SASB FSA LEVEL 1 EXAM QUESTIONS
AND ANSWERS
Brundtland Report - Answer- Published in 1987 in the influential report "Our Common
Future" and created by World Commission on Environment and Development of the UN.
Discusses sustainable development and the triple bottom line for the first time.
European Commission's Action Plan for Financial Sustainable Growth - Answer- 3 core
strategies:
-reorienting capital flows towards a more sustainable economy
-mainstreaming sustainability into risk management
-fostering transparency and long-termism
Stock Market Crash of 1929 - Answer- historical example about how a lack of
transparency and public reporting can have disastrous consequences
US SEC/Securities and Exchange Commission - Answer- Protects investors, maintains
fair, orderly, and efficient markets, and facilitates capital formation
materiality (as defined by the US Supreme Court) - Answer- information is material if its
exclusion would have altered the "total mix" of information considered by a reasonable
investor
GAAP - Answer- Generally Accepted Accounting Principles
historical cost accounting - Answer- measured the value of an asset as the actual cost
paid at the time of purchase
-original nominal value of asset reported on balance sheet, even if the asset's value has
changed over time
Accounting Principles Board (APB) - Answer- replaced CAP to resolve tensions, reduce
variation in accounting practices, and establish one standardized practice
A statement of basic accounting theory - Answer- 1960s report that shifted focus of
financial reporting from strict historical asset valuation and toward decision usefulness
of reported information to the users of the disclosed information
-"provide information which will be of assistance in making economic decisions"
FASB (Financial Accounting Standards Board) - Answer- Founded to replace APB;
identified goal of disclosure and accounting; affirmed decision-usefulness and emphasis
on discounted future cash flows as way of valuing assets (as opposed to historical cost
accounting)
-also stated that economic and social goals of a business are equally important
, EBITDA - Answer- Earnings before interest, taxes, depreciation, and amortization
83% - Answer- how much tangible assets composed of market value of S&P 500 in
1975
10% - Answer- how much tangible assets composed of market value of S&P 500 in
2020
IFRS Management Commentary - Answer- -Provide management's view of the entity's
performance, position, and progress
-supplement and complement information presented in financial statements
IASB 2017 guidance - Answer- "matters that could affect an entity's long-term
prospects; the entity's intangible resources and relationships; and ESG matters"
KPI - Answer- Key Performance Indicator
US SEC on Management Disclosure and Analysis (MD&A) - Answer- -focus on
material information
-include key performance indicators (including non-financial and metrics to improve
comparability to companies in other industries)
-disclose known trends and uncertainties that are reasonably likely
-analyze the information that is disclosed
ECA - Answer- environmental cost accounting - aims to analyze cause-and-effect
relationships to identify the source of and measure environmental impacts
EP&L - Answer- environmental profit and loss statements - seeks to assign a monetary
value to the environmental costs associated with certain business activities
SRI - Answer- socially responsible investing
problem with short-termism - Answer- though increases market liquidity, persistent
short-termism may undermine the efficiency of capital markets and result in diminished
public confidence and depressed returns
CDP - Answer- carbon disclosure project:
-supports companies, cities, states, and regions
-measure and manage environmental risks and opportunities
-compiles and scores companies:
A: environmental leadership
D: low environmental awareness
F: failure to report sufficient information
CDSB - Answer- Carbon Disclosure Standards Board:
AND ANSWERS
Brundtland Report - Answer- Published in 1987 in the influential report "Our Common
Future" and created by World Commission on Environment and Development of the UN.
Discusses sustainable development and the triple bottom line for the first time.
European Commission's Action Plan for Financial Sustainable Growth - Answer- 3 core
strategies:
-reorienting capital flows towards a more sustainable economy
-mainstreaming sustainability into risk management
-fostering transparency and long-termism
Stock Market Crash of 1929 - Answer- historical example about how a lack of
transparency and public reporting can have disastrous consequences
US SEC/Securities and Exchange Commission - Answer- Protects investors, maintains
fair, orderly, and efficient markets, and facilitates capital formation
materiality (as defined by the US Supreme Court) - Answer- information is material if its
exclusion would have altered the "total mix" of information considered by a reasonable
investor
GAAP - Answer- Generally Accepted Accounting Principles
historical cost accounting - Answer- measured the value of an asset as the actual cost
paid at the time of purchase
-original nominal value of asset reported on balance sheet, even if the asset's value has
changed over time
Accounting Principles Board (APB) - Answer- replaced CAP to resolve tensions, reduce
variation in accounting practices, and establish one standardized practice
A statement of basic accounting theory - Answer- 1960s report that shifted focus of
financial reporting from strict historical asset valuation and toward decision usefulness
of reported information to the users of the disclosed information
-"provide information which will be of assistance in making economic decisions"
FASB (Financial Accounting Standards Board) - Answer- Founded to replace APB;
identified goal of disclosure and accounting; affirmed decision-usefulness and emphasis
on discounted future cash flows as way of valuing assets (as opposed to historical cost
accounting)
-also stated that economic and social goals of a business are equally important
, EBITDA - Answer- Earnings before interest, taxes, depreciation, and amortization
83% - Answer- how much tangible assets composed of market value of S&P 500 in
1975
10% - Answer- how much tangible assets composed of market value of S&P 500 in
2020
IFRS Management Commentary - Answer- -Provide management's view of the entity's
performance, position, and progress
-supplement and complement information presented in financial statements
IASB 2017 guidance - Answer- "matters that could affect an entity's long-term
prospects; the entity's intangible resources and relationships; and ESG matters"
KPI - Answer- Key Performance Indicator
US SEC on Management Disclosure and Analysis (MD&A) - Answer- -focus on
material information
-include key performance indicators (including non-financial and metrics to improve
comparability to companies in other industries)
-disclose known trends and uncertainties that are reasonably likely
-analyze the information that is disclosed
ECA - Answer- environmental cost accounting - aims to analyze cause-and-effect
relationships to identify the source of and measure environmental impacts
EP&L - Answer- environmental profit and loss statements - seeks to assign a monetary
value to the environmental costs associated with certain business activities
SRI - Answer- socially responsible investing
problem with short-termism - Answer- though increases market liquidity, persistent
short-termism may undermine the efficiency of capital markets and result in diminished
public confidence and depressed returns
CDP - Answer- carbon disclosure project:
-supports companies, cities, states, and regions
-measure and manage environmental risks and opportunities
-compiles and scores companies:
A: environmental leadership
D: low environmental awareness
F: failure to report sufficient information
CDSB - Answer- Carbon Disclosure Standards Board:
