Densmore Blog


The CFE Evaluation Methodology

On April 26, 2016

The CFE is a brand new animal and it is clear that there are already misconceptions about the examination and its evaluation process. The CFE is really two distinctly different examinations, with candidates being evaluated on Day 1 and also on Days 2 and 3 combined.


Day 1:


The Day 1 papers are evaluated on a holistic basis to determine clearly passing and clearly unsuccessful candidates. More extensive evaluation is then applied to candidates not falling into the clearly passing or clearly unsuccessful categories.


Day 2/3:


The Day 2 case and each of the Day 3 cases have assessment opportunities with the following rankings:


Not addressed (NA)

Nominal competence (NC)

Reaching competence (RC)

Competent (C)

Competent with distinction (CD)


No marks are awarded for NA or NC ratings. Scoring starts at RC and, historically, an RC rating was worth about half as many marks as a C or CD rating. C and CD ratings were historically worth the same amount of marks, with the CD rating only used to determine honour roll candidates. The assessment opportunities on the Day 2 case are weighted such that Day 2 and Day 3 are weighted equally with each other.


The Day 2/3 assessment has 10 levels:


Level 1      Sufficiency


Level 2      Depth in Financial Reporting

                 Depth in Management Accounting

Level 3      Depth in Role (Assurance, Finance, Performance Management or Taxation)


Level 4      Breadth in Audit and Assurance

                 Breadth in Taxation

                 Breadth in Strategy and Governance

                 Breadth in Finance

                 Breadth in Financial Reporting

                 Breadth in Management Accounting


Level 1 is an assessment of overall sufficiency. In other words, whether enough marks were scored on an overall basis across all of the assessment opportunities on Days 2 and 3. Scoring starts at the RC level. Level 1 rewards consistency of scoring (i.e., avoiding the NAs and NCs). 


Level 2 assesses depth in Financial Reporting or Management Accounting. Think of depth as whether you scored enough C ratings in either of those competency areas. RC ratings help at Level 1 but do not help you here. You need some C or CD ratings (the exact number is not disclosed) to meet the Level 2 standard. You only need to meet the standard in one of the two depth areas (i.e., FR or MA). You do not need to meet the depth standard in both areas.


Level 3 assesses depth in the chosen role. Again, remember that depth is a function of scoring a C or CD rating.  What is absolutely crucial to understand is that the only assessment opportunities for Level 3 are found on the CFE Day 2 case. You really need to nail the CFE Day 2 assessment opportunities for your chosen role, as well as scoring well that day on FR and/or MA. Having a bad Day 2 is not an option as it is crucial to both the Level 2 and 3 results.


Level 4 tests breadth by assessing whether you scored something enough times in the six technical competency areas. Remember that scoring starts at the RC level so NAs/NCs are your enemy with the breadth assessment. As with Level 1, Level 4 rewards consistency of scoring (i.e., avoiding the NAs and NCs).


As you can see, the CFE evaluation process is complicated and each day of the CFE has very different testing objectives. Understanding the rules of the game is crucial for CFE success.


(Bruce Densmore – April 26, 2016)

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Avatar Priya last yearReply
Do passing all 6 competencies in level 4 means I passed Day3 exam? I failed all level1-level3.
Avatar Paul Morris, CPA, CA last yearReply
No, you can't pass or fail Day 3. Days 2 and 3 are considered a single evaluation unit. Levels 1, 2 and 4 are all impacted by your performance on Day 3 and since you failed levels 1 and 2 you presumably barely met the standard for Level 4 in several of the competency areas.