Chief Financial Officer Exam

Blueprint

Element-by-element breakdown

Parsed directly from the official CIRO syllabus. Every learning outcome maps to a specific element and weighted question count.

1. Element 1

   Free

   General regulatory framework

   5%

   In Element 1, candidates are expected to show an understanding of the key regulators in the Canadian investment industry, including the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO). Element 1 also covers the key legislation that governs and impacts the investment industry, with detailed focus on the prevention of using the investment industry for money laundering and other criminal activities.

   • 1.1the role and authority of the CSA and provincial/territorial securities and derivatives regulators.
   • 1.2the role and authority of CIRO.
   • 1.3the role and authority of exchanges and other marketplaces.
   • 1.4the role of the Canadian Investor Protection Fund (CIPF).
   • 1.5the function and purpose of other financial regulators and agencies.
   • 1.6the purpose of the following federal statutes:
   • + 1 more outcomes

   7 outcomes · 128 practice Q

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2. Element 2

   General financial requirements

   12%

   Element 2 requires the candidate to analyze key requirements of the Chief Financial Officer (CFO) in the Canadian investment industry. An analysis of fundamental regulatory knowledge of the CFO will be tested, including corporate governance and oversight responsibilities of the CFO, the Canadian Investor Protection Fund (CIPF) and the application of and accounting departures from International Financial Reporting Standards (IFRS).

   • 2.1to specific situations the responsibilities of the CFO of an Investment Dealer.
   • 2.2best practice in preparing for and undertaking internal and regulatory financial examinations, investigations and enforcement.
   • 2.3the authority and purpose of the CIPF.
   • 2.4rules and procedures relating to the funding of the CIPF by Investment Dealers.
   • 2.5accounting policies required of Investment Dealers.

   5 outcomes · 102 practice Q

3. Element 3

   Investment Dealer business model and related areas

   Element 3 covers the Investment Dealer in detail and the role of the Directors and Executives in recognizing and analyzing the risk, opportunities and requirements that the Investment Dealer’s activities create. Specific focus is applied to the Investment Dealer’s business model, the services they provide, the client types they deal with, the accounts and investments that they offer and the compensation structures they create for their representatives.

   • 3.1the risks, opportunities and requirements associated with each of the following client types:
   • 3.10the requirements for development, evaluation and delivery of products and services.
   • 3.11the product due diligence requirements and exemptions.
   • 3.12the requirements for product due diligence policies and procedures, which reflect:
   • 3.2the risks, opportunities and requirements associated with each of the following business models:
   • 3.3the risks, opportunities and requirements associated with each of the following services:
   • + 6 more outcomes

   12 outcomes · 222 practice Q

4. Element 4

   Offering and distribution of securities

   4%

   Element 4 requires the candidate to understand the responsibilities that apply to a public company, including the offering of securities to the public and the requirement for sufficient information through the prospectus. Candidates will be tested on analyzing the relevant information required and the situations where a prospectus is not needed, as well as the role of the Investment Dealer when underwriting offers.

   • 4.1the requirements under National Instrument 41–101 General Prospectus Requirements, National Instrument 44–101 Short Form Prospectus Distributions and the role of provincial and territorial securities legislation relating to the offering and distribution of securities.
   • 4.2where information and filing relating to securities issuance can rely on selective disclosure.
   • 4.3the commonly used exemptions for prospectus requirements under National Instrument 45–106 Prospectus Exemptions.
   • 4.4the information and protections available to the investor in relation to the issuance of securities.
   • 4.5the rights and obligations of the Investment Dealer when underwriting securities issuers.
   • 4.6the requirements for public company relating to continuous disclosures.
   • + 2 more outcomes

   8 outcomes · 125 practice Q

5. Element 5

   Capital adequacy, books and records, and reporting

   Element 5 requires the candidate to analyze the financial, solvency and other relevant risks affecting an Investment Dealer and the controls required to mitigate such risks. This element also requires an analysis of the CIRO record-keeping and reporting requirements, including audit, related and affiliated companies, cross guarantees and insurance coverage.

