Master the FSA Level 1 Exam – 2025-2026 Comprehensive
Practice Questions and Correct Answers||Latest Version!!Graded
A+
How has the purpose of accounting changed since the 1930s, and why
did financial reporting move toward standardization? - Answer -Early
years centered around accurate record keeping using historical cost
accounting. Firms began reporting info using a wide range of methods
reducing comparability. Adoption of IFRS and US GAAP allows
investors around the world to efficiently use info through standardized
means.
What does the rise of intangible assets mean for corporate disclosure?
- Answer -The increasing proportion of intangible assets as a
percentage of S&P market value highlights that a significant amount
of information regarding corporate performance and value drivers are
not captured in financial statements.
What factors contribute to increasing investor interest in non-financial
information? - Answer -The value of non-financial disclosure was
endorsed by the financial reporting community. Furthermore, they are
an imperative component of business reports to evaluate a company's
long-term value.
What challenges exist in sustainability disclosure that do not
necessarily exist in financial disclosure? - Answer -Relative to
financial disclosure and accounting, sustainability disclosure is a
young discipline. With many different parties interested, companies
must balance varying needs of information, Challenges with ESG
data, high variability in scale and scope of ESG data can limit
comparability.
What does "climate first" disclosure guidance tell us about regulators'
approach to sustainability disclosure globally? - Answer -Regulators
and others that issue new disclosure guidance often focus on climate
information rather than comprehensive ESG disclosure.
pg. 1
,What are the four main characteristics of sustainability disclosure
guidance? - Answer -Interpretive guidance (most flex) - clarifies how
sustainability disclosure applies to existing guidance
Principles-based guidance - provides a list of tenets to guide reporting
Comply-or-explain guidance - new mandatory disclosure guidance
(implied in name)
Line-item disclosure (least flex)- uses specific line items
What two considerations must sustainability disclosure guidance
balance and how do disclosure standards help achieve that balance? -
Answer -flexible disclosure and usefulness to investors that is
comparable, reliable and decision useful.
What role do frameworks and standards play in the sustainability
disclosure value chain? - Answer -Organizations that produce and use
info. Disclosure frameworks connect these producers and users.
Alphabet orgs issue guidance.
What three types of organizations most influence ESG data quality,
and how are they different from one another? - Answer –
1) Orgs issuing sustainability disclosure guidance
2) ESG data aggregators
3) third parties that rate/rank company ESG performance
What are some of the most common disclosure frameworks and
standards? In what ways are they different? In what ways are they
complementary? - Answer -Common frameworks and standards:
CDP, CDSB, GRI, IIRC, SASB and TCFD. Complementarity can be
focused on type of guidance and approach to materiality.
Frameworks (CDSB, IIRC, TCFD)and standards serve distinct
functions. Standards (GRI, SASB) offer specific and replicable
guidance for disclosure.
How do jurisdictions throughout the world traditionally define
materiality? - Answer -Focus on financial significance of a single
pg. 2
, piece of information and providing a framework for reporting
companies to determine what information it must disclose.
What are disclosure topics in a SASB standard and what purpose do
they serve? - Answer -topics in the SASB standard likely to have
financially material impacts on a company in a given industry.
What are the different types of metrics in a SASB standard and what
purpose do they each serve? - Answer -Accounting metrics - like KPIs
or benchmarks
Activity metrics - used to quantify the scale of a business to support
comparative analysis
How does SASB achieve each of the four fundamental tenets to
SASB's approach to standard-setting? - Answer -evidence based,
market informed, industry specific and transparent
What two documents define SASB's governance procedures, and what
purpose do they each serve? - Answer -Conceptual Framework -
defines the principles and characteristics of standard-setting process,
framework to resolve questions
Rules of Procedure - establishes the processes and practices followed
by SASB in its standard setting and governance and oversight of
related processes and practices
How do the SASB Standards evolve over time? - Answer -SASB
implements a project based model for standards development.
Proposal -> Standard setting project -> Board approval
What are two reasons why companies report using SASB standards? -
Answer -Primarily to meet unique ESG disclosure objectives
alongside other reporting frameworks like GRI, IIRC to link
sustainability management and financial performance to investors.
Where do companies disclose SASB data? - Answer -annual reports,
integrated reports, regulatory filings and sustainability reports.
