SASB FSA 1 EXAM STUDY GUIDE
What is the primary challenge that the disclosure of company policies (such as ESG
policies or whistleblower policies) can pose to investment analysis?
A. The presence of a company policy is represented through binary data, which does
not provide useful insight into actual company performance
B.Company policies always increase the labor burden of analysis, where large narrative
documents must be manually processed
C.Company policies may be written in response to poor performance and often provide
fraudulent data, reducing the reliability of the information
D.It is not always clear who at the company is accountable for implementing the policy,
inhibiting investor-investee engagement - Correct Answers -The presence of a company
policy is represented through binary data, which does not provide useful insight into
actual company performance
How do trends in index investing influence corporate-investor engagement on
sustainability?
A.The decline of index investing can encourage investment stewardship through proxy
voting
B.The growth of index investing can encourage use of the "Wall Street rule" and
decrease dialogue-based engagement
C.The decline of index investing can encourage shareholders to file resolutions and
increase withdrawal rates
D.The growth of index investing can encourage investment stewardship based on how
buy-sell decisions are made - Correct Answers -D.The growth of index investing can
encourage investment stewardship based on how buy-sell decisions are made
Corporate disclosures of sustainability information serve which two (2) of the following
purposes in capital markets? (Choose 2)
,A.Aid in valuation for financial analysts
B.Demand additional regulation for corporations
C.Allow investors to assess risks and opportunities related to their investments
D.Prevent non-governmental organizations from "naming and shaming" poor ESG
performers - Correct Answers -A.Aid in valuation for financial analysts
C.Allow investors to assess risks and opportunities related to their investments
Why is SASB's objective of cost-effectiveness for reporting companies ultimately in the
best interest of providers of capital?
A.If companies limit the amount of information they report, they are more likely to report
information that is material, reducing the level of immaterial data in the market
B.If companies spend more than the value disclosure generates, there is potential for
sustainability disclosure as a business function to negatively impact enterprise value
C.If companies increase spending on reporting processes, they will be better equipped
to gather and disclose new data, increasing the availability of sustainability data
available
D.If companies focus on internal reporting to inform performance management
decisions, they will naturally produce decision-useful information that meets the needs
of external users - Correct Answers -B.If companies spend more than the value
disclosure generates, there is potential for sustainability disclosure as a business
function to negatively impact enterprise value
Which two (2) features explain how SASB's standards-development process is
designed to improve the decision-usefulness of sustainability information for investors?
(Choose 2)
A. A topic is only included in a standard if it includes evidence of financial impacts
B. Investors' feedback during the standards development process is prioritized over
other stakeholders
C. The accounting metrics are quantitative to make it easier to integrate into
conventional financial analysis tools
D. The technical protocols are intended to improve the reliability of the information by
forming the basis for suitable criteria - Correct Answers -A. A topic is only included in a
standard if it includes evidence of financial impacts
D. The technical protocols are intended to improve the reliability of the information by
forming the basis for suitable criteria
An analyst wants to understand the connection between a company's sustainability data
and one of four financial drivers (revenue, cost, assets and liabilities, and cost of capital)
that are relevant to a discounted cash flow (DCF) analysis. Choose the pairing that
correctly matches a data type with its relevance to a DCF analysis.
, A. Data about factors that drive brand value : impacts on valuation methods for assets
and liabilities
B. Data about regulatory compliance : operational performance and cost structure
C. Data about product features required by law : cost structure for profitability ratios
(e.g. ROI)
D. Data about the number of safety incidents : revenue growth in the context of price-
based ratios (e.g. PE or PEG ratios) - Correct Answers -B. Data about regulatory
compliance : operational performance and cost structure
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end?
A. Impact Investing
B. Negative Screening
C. ESG Integration
D. Positive Screening - Correct Answers -C. ESG Integration
Which two (2) statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard? (Choose 2)
A. "Labor Practices is a frequent topic in media coverage of the industry and
shareholder resolutions in the industry but it is not important to our customers or our
board of directors."
B. "The industry is not unionized and strikes are a rare occurrence within the industry.
Workers are generally extremely well paid and labor practices are healthy for the most
part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
D. "Surveyed customers and suppliers indicated that cost containment strategies
warranted disclosure except where it concerned what they viewed as a non-issue—
labor practices— even though lab - Correct Answers -B. "The industry is not unionized
and strikes are a rare occurrence within the industry. Workers are generally extremely
well paid and labor practices are healthy for the most part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
What does the history of the formation of accounting standards-setting organizations -
leading up to the establishment of the global International Accounting Standards Board
What is the primary challenge that the disclosure of company policies (such as ESG
policies or whistleblower policies) can pose to investment analysis?