   • 5.1the capital adequacy reporting system and risk-adjusted capital (RAC) controls of the Investment Dealer, including the importance of oversight and maintenance of the capital adequacy reporting system.
   • 5.10regulatory requirements and disclosures for non-arms length or related party transactions or events which impact the risk assessment of the Investment Dealer.
   • 5.11to specific situations relevant to a CFO, insurance coverage requirements of an Investment Dealer in accordance with the regulatory requirements.
   • 5.12to specific situations relevant to a CFO best practice in ensuring an appropriate audit of an Investment Dealer.
   • 5.13specific substantive audit procedures regarding the financial position of the Investment Dealer.
   • 5.2the financial risks faced by an Investment Dealer.
   • + 7 more outcomes

   13 outcomes · 195 practice Q

6. Element 6

   Corporate governance and ethics

   9%

   Element 6 requires the candidate to be able to identify, analyze and draw conclusions from internal behavioural factors that pose a risk to the Investment Dealer. It begins by covering the role of corporate governance from the role and the composition of the Board to the relationship with company stakeholders.

   • 6.1the components of effective corporate governance.
   • 6.10the requirements for the containment of confidential and material non-public information policies and procedures.
   • 6.2the impact of a company setting its own corporate bylaws.
   • 6.3the relevance and impact of environmental, social and governance (ESG) considerations.
   • 6.4situations for Directors and Executives, including the Chief Financial Officer (CFO), that involve the role of ethics and integrity in the securities industry.
   • 6.5situations for Directors and Executives, including the CFO, that involve the role of ethics and integrity in corporate governance.
   • + 4 more outcomes

   10 outcomes · 164 practice Q

7. Element 7

   Duties, liabilities and defences

   5%

   This element requires the candidate to analyze the duties of Directors, the liabilities that they could face and the defences owed to them. Questions will challenge candidates to interpret information and draw appropriate conclusions to a range of situations. The questions will also draw on the difference in responsibilities in these areas between the role of Director and the roles of Executives.

   • 7.1factors relating to strategic company objectives and positions.
   • 7.2situations and obligations relating to a Director or Executive’s duties.
   • 7.3situations relating to legal obligations as corporate Directors or Executives as fiduciary.
   • 7.4situations and potential legal liabilities that may arise from:
   • 7.5securities-related criminal penalties.
   • 7.6limitation of liability (e.g. indemnity). Defences: Directors
   • + 1 more outcomes

   7 outcomes · 116 practice Q

8. Element 8

   Risk management and internal controls

   9%

   Element 8 covers the objectives of risk management and internal controls as well as the regulatory requirements on these. Candidates will need to identify, analyze and determine methods to manage risks as well as evaluate the effectiveness of policies and procedures used. Element 8 is another element where questions will draw on the difference in responsibilities in these areas between the role of Director and the role of Executives.

   • 8.1the definition and objectives of risk management.
   • 8.10risk identification, measurement, monitoring, control and reporting considerations.
   • 8.11the effectiveness of risk management tools.
   • 8.12the requirements relating to credit risk management policies and procedures.
   • 8.2risk management in a principles-based regulatory environment.
   • 8.3the regulatory expectations of risk management
   • + 6 more outcomes

   12 outcomes · 180 practice Q

9. Element 9

   Inventory, pricing of securities and underwriting

   11%

   Element 9 requires the candidate to analyze policies, procedures and processes relating to inventory risk management and margin rates, pricing of securities and underwriting capital issuances. Candidates will be tested both on areas of oversight and detecting and correcting errors, in the management of these areas.

   • 9.1principal trading activities and controls of the Investment Dealer.
   • 9.2relevant rules and calculations regarding inventory margin and offsets.
   • 9.3to specific situations relevant to a Chief Financial Officer (CFO), oversight of approved Traders and trading desks.
   • 9.4to specific situations relevant to a CFO, considerations in assessing inventory margin errors.
   • 9.5to specific situations relevant to a CFO, oversight of policies, procedures and processes relating to pricing of financial instruments.
   • 9.6minimum requirements relating to pricing securities.
   • + 3 more outcomes

   9 outcomes · 140 practice Q

10. Element 10

    Credit risk management and client accounts

    11%

    Element 10 requires the candidate to analyze CIRO requirements and best practices in relation to credit risk management, client accounts and registered account plans. An understanding of regulations around these areas will be tested, together with the practical application of these techniques from the oversight perspective of the Chief Financial Officer (CFO).

