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SASB > Sasb > Flashcards

Sasb Flashcards

1
Q

What are examples of intangible assets?

A

Intellectual capital

Brand value

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2
Q

What is not accounted for in traditional accounting?

A

Intangible assets

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3
Q

Define “sustainability”

A

Sustainability is the ESG dimensions of a company’s performance and operations

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4
Q

when did the EU first adopt standards?

A

September 2014

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5
Q

What are the areas of the EU regs?

A

Hearse CBD

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6
Q

What does hearse stand for?

A

HR, Employees, Social, Environmental

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7
Q

What does CBD stand for?

A

Corruption, Bribery, Diversity

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8
Q

What does US require?

A

Material information be disclosed

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9
Q

Who determines materiality?

A

Up to each firm to determine materiality

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10
Q

When was PRI incepted

A

2006

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11
Q

If assets are intangible, what impacts you

A

1) ESG Risks, 2) Company’s actions on ESG risks and 3) regulations on ESG risks

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12
Q

Which direction does ESG disclosure look?

A

Forward

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13
Q

What is fiduciary duty?

A

Look after your clients’ interests instead of your own

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14
Q

What is “universal owner” approach?

A

You own the assets, but so does everyone else

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15
Q

What does Universal owner want?

A

Broad growth across multiple generations

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16
Q

What did Uniform Prudent Investor Act of 1992 require?

A

Consider sustainability information to be material for prudent fiduciaries BECAUSE it impacts valuation

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17
Q

What 2 US laws were passed after the Crash of 1929?

A

Securities Act of 1933 and the Exchange Act of 1934; Flipped alphabetically

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18
Q

What does 1933 Act Section 5(c) require?

A

Anti-Fraud: Fully and truthfully disclose information in a securities registration statement

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19
Q

What does the 1934 Act do?

A

Regulated exchanges and spells out ongoing reporting requirements

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20
Q

What are new reporting standards designed to do?

A

Change corporate behavior

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21
Q

How do the two Acts differ?

A

Sec. Act of ‘33 focuses on new issue, Exchange Act of ‘34 focuses on secondary markets

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22
Q

What does SEC Rule 10b-5 state?

A

No untrue statements; no misleading statements; broad anti-fraud rule

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23
Q

What does 1934 Exchange Act Section 12 require?

A

Registration of securities with “complete information”

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24
Q

What does 1934 Exchange Act Section 13 require?

A

Update initial registrations through periodic reporting, 10-K, etc.

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25
Q

What are the required annual reports?

A

Form 10-K, Form 20-F, Form 40-F

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26
Q

What is the required quarterly report?

A

Form 10-Q

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27
Q

What is the current period report?

A

Form 8-K

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28
Q

What is PCAOB?

A

Public Company Accounting Oversight Standards Board

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29
Q

When was PCAOB founded?

A

2002

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30
Q

What legislation founded it?

A

Sarbanes-Oxley

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31
Q

When did FASB start?

A

1973

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32
Q

What were earlier boards?

A

Committee on Accounting Procedure and Accounting Principles Board

CAP and APB

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33
Q

What did FASB work to do?

A

Codify GAAP

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34
Q

What was SFAC 2?

A

Focused on qualitative aspects of accounting: RRN; CMC/B

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35
Q

What is RRN

A

Relevant, Reliable and Nuetral

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36
Q

What is CMC/B?

A

Comparable, Material, Cost/Benefit to gather data

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37
Q

What is SFAC 8?

A

Redefined materiality in GAAP

38
Q

When was SFAC 8?

A

2010

39
Q

What did SFAC 8 say?

A

Replaces 1 and 2; To be relevant, it must be material

40
Q

Distinguish FASB from APB

A

FASB full-time, APB was part-time. FASB has staff, APB had no staff

41
Q

What is ASOBAT?

A

A Statement of—-Basic Accounting Theory

42
Q

What case defined “materiality”?

A

TSC vs. Northway in 1976

43
Q

How did TSC define “materiality”?

A

Leaving it out change the “total mix” of info available to the reasonable investor; Doesn’t have to change decision

44
Q

What kind of fact is material?

A

A fact “likely to be considered” is material

45
Q

What was “Basic vs. Levenson” about?

A

Basic in 1988 created a “test” testing materiality through 1) probability and 2) magnitude

46
Q

What was “Reese vs. Malone” about?

A

BP made false statements. Material omissions that would have “altered the total mix of information”

47
Q

What does FASB’s Staff Accounting Bulletin #99 say?

A

No bright line rule on materiality. Rejected at 5% +/- standard; Materiality is qualitative

48
Q

What did FASB say about materiality in 2014?

