Posted: September 16th, 2017

The Brown Boot Company

The Brown Boot Company

Chartered Professional Accountants of Canada, CPA Canada, CPA
are trademarks and/or certification marks of the Chartered Professional Accountants of Canada.
© 2014, Chartered Professional Accountants of Canada. All Rights Reserved.
PREP Project
Format Specifications
PREP Project Format Specifications
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INTRODUCTION
The CPA Competency Map includes five enabling competencies that provide the essential
skills required for a career as a professional accountant. One of these five enabling
competencies is written and oral communication. The CPA Competency Map states that “CPAs
must communicate effectively through listening, understanding, speaking and writing with
clarity, and through the art of persuasion and negotiation. CPAs must be able to clearly
communicate complex matters to all levels of an entity.”
This document provides you with guidelines that should be followed when formatting your
project. This will assist you in developing and presenting a professional and clear response.
FORMAT SPECIFICATIONS
Audit trails
An audit trail for all numerical figures (dollar amounts, volumes, percentages and so forth)
must be provided. All figures should be labelled (that is, indicate what the figure represents),
and either the source of the figure or details showing how it was calculated should be clearly
evident in the response when a hard copy is printed. Readers of the project should not have to
look at formulas in the Excel cells to determine how a figure was calculated. The Appendix
provides guidance on creating proper audit trails.
Excel — page breaks and titles
For portions of the response completed in Excel, the page breaks must be defined in the file
(using View, Page Break Preview), or a separate sheet should be used for each page (each
sheet must be labelled with a descriptive title).
If the project requires a report, and an Excel spreadsheet is used to support the analysis in the
report, the title for the analysis (for example, Exhibit 1) must be visible when the sheet is
printed.
Separate Excel sheets must be used for each question in the project when the project includes
multiple questions. Label each sheet with the question number.
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Financial statements
Proper financial statement format and labelling (account names, units of measure) must be
used where appropriate. Negative numbers should be in brackets, subtotals should be
underlined and totals should be double underlined.
Unless instructed otherwise, you should consider presenting financial statements and other
financial analysis exhibits, where appropriate, rounded to the nearest thousand. Rounding is
acceptable as long as the rounded amounts do not mislead the reader in the interpretation of
the results. Any exhibit where there is rounding must be labelled as such.
Font, spacing and page orientation
If the project requires a written report covering elements such as an analysis of the current
situation, alternatives, recommendations and implementation plan, the report must be
completed in Word, using Arial 12-point font, double spacing and portrait orientation. The
report should contain a cover page, covering memorandum or executive summary, table of
contents, introduction, body (analysis, alternatives, recommendations and implementation
plan), conclusion and bibliography. Titles and headings may be in a font size larger than 12
point. Headers, footers and footnotes may be in a smaller font size, but no smaller than 8
point.
Appendixes may be in Excel or Word, using either portrait or landscape orientation. The
minimum allowable font for quantitative exhibits is 10 point. Exhibits comprising 60 per cent or
more words must be in 12-point font. For appendixes provided in Excel, scaling must be
set at 100 per cent; for appendixes imported from Excel to Word, text and numbers must be
presented at the specified font size. If the Excel scaling is less than 100 per cent, markers will
rescale the document to 100 per cent and will assess only the content that fits within the page
borders.
Margins and paper size
For all portions of the response (in Word and Excel, including the appendixes), 2.54-cm/1-inch
margins and letter-size pages must be used.
Page numbering
All pages of any required report must be sequentially numbered, including any appendixes
submitted in Excel (that is, when the report is printed, the page numbers must be visible and in
sequence). Lower-case roman numerals should be used for the executive summary and table
of contents. The first page of the main report (usually consisting of the introduction) is the
beginning of a new sequence and should be numbered using the numeral 1 (format the page
number in the header and footer).
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Text boxes, charts and images
Text boxes, charts, figures and images may be used in the body of a report to illustrate
concepts or trends (such as a graph showing five-year sales).
The text portions of a report as well as all text boxes must be developed using Word.
Charts, figures and quantitative appendixes may be prepared in Excel and imported into the
Word document.
Images may be used to illustrate concepts or trends only (such as graphs or pie charts) and
should not be used to present text boxes or quantitative exhibits. Images should not contain
any additional words except those for the title and the axis description. Any other additional
