SASB FSA Level 1 Exam Study Guide with Complete Solutions Brundtland Report - Correct Answers Published in 1987 in the influential report "Our Common Future" and created by World Commision 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 - Correct Answers 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 - Correct Answers historical example about how a lack of transparency and public reporting can have disastrous consequences US SEC/Securities and Exchange Commission - Correct Answers Protects investors, maintains fair, orderly, and efficient markets, and facilitates capital formation materiality (as defined by the US Supreme Court) - Correct Answers information is material if its exclusion would have altered the "total mix" of information considered by a reasonable investor GAAP - Correct Answers Generally Accepted Accounting Principles historical cost accounting - Correct Answers 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) - Correct Answers replaced CAP to resolve tensions, reduce variation in accounting practices, and establish one standardized practice A statement of basic accounting theory - Correct Answers 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" 1 / 3
FASB (Financial Accounting Standards Board) - Correct Answers 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 - Correct Answers Earnings before interest, taxes, depreciation, and amortization 83% - Correct Answers how much tangible assets composed of market value of S&P 500 in 1975 10% - Correct Answers how much tangible assets composed of market value of S&P 500 in 2020 IFRS Management Commentary - Correct Answers -Provide management's view of the entity's performance, position, and progress -supplement and complement information presented in financial statements IASB 2017 guidance - Correct Answers "matters that could affect an entity's long-term prospects; the entity's intangible resources and relationships; and ESG matters" KPI - Correct Answers Key Performance Indicator US SEC on Management Disclosure and Analysis (MD&A) - Correct Answers -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 - Correct Answers environmental cost accounting - aims to analyze cause-and-effect relationships to identify the source of and measure environmental impacts EP&L - Correct Answers environmental profit and loss statements - seeks to assign a monetary value to the environmental costs associated with certain business activities 2 / 3
SRI - Correct Answers socially responsible investing problem with short-termism - Correct Answers though increases market liquidity, persistent short- termism may undermine the efficiency of capital markets and result in diminished public confidence and depressed returns
CDP - Correct Answers 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 - Correct Answers Carbon Disclosure Standards Board:
-offers companies a framework to disclose environmental information with the same rigor used to report financial information -encourages standardization of environmental reporting -helps investors, analysts, companies, regulators, stock exchanges, and accounting firms consider the impacts of natural capital -series of *principles* to abide by in reporting
GRI - Correct Answers global reporting initiative:
-independent standard-setting organization -helps companies/organizations report significant impacts on economy, environment, and surrounding society IIRC - Correct Answers International Integrated Reporting Council -
- helps companies connect sustainability disclosure to reporting on financial and other capitals:
- financial
- manufactured
- intellectual
- / 3