A

Materality is a legal concept

49
Q

What is diff between “relevant” and “material”?

A

Relevant is general idea of what is useful. Material is “judgment of reasonable person would be changed by inclusion of OR correction of this item.

50
Q

What did SEC say about ESG disclosures?

A

Didn’t want to include; minority of investors care

51
Q

What does the SEC position do?

A

SEC position conflicts with the ‘33 and ‘34 Acts desire to “change behavior”

52
Q

What is the purpose of sustainability accounting?

A

Purpose is to help close gap between market value and book value

53
Q

Where can you put sustainability metrics?

A

Sustainability metrics can be put into management accounting metrics

54
Q

Where could you use sustainability?

A

Balanced scorecard approach

55
Q

When are reporting requirements?

A

Current and periodic

56
Q

What is a 10-K?

A

Annual, comprehensive report with audited financials

57
Q

What does Reg S-X address?

A

Financial reports

58
Q

What does Reg S-K address?

A

Non-financial information

59
Q

When is a 10-Q filed?

A

10-Q is filed when there is not a 10-K, so 3 of 4 quarters

60
Q

What does a 10-Q contain?

A

Unaudited financials and current company condition

61
Q

What is an MD&A

A

Management Discussion and Analysis is abbreviated MD&A

62
Q

What 3 areas of 10-K would have sustainability language?

A

Item 101, 103 and 503c

63
Q

What is 10-K Section 101 of Reg S-K

A

Description of Business, so financial impact of any ESG issues, laws in Section 101

64
Q

What is 10-K Section 103 of Reg S-K

A

Legal proceedings–Did enviro laws change? in Section 103

65
Q

What is 10-K Section 503b of Reg S-K

A

What Risk Factors to business in Section 503b

66
Q

What is 10-K Section 303 of Reg S-K

A

That’s the MD&A section, section 303 is the MD&A section

67
Q

What must you disclose in MD&A?

A

Known trends must be disclosed

68
Q

What is optional to disclose in MD&A?

A

Anticipation of a future trend is optional

69
Q

What is MD&A about?

A

MD&A is about ‘known trends and uncertainties that are reasonably likely to have a “material impact” on operations and financial conditions

70
Q

What did the SEC say in 2003?

A

Disclosure should “look through eyes of management” and discuss quality and variability of cash flow and earnings

71
Q

What does 12b-20 of Exchange Act require?

A

Provide enough info to make ALL statements not misleading

72
Q

What did SEC say in 2010?

A

Four issues: Legislation/Regulation; International Agreements; Physical Impacts; Indirect Impacts (brand, demand, etc.)

73
Q

What did the 2010 SEC requirements do?

A

Created need to capture environmental information

74
Q

What is not a defense to inadequate disclosure?

A

Boilerplate disclosures aren’t a defense; each firm determines materiality

75
Q

What statutes can shareholders bring actions under?

A

‘34 Exchange Act, Section 10b and SEC Rule 10b-5

76
Q

What was the name of the post-1929 Crash Senate Banking Committee Report?

A

The Fletcher Report

77
Q

What did Supreme Court say about Securities Act of 1933?

A

Upheld it. “Full disclosure of information thought necessary to informed investment decisions”

78
Q

Why was 1934 exchange Act passed?

A

To fill gaps in the 1933 law

79
Q

What were the gaps in the 1933 law?

A

No regulation of stock exchanges

80
Q

What does SEC require in disclosure?

A

Make available all information that might be relevant to buy, hold or sell security

81
Q

When did the SEC permit GAAP?

A

1938

82
Q

What is “Decision-Usefulness”?

A

In ASOBAT (1966), moved away from valuation and toward what users would need to know

83
Q

What did ASOBAT focus on?

A

Discounted future cash flows

84
Q

What does “SFAC” stand for?

A

Statement of Financial Accounting Concepts

85
Q

What are the elements of SFAC 8?

A

Relevant, Faithful Representation//Comparable, Verifiable, Timely, Understandable

86
Q

What does 1934 Exchange Act Section 10(b) require?

A

Make an untrue statement of a material fact or omit a material fact

87
Q

What is optional in an MD&A?

A

“Anticipating a future trend or event, or a less predictable impact of a known event”

88
Q

What is required in an MD&A

A

Focus on Material information; Include KPIs; Analyze info disclosed; known trends and “uncertainties that are reasonably likely”;

89
Q

Who signs the statements per Sarbanes-Oxley?

A

CEO and CFO certify the content of the issuer’s reports

90
Q

What do you certify under Sab-Ox?

A

1) Material accuracy, 2) effective disclosure controls and 3) inadequacies in/changes to internal controls about financial reporting

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