identified the development costs issue but your response lackeddepth. X Analyze Major Issue

(s)-Qualitative

Your discussion of the development costs issue demonstratedtechnical errors. X Analyze Major Issue

(s)-Qualitative



40 / 56

You identified the impairment issue but your response lacked depth. X Analyze Major Issue

(s)-Qualitative

Your discussion of the impairment issue demonstrated technicalerrors. X Analyze Major Issue

(s)-Qualitative

Day 2 - Tax - TankCo

Assessment Opportunity #5 (FR)You calculated one of the debt-to-equity covenant or the borrowingbase, but not both. X Analyze Major Issue

(s)-Quantitative

Day 3 - Case #2 - Dogani Inc.




TaxationDay 2 - Tax - TankCo

Assessment Opportunity #7 (TAX)You attempted a calculation but your response lacked depth.

X Analyze Major Issue(s)-Quantitative

Assessment Opportunity #8 (TAX)You identified the SR&ED issue but did not determine the quantitativeimpact. X Analyze Major Issue

(s)-Quantitative



Your calculation demonstrated technical errors. X Analyze Major Issue

(s)-Quantitative


41 / 56





Your calculation demonstrated technical errors. X Analyze Major Issue

(s)-Quantitative


Assessment Opportunity #7 (TAX)Your calculation demonstrated technical errors.


Assessment Opportunity #9 (TAX)You attempted a discussion but your response lacked depth.


Assessment Opportunity #13 (TAX)You identified the death of the taxpayer but your response lackeddepth. X Analyze Major Issue

(s)-Qualitative

Day 3 - Case #1 - Play

Assessment Opportunity #4 (TAX)Your discussion of the principal residence exemption lacked depth[ i.e. use of case facts, technical knowledge, etc.]. X Analyze Major Issue

(s)-Qualitative

You did not take the cottage into consideration in your discussion ofthe principal residence exemption. X Analyze Major Issue

(s)-Qualitative



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Your discussion of whether the proposed move would be eligible forthe purpose of deducting moving expenses lacked depth [ i.e. use ofcase facts, technical knowledge, etc.].


Your discussion of the tax rules around the deductibility of specificmoving costs contained technical errors. X Analyze Major Issue

(s)-Qualitative

Day 3 - Case #3 - Culinary Crawl

Assessment Opportunity #1 (TAX)You did not explain the adjustments made to Ivy's business income fortax purposes. X Analyze Major Issue

(s)-Qualitative

Your calculation of the business income for tax purposes containedtechnical errors. X Analyze Major Issue

(s)-Qualitative





Management AccountingDay 3 - Case #1 - Play

Assessment Opportunity #1 (MA)You did not provide an analysis of both of the pricing alternativespresented. X Assess the Situation

You did not include a sufficient number of elements in yourquantitative analysis of the pricing alternatives. X Assess the Situation



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The candidate analyzes the make versus buy decision and provides arecommendation to Gale.



Assessment Opportunity #2 (MA)You did not provide a quantitative analysis of both the lunch tour andthe evening tour. X Assess the Situation


The candidate calculates the number of customers required on Ivy'scurrent tour to replace her current employment income.


Day 3 - Case #1 - Play

Assessment Opportunity #1 (MA)You did not compare the pricing alternatives to the status quo.


Assessment Opportunity #2 (MA)You did not properly incorporate the concept of one-time costs intoyour analysis. X Analyze Major Issue

(s)-Quantitative

Your quantitative analysis of the cost of outsourcing the sanitizationprocess and keeping it in-house contained technical errors. X Analyze Major Issue

(s)-Quantitative

FinanceDay 3 - Case #1 - Play

Assessment Opportunity #6 (FIN)Your discussion of the investment options lacked depth (i.e. use ofcase facts, technical knowledge, etc.). X Analyze Major Issue

(s)-Qualitative


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You did not provide a balanced analysis of the risks and rewards for allof the investment options. X Analyze Major Issue

(s)-Qualitative


Assessment Opportunity #6 (FIN)Your discussion of the mortgage interest rate lacked depth (i.e. use ofcase facts, impact, technical knowledge, etc.). X Analyze Major Issue

(s)-Qualitative



The candidate advises on whether the information that Gale isproposing to give to the bank will be useful in securing the loan andsuggests what other information the bank may require.