words should be placed outside the image in a Word format.
Length limits
There is no maximum for the length of project or any required report. However, no marks will
be awarded for points that are off-topic or repeated. Further, markers will assess only the
content that appears when files are properly printed. Markers will not check each formula used
in Excel and should be able to follow audit trails, as discussed above.
References
If the project requires citations of reference information, both footnotes and a bibliography are
required. In preparing a bibliography, use the Chicago Manual of Style system and be sure to
do the following:
1. List multiple-author articles as LastName1, FirstName1 and FirstName2 LastName2, and
so forth.
2. Use a hanging indent for individual citations.
3. For articles, italicize the title of the journal in which the article is published.
4. Sort publications alphabetically by author’s last name.
5. Sort publications by the same authors by date of publication in ascending chronological
order.
6. Place the bibliography at the end of the project.
Footnotes must also follow Chicago style. Footnotes should mainly be used to provide
references and short explanations in the body of the report and to provide an audit trail
(supporting calculations and explanations) in the appendixes.
References should be from credible or peer-reviewed sources, such as Harvard or MIT Sloan.
Wikipedia and blogs should not be used as authoritative sources of information. Wikipedia is
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an online encyclopedia that virtually anyone can add to and edit; there is no official oversight of
any entry’s accuracy by subject matter experts. Accordingly, it should only be used as a means
of finding information to guide subsequent searches.
Submission upload files
Only one Word file and/or one Excel file may be submitted for each project. If the project
requires responses to several questions (as opposed to single report), start the response to
each question on a new page and label it appropriately.
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APPENDIX — NOTES ON PROVIDING A PROPER AUDIT TRAIL
One of the key attributes evaluated under the communication competency is the provision of
clear audit trails, such as the supporting details for calculations used in quantitative analyses.
This is especially important if a financial calculator or Excel function is used to perform the
calculations. The following example demonstrates how to provide an audit trail for three
methods of calculation: 1) using the appropriate equation from one of the readings (in Word or
Excel), 2) using a financial calculator, such as the Texas Instruments BA II Plus and 3) using
Excel functions.
Example
A company is considering issuing a new 20-year debt. The annual interest rate
would be 8 per cent, and each $1,000 bond would net the firm $970. The
company has a tax rate of 40 per cent. Determine the cost of debt to the
company.
1) Equation approach
Provide the equation and define each variable in the equation. Then
substitute the appropriate numbers for all known or assumed variables.
Finally, solve for the unknown variable.
For the above problem, solve for Kb (the cost of debt) in the following
equation, where:
NPb = Current bond value
? (1 – T)I ÷ (1 + kb)
t = Present value of interest payments
F ÷ (1 + Kb)
n = Present value of lump sum payment at maturity
NPb = ? (1 – T)l
(1 + Kb)t
n
t-1
+
F
(1 + Kb)n
970 = 80(1 – 0.40) ?
1 – (1 + Kb)-20
Kb
? +
1,000
(1 + Kb)20
Kb = 5.04%
2) Calculator method
Using this method, an audit trail is shown by providing a table similar to the
one below that describes each function key and the associated value used in
the calculation:
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Description (function key) Amount
Number of periods to maturity (N) 20
Issue value for a $1,000 bond (PV) 970
After-tax cost of interest payment (PMT)* 48 +/–
Face value or maturity value of each $1,000 bond (FV) 1,000 +/–
Cost of debt (CPT I/Y)** 5.04% (rounded)
* In this example, the after-tax interest payment is used:
$1,000 × 8% × (1 – 0.4) = 48.
** Some calculators use I/P instead of I/Y to represent the internal rate of
return or yield percentage.
Note: Ensure that Payment and FV are either both negative OR the PV is negative.
3) Excel functions method (Office 2007, 2010 and 2013)
Using this method, an audit trail is shown by providing a table similar to the
one in item 4 below, which describes each function key and the associated
value used in the calculation.
1. Click on Formulas at the top of the screen.
2. Select Insert Function.
3. Type Rate in “Search for a function” and click on Go.
4. Highlight Rate and click on OK. The following should appear in a grey or
tan-coloured box. Fill in the amounts or cell references on the right-hand
side:
Description (Excel boxes) Figures
Number of periods to maturity (Nper) 20
After-tax cost of interest payment (Pmt) –48
Issue value for a $1,000 bond (Pv) 970
Face value or maturity value of each $1,000 bond (Fv) –1,000
End of the period or beginning of the period payments
(Type)*
Rate?cost of debt** 5.04%?5% rounded
* Do not enter anything here if the payments are at the end of the year;
enter 1 if the payments are at the beginning of the year. This box is
NOT relevant for this example.
** The bolded cells in the last row of the table represent the answer to the
calculation.
5. Click on OK. The calculated Rate representing the cost of debt will
appear in the worksheet cell.