SASB EXAM QUESTIONS AND
ANSWERS
How has the purpose of accounting changed since the 1930's, and why did financial
reporting move from flexible implementation to standardization? - Answer- Purpose of
accounting has shifted from strict historical asset valuation towards decision usefulness
of reported information to user of disclosed information
Accounting measurements are to serve a specific purpose (inform decisions) rather
than perform singular function (provide accurate measurement data)
Purpose of accounting has shifted to assist in making economic decisions
Standardization results in reliable, comparable, decision useful info across markets
allowing investors to see info presented on comparable basis
What does the rise of intangible assets mean for corporate disclosure? - Answer- Value
of non-financial information has increased
Traditional financial statements tell an increasingly smaller part of the story
What factors contribute to increasing investor interest in non-financial information? -
Answer- Endorsement by several key organizations in the financial reporting
community
Increasing percentage of market value attributed to intangibles
What challenges exist in sustainability disclosure that do not necessarily exist in
financial disclosure? - Answer- Different audiences have different needs - you are not
just presenting info to investors but many other stakeholders such as community
There are a broad range of data types and ESG issues require different modes and
methods of measurement making users of data need to be able to understand many
different data sets
Sustainability info tends to be future oriented
What are some examples of "climate first" approach to regulatory guidance, and what
does a "climate first" approach tell us about regulators' approach to sustainability
disclosure guidance? - Answer- prioritizing disclosure related to climate change
Ex: Canadian Securities Administration disclosed requirements related to environmental
matters stating that compliance is necessary to exist
, Basically when requirements for climate change disclosure are released explaining how
companies should apply existing disclosure requirements to climate change info that
might be appropriate to disclose
What are the four main characteristics of sustainability disclosure guidance, and what
are pros and cons of each - Answer- Interpretive Guidance - allows companies to
understand their responsibility to disclose sustainability information within the context of
existing reporting practices
Principals Based Disclosure - allows companies to choose what information would be
most relevant for users; allows company flexibility in their decision to disclose certain
metrics; provides list of tenets that companies use to guide their reporting process;
flexibility of this approach can hinder comparability
Comply or Explain - either comply with required rules/codes or explain why you have
chosen not to; can help ease companies that are new to the reporting process into
things; allows companies to justify to themselves whether non-compliance is justified;
lets market decide what information is adequate and useful to investment decision;
limited comparability
Line item Disclosure - requires info to be disclosed using specified methodology to
produce specific line items; easier to compare but less flexible
What two considerations must sustainability disclosure guidance balance, and how do
disclosure standards help achieve that balance? - Answer- Usability & Flexibility
Disclosure standards allow comparability while letting companies make useful
adjustments or additions
What role do frameworks and standards play in the sustainability disclosure value
chain? - Answer- Standards set specific, replicable, and detailed guidance for what
should be disclosed; enable apples to apples comparison among reporting companies
Frameworks are set of concepts and principles for how information is structured and
prepared/what broad topics are covered; help establish useful conceptual schema for
communicating the sustainability related risks and opportunities faced by a business
What three types of organizations strongly influence ESG data quality, and how are they
different from one another? - Answer- 1. Organizations that issue sustainability
disclosure guidance
2. Organizations that aggregate sustainability data
ANSWERS
How has the purpose of accounting changed since the 1930's, and why did financial
reporting move from flexible implementation to standardization? - Answer- Purpose of
accounting has shifted from strict historical asset valuation towards decision usefulness
of reported information to user of disclosed information
Accounting measurements are to serve a specific purpose (inform decisions) rather
than perform singular function (provide accurate measurement data)
Purpose of accounting has shifted to assist in making economic decisions
Standardization results in reliable, comparable, decision useful info across markets
allowing investors to see info presented on comparable basis
What does the rise of intangible assets mean for corporate disclosure? - Answer- Value
of non-financial information has increased
Traditional financial statements tell an increasingly smaller part of the story
What factors contribute to increasing investor interest in non-financial information? -
Answer- Endorsement by several key organizations in the financial reporting
community
Increasing percentage of market value attributed to intangibles
What challenges exist in sustainability disclosure that do not necessarily exist in
financial disclosure? - Answer- Different audiences have different needs - you are not
just presenting info to investors but many other stakeholders such as community
There are a broad range of data types and ESG issues require different modes and
methods of measurement making users of data need to be able to understand many
different data sets
Sustainability info tends to be future oriented
What are some examples of "climate first" approach to regulatory guidance, and what
does a "climate first" approach tell us about regulators' approach to sustainability
disclosure guidance? - Answer- prioritizing disclosure related to climate change
Ex: Canadian Securities Administration disclosed requirements related to environmental
matters stating that compliance is necessary to exist
, Basically when requirements for climate change disclosure are released explaining how
companies should apply existing disclosure requirements to climate change info that
might be appropriate to disclose
What are the four main characteristics of sustainability disclosure guidance, and what
are pros and cons of each - Answer- Interpretive Guidance - allows companies to
understand their responsibility to disclose sustainability information within the context of
existing reporting practices
Principals Based Disclosure - allows companies to choose what information would be
most relevant for users; allows company flexibility in their decision to disclose certain
metrics; provides list of tenets that companies use to guide their reporting process;
flexibility of this approach can hinder comparability
Comply or Explain - either comply with required rules/codes or explain why you have
chosen not to; can help ease companies that are new to the reporting process into
things; allows companies to justify to themselves whether non-compliance is justified;
lets market decide what information is adequate and useful to investment decision;
limited comparability
Line item Disclosure - requires info to be disclosed using specified methodology to
produce specific line items; easier to compare but less flexible
What two considerations must sustainability disclosure guidance balance, and how do
disclosure standards help achieve that balance? - Answer- Usability & Flexibility
Disclosure standards allow comparability while letting companies make useful
adjustments or additions
What role do frameworks and standards play in the sustainability disclosure value
chain? - Answer- Standards set specific, replicable, and detailed guidance for what
should be disclosed; enable apples to apples comparison among reporting companies
Frameworks are set of concepts and principles for how information is structured and
prepared/what broad topics are covered; help establish useful conceptual schema for
communicating the sustainability related risks and opportunities faced by a business
What three types of organizations strongly influence ESG data quality, and how are they
different from one another? - Answer- 1. Organizations that issue sustainability
disclosure guidance
2. Organizations that aggregate sustainability data