Assessment Opportunity #6 (FIN)You did not address Ivy's debt structure, or the interest rate related toher mortgage renewal. X Assess the Situation

Audit and AssuranceDay 3 - Case #2 - Dogani Inc.

Assessment Opportunity #3 (AS)You did not identify a sufficient number of factors that would affect therisk of material misstatement for the current year audit. X Assess the Situation


Assessment Opportunity #5 (AS)You did not identify a sufficient number of control weaknesses.

X Assess the Situation



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Assessment Opportunity #4 (AS)Your discussion of the suggested audit approach and/or materialitylacked depth (i.e. use of case facts, technical knowledge, etc.). X Analyze Major Issue

(s)-Qualitative

Your discussion of the suggested audit approach and/or materialitycontained technical errors. X Analyze Major Issue

(s)-Qualitative

Strategy and GovernanceDay 3 - Case #3 - Culinary Crawl





Assessment Opportunity #7 (GOV)You did not integrate a sufficient number of analyses in yourdiscussion. X Analyze Major Issue

(s)-Integrate Situation


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Section C: General Findings and CPA Enabling Skills


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Section C: General Findings and CPA Enabling SkillsOverall Comments

Was the response well organized with a logical flow?

YesDay 2 - Tax - TankCo

Your response was well organized and easy to follow. You used headings and separated your discussions by assessment opportunity, which was a logical way to respond to this case. However, on AO#10, you attempted a calculation of the corporate income resulting from liquidation but your work was difficult to follow. Your calculation was not clearly presented or labelled, or did not have a logical flow. Using Excel to prepare a calculation with clear rows and columns identifying the assets to be sold is a useful way to present a sale of assets transactions. For example, a common presentation format would have columns for asset description, proceeds, adjusted cost base, undepreciated capital cost, aggregate investment income, active business income, capital dividend account additions/deductions, and refundable dividend tax on hand additions/deductions.

YesDay 3 - Case #1 - Play

Your response was well organized and easy to follow. You used headings and separated your discussions by each issue addressed, which was a logical way to respond to this case.

NoDay 3 - Case #2 - Dogani Inc.

Your response could have been better organized, which would have made it easier to follow. For example, you did not discuss the audit planning issues separately, or use headers to organize your thoughts in this discussion. If you had used headings, such as "risk" and "approach", your discussion would have been clearer and you would have been more focused on addressing the requireds of the case. You did use headings for portions of your response, but sometimes they were not representative of your discussion. For example, under your heading of "Financial Reporting Issues" you discussed the taxation issues. This is confusing as it was expected that you would have accounting treatment discussions under this heading. Your materiality discussion was not grouped with your other audit planning discussion, and was therefore not as effective as the discussion did not feel as complete. Having a well-organized response helps demonstrate that you have identified the relevant issues and helps you to ensure that you address all the requirements of the case.

YesDay 3 - Case #3 - Culinary Crawl

Your response was organized and easy to follow. You used headings and separated your discussions by assessment opportunity, which was a logical way to respond to this case.

Did the candidate focus their response on the appropriateissues?

YesDay 2 - Tax - TankCo


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You did a good job focusing your response on the significant requests and issues in this case and your response did not contain any unrelated issues.

NoDay 3 - Case #1 - Play

You spent time discussing the qualitative aspects of PCI's pricing alternatives. This was not appropriate as it was not a significant issue, since the case specifically asked which alternative maximized cash flows. It did not require a qualitative assessment. This may have limited the time you had to address other, more significant, requests and issues. Also, note that much more information about Sarah's objectives was provided with respect to the outsourcing option, for which a qualitative discussion was expected. This was 2.5 of your 9-page response. You also attempted a Quantitative analysis of moving when only the tax treatment had been requested, you discussed tax treatment of the investments and you wrote a one-page background introduction which did not address any of the client requests. These items covered another 3 pages of your 9-page response. Approximately half of the narrative response was items that were not requested by the client.

YesDay 3 - Case #2 - Dogani Inc.

Your response did not contain any unrelated issues to the case, but there were a number of assessment opportunities that were not discussed. This may have been an issue identification issue, or a timing issue. Taking the time to carefully read the case and plan your response is important to ensure that you address all the assessment opportunities in sufficient depth and breadth.

NoDay 3 - Case #3 - Culinary Crawl

You spent time discussing and calculating total taxable income. This was not appropriate as it was not a significant issue as the case specifically asked for business income for tax purposes. This appears to have limited the time you had to address the other, more significant, requests and issues.

Did the candidate understand their role?YesDay 2 - Tax - TankCo

You appeared to have understood your role and addressed most of the partner's requests.


You did not always provide Sam and Sarah, the users, with sufficient information to respond to their needs. The main area this was observed was in your tax discussions. You spent very little time on the tax questions they specifically requested (the sale of the house and the deductibility of moving expenses) but you spent a lot of time discussing the taxation of investments. You want to consider the extent of data given when determining how much time to spend on an issue. For example, the client provided a lot of specific data about the cost and sales value of the house and the specific moving costs they would incur which you did not bring into your analysis.


You appeared to have understood your role as you had addressed your memo to the partner and attempted to discuss some of the requireds.


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When you attempted to address the assessment opportunities in the case you did not always provide Ivy, the user, with sufficient information to respond to her needs. The case provided a significant number of facts to be used in your analysis of the assessment opportunities. However, you failed to incorporate these facts into your response. For example, in your analysis of control weaknesses, you did not attempt to address any of the weaknesses outlined in the case. It appears that you may have been running out of time on the case which could have limited your ability to include additional information.

Did the response appear balanced?YesDay 2 - Tax - TankCo

Your response was well-balanced and you seemed to have allocated an appropriate amount of time to each of the assessment opportunities, except for Assessment Opportunity 11 which you did not address.


As discussed above "unrelated issues" half of the response was on items that the client did not address. On the quantitative side, only the outsourcing of sanitization issue was fully attempted and there was no attempt at the pricing calculations beyond copying data from the case.

NoDay 3 - Case #2 - Dogani Inc.

You may have had an issue with time management on this case, as you did not address all of the requirements. Your paper was only 5 pages long, which was well below the average paper length, and this may have been another indicator that time management was an issue. It is important to plan your time on each case and ensure you allocate a sufficient amount of time to each of the significant issues.


You appear to have run out of time on this case since your response was lacking depth and felt rushed. This prevented you from addressing all of the requirements in the case and obtaining sufficient depth. It is important to plan your time on each case and ensure you allocate a sufficient amount of time to each of the significant issues.

Was the response easy to read and understand?YesDay 2 - Tax - TankCo

Your response was written efficiently and was possible to understand. You used complete paragraphs which allowed you to have thoughts that were complete and clear. Although it did not detract from the overall understanding, your response contained a number of grammatical errors, which made it difficult to read at times. For example, you wrote, "Tax implication on such setting do not have much as a result as this will be filling as TankCo as a whole tax filling entity". You should take the time to ensure that significant grammatical errors are addressed in your response.


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YesDay 3 - Case #1 - Play

Although it did not detract from the overall understanding, your response contained a number of grammatical errors which made it difficult to read at times. For example, you wrote, "Clean Crew (CC) has experiences and contracted to work for medical related field most. This indicates that their quality of the services are met their standard." You should take the time to ensure that significant grammatical errors are not included in your response.


Your response was written efficiently and was easy to read and understand. You mostly used complete paragraphs which allowed you to provide thoughts that were complete and clear, you did use point form for some areas, but your thoughts were still complete.


Short sentences (similar to point form) was used throughout your response and this sometimes limited the depth of your discussions. For example, you wrote, "In conclusion, evening tour will be more beneficial" without providing Ivy a summary as to why. You should ensure that you always provide a complete discussion to clearly present your thoughts, even when using point form.


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CPA Enabling SkillsConclude and Advise

No weaknesses noted by the reviewers.

