CPA Canada CFE Day 3 Sample Questions & Practice Test

CPA Canada CFE Day 3 uses multiple shorter cases. Preparation should emphasize breadth, issue spotting, time management, and concise recommendations across financial reporting, assurance, tax, finance, performance management, and governance.

This page includes 12 original CFE Day 3 sample questions for initial review. They are not official CPA Canada questions and do not reproduce a CFE case.

What CFE Day 3 practice should test

• quickly identifying the required issue in a short fact pattern
• choosing enough analysis for the mark value and time available
• switching between competencies without losing professional judgment
• writing a practical recommendation rather than a long unsupported discussion

How to use this CFE Day 3 preview

Use the 12-question set below to practise breadth and triage. Day 3 misses usually come from spending too long on the first visible issue, missing a second competency, or writing analysis without a clear recommendation.

Before the sample set, use the CPA Canada CFE Day 3 Cheat Sheet to review short-case scanning, breadth coverage, timeboxing, concise recommendations, and cross-competency traps.

Sample Exam Questions

Try these 12 original sample questions for CPA Canada CFE Day 3. They are designed for self-assessment and are not taken from the live exam.

Question 1

Topic: short-case triage

A short case includes an inventory valuation issue, an owner remuneration question, and a weak cash forecast. What is the best Day 3 approach?

• A. Write only about inventory because it appears first
• B. Ignore tax and finance because Day 3 is short
• C. Identify and address each material issue concisely, allocating time based on importance
• D. Spend all time drafting an introduction

Best answer: C

Explanation: Day 3 breadth requires disciplined triage. The candidate should address material issues across competencies without overworking one area.

Question 2

Topic: financial reporting

A client records revenue when an invoice is issued, but goods ship two weeks later. What is the likely issue?

• A. Payroll classification
• B. Revenue recognition and cutoff
• C. Bank reconciliation format
• D. Dividend policy

Best answer: B

Explanation: The short fact pattern points to whether performance occurred before revenue was recorded. Day 3 questions often require quick issue recognition.

Question 3

Topic: assurance

An auditor wants to test whether all payables are recorded. Which procedure is most relevant?

• A. Confirm share capital
• B. Recalculate depreciation
• C. Inspect customer contracts for revenue terms only
• D. Search subsequent payments and unmatched receiving documents for unrecorded liabilities

Best answer: D

Explanation: Completeness of liabilities is tested by looking beyond recorded payables. Subsequent payments and receiving records can reveal omissions.

Question 4

Topic: tax

A shareholder uses a company-owned asset personally without reimbursement. What should the candidate consider?

• A. No issue because the company owns the asset
• B. Whether a taxable benefit or shareholder benefit should be reported
• C. Only depreciation expense
• D. Whether the asset is physically present

Best answer: B

Explanation: Day 3 tax prompts often use short facts to test benefit recognition. Personal use of corporate property can have tax consequences.

Question 5

Topic: finance

A company is profitable but cannot pay suppliers on time because receivables are slow. What is the main issue?

• A. Profitability is impossible
• B. The company should stop invoicing customers
• C. Liquidity and working-capital management
• D. Audit independence only

Best answer: C

Explanation: Positive profit does not guarantee cash. Day 3 finance issues often focus on working capital and liquidity.

Question 6

Topic: performance management

A sales bonus is based only on gross sales, and returns are rising. What is the best recommendation?

• A. Keep the bonus because sales increased
• B. Add return rates, margin, cash collection, and customer satisfaction to the performance measures
• C. Remove sales tracking entirely
• D. Reward the largest invoice only

Best answer: B

Explanation: A gross-sales-only bonus can encourage low-quality sales. Balanced measures reduce dysfunctional behaviour.

Question 7

Topic: governance

A director approves a contract with a company owned by a family member without disclosure. What should be raised?

• A. No issue if the contract is profitable
• B. Only marketing strategy
• C. Inventory valuation only
• D. Conflict of interest, disclosure, independent review, and approval process

Best answer: D

Explanation: Conflicts can affect governance even when a transaction seems financially attractive. Disclosure and independent review are key.

Question 8

Topic: concise recommendation

A candidate identifies a weak control over vendor setup. Which recommendation is strongest?

• A. “Improve controls.”
• B. “Controls are important.”
• C. “Have someone independent review and approve new vendors, and periodically review the vendor master file for duplicates or unauthorized vendors.”
• D. “Do nothing until fraud occurs.”

Best answer: C

Explanation: Day 3 recommendations should be actionable. The best answer states a specific control and why it addresses the weakness.

Question 9

Topic: time pressure

With five minutes left, a candidate has identified a tax issue but has not written the recommendation. What should the candidate do?

• A. Write a concise issue, implication, and next step rather than leaving it blank
• B. Start a new full memo
• C. Delete the issue
• D. Continue editing an earlier sentence

Best answer: A

Explanation: Under time pressure, a concise supported point is better than no response. Day 3 rewards efficient coverage.

Question 10

Topic: integrated issue

A client wants to expand using debt, but forecasts show tight cash flow and weak controls over revenue. What should the candidate connect?

• A. Financing feasibility, covenant risk, revenue reliability, and control improvements
• B. Only the loan interest rate
• C. Only the revenue control
• D. Only the owner’s optimism

Best answer: A

Explanation: Day 3 issues can be integrated. Debt decisions depend on reliable forecasts, controls, cash flow, and lender requirements.

Question 11

Topic: evidence

A client estimates a warranty provision using a guess from the sales manager. Claims have recently increased. What should the candidate recommend?

• A. Accept the guess because estimates are subjective
• B. Reverse the provision automatically
• C. Record no warranty expense until cash is paid
• D. Gather claims history, current trend data, product changes, and management support for the estimate

Best answer: D

Explanation: Estimates need support. Day 3 candidates should request evidence and update assumptions when current facts differ from history.

Question 12

Topic: breadth

A short case asks for “accounting and business implications.” What is the common mistake?

• A. Addressing only the accounting entry and ignoring decision, cash-flow, control, or stakeholder effects
• B. Mentioning a recommendation
• C. Using plain language
• D. Prioritizing material issues

Best answer: A

Explanation: Day 3 breadth often means more than technical accounting. The candidate should connect the accounting issue to business implications when requested.

CFE Day 3 answer checklist

Mini Glossary

• Breadth: Coverage across multiple competency areas.
• Issue spotting: Identifying the decision or accounting/audit/tax problem raised by the facts.
• Timebox: Limiting time spent on an issue so other material issues are covered.
• Business implication: The operational, cash, control, or stakeholder effect of a technical issue.

Related CPA Canada routes

• CPA Canada CFE Day 1
• CPA Canada CFE Day 2
• CPA Canada Core 1
• CPA Canada hub

In this section

• CPA Canada CFE Day 3 Cheat Sheet
  Review CPA Canada Common Final Examination Day 3 reminders for short-case triage, breadth, timeboxing, competency switching, evidence, and concise recommendations.