(Posted May 2025)
A very common type of analysis on the CPA Common Final Examination (CFE) is discussing weaknesses in a company’s processes, systems, and/or controls. Discussing involves more than just identifying the weaknesses using the case facts. You then need to explain the implications of the weaknesses on the company and how to resolve those weaknesses. We often find that candidates can identify weaknesses and provide specific recommendations to fix the weaknesses, but they struggle with explaining the implications.
Let’s look at some writing tips to enhance your ability to write good implications.
What are implications?
Candidates sometimes think they have provided an implication when they have only identified the problem. An implication goes beyond using the case facts to identify the weakness. It involves explaining how the weakness is occurring and why it is a weakness for the company. How would the company be impacted as a result of this weakness? What issues would be caused for the company?
It is important to go beyond superficial or intangible implications and think about the tangible impacts. For example, a weakness could cause the company’s reputation to decrease but that is intangible. To enhance this implication, you would then want to link that to the impact on sales or profits to show the tangible impact of the weakness on the company.
One of the best tips I ever received was to ask myself “So what?” when writing an implication. If you have not answered that question, then you have not provided a sufficiently detailed implication.
Candidates often also only consider the implications on the customer, instead of considering the impact on their user, so they do not address the implications in the correct context.
Format
Often, the issue is not that the candidate does not know how to write an implication but that they forget to include it in their discussion. It is very easy to jump from identifying the weakness to fixing the problem.
Using a WIR format (weakness, implication, recommendation as sub-headings in your response) is one way to ensure that you do not forget to write the implication. The WIR format forces you to think about each component to ensure that it is appropriate for that part of your response. An efficient writer can usually cover each component with a single sentence or two, so this does not have to create a lengthy analysis.
Consistency with case facts
Your implication should be consistent with the case facts provided. When explaining how a weakness is occurring, instead of providing a generic explanation, you should use specific case facts from the process description that will help you describe the specific things causing the weakness to occur.
For example, in the September 2023 CFE report, the Board of Examiners noted that strong candidates explained why the weakness would allow fraud to occur using the specific case facts instead of just stating the general lack of review of the supplier payments.
Something similar occurs when candidates provide implications that show weakness in understanding the specific case facts surrounding the weakness. Often, this comes from a candidate memorizing implications for certain types of weaknesses. For example, on the September 2023 CFE, candidates suggested that fraud could occur as a result of a lack of segregation of duties. However, the specific tasks that were being performed did not provide a potential for fraud, so the implication was not valid in this circumstance.
Repetitive discussions
Some candidates struggle to identify separate and distinct weaknesses, and instead identify weaknesses that are similar. You need sufficient breadth to reach Competent. In this case, it is difficult to separate the implications and recommendations for these weaknesses because they are essentially the same problem. For example, on the September 2023 CFE, candidates tried to discuss the fact that too many individuals had authority to make purchases and that purchases should require approval. The implications and recommendations related to these issues were similar because they were related weaknesses, and therefore, candidates did not have the opportunity to gain breadth.
If you find yourself writing the exact same implication and recommendation for more than one issue, step back and consider whether the weaknesses identified are the same issue.
Ability to Adapt
Implications are not only required for discussions surrounding weaknesses, so you need to be able to adapt your ability to write implications to other circumstances. We have seen instances on the CFE where candidates needed to discuss specific risks. This involved not only identifying the relevant risk but explaining why it is a risk to the company (the implication of the risk). In other instances, candidates have been asked to identify good controls and consider how to test them. It would not be enough to just identify a control and provide a procedure. The Board of Examiners wants you to explain why it is an effective control to support your identification of that control. That is another form of implication. Make sure that whenever you are asked to identify issues, controls, risks, etc. that you are also considering the implications.