Assess the SituationAssessment Opportunity #11 (TAX)


YOU DID NOT ADDRESS THIS ASSESSMENT OPPORTUNITY. X

Day 2 - Tax - TankCo AO #11 TAX

You did not provide an analysis of both of the pricing alternativespresented. X

Day 3 - Case #1 - Play AO #1 MA

You did not include a sufficient number of elements in yourquantitative analysis of the pricing alternatives. X





Day 3 - Case #2 -Dogani Inc. AO #1 FR


The candidate advises on whether the information that Gale isproposing to give to the bank will be useful in securing the loanand suggests what other information the bank may require.


Day 3 - Case #2 -Dogani Inc. AO #2 FIN

You did not identify a sufficient number of factors that would affectthe risk of material misstatement for the current year audit.

X

Day 3 - Case #2 -Dogani Inc. AO #3 AS


The candidate analyzes the make versus buy decision and providesa recommendation to Gale.


Day 3 - Case #2 -Dogani Inc. AO #6 MA


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You did not provide a quantitative analysis of both the lunch tourand the evening tour.

X

Day 3 - Case #3 -Culinary Crawl AO #2 MA




Day 3 - Case #3 -Culinary Crawl AO #4 GOV

You did not identify a sufficient number of control weaknesses.

X

Day 3 - Case #3 -Culinary Crawl AO #5 AS

You did not address Ivy's debt structure, or the interest rate relatedto her mortgage renewal.

X

Day 3 - Case #3 -Culinary Crawl AO #6 FIN

Analyze Major Issue(s)-QualitativeYou identified the revenue recognition issue but your responselacked depth. X

Day 2 - Tax - TankCo AO #1 FR

Your discussion of the revenue recognition issue demonstratedtechnical errors. X


You identified the warranty provision issue but your responselacked depth. X


Your discussion of the warranty provision issue demonstratedtechnical errors. X


You identified the lawsuit issue but your response lacked depth. X


You identified the development costs issue but your responselacked depth. X



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Your discussion of the development costs issue demonstratedtechnical errors. X


You identified the impairment issue but your response lackeddepth. X


Your discussion of the impairment issue demonstrated technicalerrors. X




You attempted a discussion but your response lacked depth. X


You identified the death of the taxpayer but your response lackeddepth. X


Your discussion of the principal residence exemption lacked depth[ i.e. use of case facts, technical knowledge, etc.]. X

Day 3 - Case #1 - Play AO #4 TAX

You did not take the cottage into consideration in your discussionof the principal residence exemption. X


Your discussion of whether the proposed move would be eligiblefor the purpose of deducting moving expenses lacked depth [ i.e.use of case facts, technical knowledge, etc.].

X Day 3 - Case #1 - Play AO #5 TAX

Your discussion of the tax rules around the deductibility of specificmoving costs contained technical errors. X


Your discussion of the investment options lacked depth (i.e. use ofcase facts, technical knowledge, etc.). X

Day 3 - Case #1 - Play AO #6 FIN

You did not provide a balanced analysis of the risks and rewardsfor all of the investment options. X

Day 3 - Case #1 - Play AO #6 FIN


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Your discussion of the suggested audit approach and/or materialitycontained technical errors.

X

Day 3 - Case #2 -Dogani Inc. AO #4 AS

Your calculation of the business income for tax purposes containedtechnical errors.

X

Day 3 - Case #3 -Culinary Crawl AO #1 TAX

Analyze Major Issue(s)-QuantitativeYou calculated one of the debt-to-equity covenant or the borrowingbase, but not both. X




You identified the SR&ED issue but did not determine thequantitative impact. X












You did not compare the pricing alternatives to the status quo. X



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You did not properly incorporate the concept of one-time costs intoyour analysis. X


Your quantitative analysis of the cost of outsourcing thesanitization process and keeping it in-house contained technicalerrors.

X Day 3 - Case #1 - Play AO #2 MA

Analyze Major Issue(s)-Integrate SituationYou did not integrate a sufficient number of analyses in yourdiscussion.

X

Day 3 - Case #3 -Culinary Crawl AO #7 GOV


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