    • 10.1to specific situations credit risk management best practices.
    • 10.10to specific situations relevant to a CFO, oversight of the operation of registered accounts.
    • 10.2different types and classifications of credit risk.
    • 10.3to specific situations relevant to a CFO, margin rules and capital provisions and the use of margin accounts.
    • 10.4to specific situations relevant to a CFO, the Cash Account Rules and practices.
    • 10.5CIRO requirements to account guarantees.
    • + 4 more outcomes

    10 outcomes · 105 practice Q

11. Element 11

    Significant areas of risk

    5%

    This section requires an understanding of significant areas of risk for an Investment Dealer and analysis of how Directors and Executives should respond to these. Element 11 is another element where questions will draw on the difference in responsibilities in these areas between the role of Director and the roles of Executives.

    • 11.1the definition of significant areas of risk.
    • 11.2to specific scenarios the requirements relating to managing significant areas of risk.
    • 11.3significant areas of risk specific to the Investment Dealer and its business lines, which may include the following:
    • 11.4the impact of the significant areas of risk mentioned above on the Investment Dealer and ways to mitigate these risks.

    4 outcomes · 45 practice Q

12. Element 12

    Operations and settlement

    11%

    Element 12 requires the candidate to analyze operations and settlement of the Investment Dealer. Candidates can expect to be tested on the activities of clearing organizations, oversight of back-office operations and the Investment Dealer’s liquidity and financing needs. Application of control activities and corrective actions in these areas will also be examined.

    • 12.1rules, policies and roles of clearing agencies and depositories.
    • 12.10techniques to determine and manage the liquidity needs and financing costs of the Investment Dealer.
    • 12.11the Investment Dealer’s use of client free credits.
    • 12.12economics, collateral, legal structure, accounting, internal controls, reporting and regulatory margin rules for the various financing arrangements.
    • 12.2roles of foreign clearing and settlement agencies.
    • 12.3oversight of relevant aspects of clearing and settlement.
    • + 6 more outcomes

    12 outcomes · 125 practice Q

13. Element 13

    Protection of dealer and client assets

    7%

    Element 13 requires the candidate to apply policies, procedures and controls over the assets of the Investment Dealer and of the client. Areas including custody of assets, segregation of assets and safekeeping requirements will be tested. Candidates will also be required to demonstrate the application of calculations and controls in respect of client free credit balances and of oversight of internal controls for safeguarding cash and securities.

    • 13.1internal control standards over the handling and custody of money and securities.
    • 13.2to specific situations relevant to a Chief Financial Officer (CFO), oversight of acceptable securities locations.
    • 13.3to specific situations relevant to a CFO, oversight of capital and early warning charges.
    • 13.4to specific situations relevant to a CFO, oversight of segregation of securities.
    • 13.5to specific situations relevant to a CFO, oversight of indicators of potential problems with the segregation system and corrective measures for segregation deficiencies.
    • 13.6to specific situations relevant to a CFO, oversight of investment policies and controls related to client free credit disclosure requirements on client account statements.
    • + 2 more outcomes

    8 outcomes · 85 practice Q

14. Element 14

    Other capital provisions

    7%

    Element 14 requires the candidate to apply oversight of other capital provisions, including securities concentration, providers of capital and foreign exchange. An understanding of applicable regulatory requirements in these areas will also be assessed.

    • 14.1to specific situations relevant to a Chief Financial Officer (CFO) matters relating to oversight of securities concentration.
    • 14.2the importance of regulation, oversight and controls related to providers of capital.
    • 14.3the role of Investment Dealers and liquidity providers in foreign exchange markets, including activities that result in foreign exchange exposure.
    • 14.4foreign exchange margin rules.

    4 outcomes · 45 practice Q

15. Element 15

    Ultimate Designated Person (UDP) responsibilities

    4%

    Element 15 covers the oversight responsibilities that fall on the Ultimate Designated Person (UDP). This section will test the candidate’s ability to analyze specific situations in respect of the UDP’s responsibilities, including their role in the monitoring and supervision of the organization as a whole.

    • 15.1situations relevant to an Investment Dealer that highlight the specific UDP responsibilities:
    • 15.2situations that highlight the UDP monitoring and supervision responsibilities, including:
    • 15.3the role of the UDP in overseeing Executives (including CCO and CFO) in managing significant areas of risk, including:
    • 15.4to specific situations the impact of and risks associated with early warning rules, including:
    • 15.5the requirement for the UDP to ensure that issues raised by examination reports are responded to and addressed.
    • 15.6the purpose of annual risk questionnaires and risk trend reports:

    6 outcomes · 65 practice Q