A. The presence of a company policy is represented through binary data, which does
not provide useful insight into actual company performance
B.Company policies always increase the labor burden of analysis, where large narrative
documents must be manually processed
C.Company policies may be written in response to poor performance and often provide
fraudulent data, reducing the reliability of the information
D.It is not always clear who at the company is accountable for implementing the policy,
inhibiting investor-investee engagement - Correct Answers -The presence of a company
policy is represented through binary data, which does not provide useful insight into
actual company performance
How do trends in index investing influence corporate-investor engagement on
sustainability?
A.The decline of index investing can encourage investment stewardship through proxy
voting
B.The growth of index investing can encourage use of the "Wall Street rule" and
decrease dialogue-based engagement
C.The decline of index investing can encourage shareholders to file resolutions and
increase withdrawal rates
D.The growth of index investing can encourage investment stewardship based on how
buy-sell decisions are made - Correct Answers -D.The growth of index investing can
encourage investment stewardship based on how buy-sell decisions are made
Corporate disclosures of sustainability information serve which two (2) of the following
purposes in capital markets? (Choose 2)
,A.Aid in valuation for financial analysts
B.Demand additional regulation for corporations
C.Allow investors to assess risks and opportunities related to their investments
D.Prevent non-governmental organizations from "naming and shaming" poor ESG
performers - Correct Answers -A.Aid in valuation for financial analysts
C.Allow investors to assess risks and opportunities related to their investments
Why is SASB's objective of cost-effectiveness for reporting companies ultimately in the
best interest of providers of capital?
A.If companies limit the amount of information they report, they are more likely to report
information that is material, reducing the level of immaterial data in the market
B.If companies spend more than the value disclosure generates, there is potential for
sustainability disclosure as a business function to negatively impact enterprise value
C.If companies increase spending on reporting processes, they will be better equipped
to gather and disclose new data, increasing the availability of sustainability data
available
D.If companies focus on internal reporting to inform performance management
decisions, they will naturally produce decision-useful information that meets the needs
of external users - Correct Answers -B.If companies spend more than the value
disclosure generates, there is potential for sustainability disclosure as a business
function to negatively impact enterprise value
Which two (2) features explain how SASB's standards-development process is
designed to improve the decision-usefulness of sustainability information for investors?
(Choose 2)
A. A topic is only included in a standard if it includes evidence of financial impacts
B. Investors' feedback during the standards development process is prioritized over
other stakeholders
C. The accounting metrics are quantitative to make it easier to integrate into
conventional financial analysis tools
D. The technical protocols are intended to improve the reliability of the information by
forming the basis for suitable criteria - Correct Answers -A. A topic is only included in a
standard if it includes evidence of financial impacts
D. The technical protocols are intended to improve the reliability of the information by
forming the basis for suitable criteria
An analyst wants to understand the connection between a company's sustainability data
and one of four financial drivers (revenue, cost, assets and liabilities, and cost of capital)
that are relevant to a discounted cash flow (DCF) analysis. Choose the pairing that
correctly matches a data type with its relevance to a DCF analysis.
, A. Data about factors that drive brand value : impacts on valuation methods for assets
and liabilities
B. Data about regulatory compliance : operational performance and cost structure
C. Data about product features required by law : cost structure for profitability ratios
(e.g. ROI)
D. Data about the number of safety incidents : revenue growth in the context of price-
based ratios (e.g. PE or PEG ratios) - Correct Answers -B. Data about regulatory
compliance : operational performance and cost structure
On the spectrum of "values-" to "value"-focused investing, which investment strategy
that uses sustainability information is farthest on the "value" end?
A. Impact Investing
B. Negative Screening
C. ESG Integration
D. Positive Screening - Correct Answers -C. ESG Integration
Which two (2) statements, if true, provide evidence that the potential disclosure topic of
Labor Practices fails to meet the criteria for inclusion in the Oil & Gas - Services
Standard? (Choose 2)
A. "Labor Practices is a frequent topic in media coverage of the industry and
shareholder resolutions in the industry but it is not important to our customers or our
board of directors."
B. "The industry is not unionized and strikes are a rare occurrence within the industry.
Workers are generally extremely well paid and labor practices are healthy for the most
part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
D. "Surveyed customers and suppliers indicated that cost containment strategies
warranted disclosure except where it concerned what they viewed as a non-issue—
labor practices— even though lab - Correct Answers -B. "The industry is not unionized
and strikes are a rare occurrence within the industry. Workers are generally extremely
well paid and labor practices are healthy for the most part."
C. "There are instances where labor practices is material in a specific set of
circumstances— such as in Gabon in 2013—but it is not material across the industry."
What does the history of the formation of accounting standards-setting organizations -
leading up to the establishment of the global International Accounting Standards Board