How do companies disclose SASB-aligned data when a Standard does
not perfectly align with their business? - Answer -SICS developed to
pg. 3
Practice Questions and Correct Answers||Latest Version!!Graded
A+
How has the purpose of accounting changed since the 1930s, and why
did financial reporting move toward standardization? - Answer -Early
years centered around accurate record keeping using historical cost
accounting. Firms began reporting info using a wide range of methods
reducing comparability. Adoption of IFRS and US GAAP allows
investors around the world to efficiently use info through standardized
means.
What does the rise of intangible assets mean for corporate disclosure?
- Answer -The increasing proportion of intangible assets as a
percentage of S&P market value highlights that a significant amount
of information regarding corporate performance and value drivers are
not captured in financial statements.
What factors contribute to increasing investor interest in non-financial
information? - Answer -The value of non-financial disclosure was
endorsed by the financial reporting community. Furthermore, they are
an imperative component of business reports to evaluate a company's
long-term value.
What challenges exist in sustainability disclosure that do not
necessarily exist in financial disclosure? - Answer -Relative to
financial disclosure and accounting, sustainability disclosure is a
young discipline. With many different parties interested, companies
must balance varying needs of information, Challenges with ESG
data, high variability in scale and scope of ESG data can limit
comparability.
What does "climate first" disclosure guidance tell us about regulators'
approach to sustainability disclosure globally? - Answer -Regulators
and others that issue new disclosure guidance often focus on climate
information rather than comprehensive ESG disclosure.
pg. 1
,What are the four main characteristics of sustainability disclosure
guidance? - Answer -Interpretive guidance (most flex) - clarifies how
sustainability disclosure applies to existing guidance
Principles-based guidance - provides a list of tenets to guide reporting
Comply-or-explain guidance - new mandatory disclosure guidance
(implied in name)
Line-item disclosure (least flex)- uses specific line items
What two considerations must sustainability disclosure guidance
balance and how do disclosure standards help achieve that balance? -
Answer -flexible disclosure and usefulness to investors that is
comparable, reliable and decision useful.
What role do frameworks and standards play in the sustainability
disclosure value chain? - Answer -Organizations that produce and use
info. Disclosure frameworks connect these producers and users.
Alphabet orgs issue guidance.
What three types of organizations most influence ESG data quality,
and how are they different from one another? - Answer –
1) Orgs issuing sustainability disclosure guidance
2) ESG data aggregators
3) third parties that rate/rank company ESG performance
What are some of the most common disclosure frameworks and
standards? In what ways are they different? In what ways are they
complementary? - Answer -Common frameworks and standards:
CDP, CDSB, GRI, IIRC, SASB and TCFD. Complementarity can be
focused on type of guidance and approach to materiality.
Frameworks (CDSB, IIRC, TCFD)and standards serve distinct
functions. Standards (GRI, SASB) offer specific and replicable
guidance for disclosure.
How do jurisdictions throughout the world traditionally define
materiality? - Answer -Focus on financial significance of a single
pg. 2
, piece of information and providing a framework for reporting
companies to determine what information it must disclose.
What are disclosure topics in a SASB standard and what purpose do
they serve? - Answer -topics in the SASB standard likely to have
financially material impacts on a company in a given industry.
What are the different types of metrics in a SASB standard and what
purpose do they each serve? - Answer -Accounting metrics - like KPIs
or benchmarks
Activity metrics - used to quantify the scale of a business to support
comparative analysis
How does SASB achieve each of the four fundamental tenets to
SASB's approach to standard-setting? - Answer -evidence based,
market informed, industry specific and transparent
What two documents define SASB's governance procedures, and what
purpose do they each serve? - Answer -Conceptual Framework -
defines the principles and characteristics of standard-setting process,
framework to resolve questions
Rules of Procedure - establishes the processes and practices followed
by SASB in its standard setting and governance and oversight of
related processes and practices
How do the SASB Standards evolve over time? - Answer -SASB
implements a project based model for standards development.
Proposal -> Standard setting project -> Board approval
What are two reasons why companies report using SASB standards? -
Answer -Primarily to meet unique ESG disclosure objectives
alongside other reporting frameworks like GRI, IIRC to link
sustainability management and financial performance to investors.
Where do companies disclose SASB data? - Answer -annual reports,
integrated reports, regulatory filings and sustainability reports.
How do companies disclose SASB-aligned data when a Standard does
not perfectly align with their business? - Answer -SICS developed to
pg. 3
