CPA Article Test

Question 1

What Is happening?

Answer 1

IFRS (International Financial Reporting Standards) Foundation of Trustees set accounting rules for 140 jurisdictions and now they have:

• Created the International Sustainability Standards Board (ISSB) to codify sustainability reporting

• ISSB Has the: Sustainability Accounting Standards board and Task Force on Climate -Related Financial Disclosures

Question 2

What does the IFRS Stand For?

Answer 2

IFRS (International Financial Reporting Standards)

Question 3

What does ISSB stand for?

Answer 3

International Sustainability Standards Board

Question 4

What 2 things does the ISSB incorporate?

Answer 4

1. Sustainability Accounting Standards Board
2. Task Force on Climate-Related Financial Disclosures

Question 5

What are the 4 areas of Disclosure?

Answer 5

a. Governance

b. Strategies to address sustainability in the
• Short term
• Medium term; and
• Long term

c. Risk management protocols

d. Sustainability targets

Question 6

Define Governance

Answer 6

Governance is the management framework for making decisions.

Question 7

Define Protocols

Answer 7

Protocols are a set of rules and procedures.

Question 8

Companies will need to describe how climate change related risks affect…

Answer 8

• Business model
• Cost of borrowing
• cash flow

Question 9

What will the companies need to address with climate related risks?

Answer 9

• Acute risks (e.g. floods and cyclones)
• Chronic risks (e.g. hotter temperatures and rising sea levels)

Question 10

Define Business Model

Answer 10

is how a business makes money; how do they generate revenues etc.

Question 11

What does the CSSB stand for, and what will it do?

Answer 11

Canadian Sustainability and Standards Board (CSSB) will give Canada a voice in the ISSB as it develops the standards

Question 12

Who will develop assurance Standards?

Answer 12

IAASB (International Auditing and Assurance standards board)

Question 13

Define Assurance Standards

Answer 13

will set out procedures for reviewing the data so that you get (accuracy, reliability, completeness, relevance and timeliness)

Question 14

What did the Exxon Valdez Oil Tanker Accident lead to?

Answer 14

Exxon Valdez oil tanker spill of 41 million litres of oil in 1989 triggered billions of dollars in penalties for Exxon and lead to the demand by the public for information on environmental records of companies

Exxon Valdez lead to the establishment of the Global Reporting Initiative that created the first framework for sustainability reporting in 2000

Question 15

What does ESG Stand For?

Answer 15

environmental, social and governance guidelines

Question 16

What are the controversial issues?

Answer 16

1. Politics-there is an American political right-wing backlash against ESG
2. Should the focus be on sustainability that affects the value of the company, or sustainability that affects the value of the company AND the impact on the planet regardless of financial materiality
3. Should the reports include “hardcore” data on issues like greenhouse gas emissions, and pollution to prevent greenwashing

Question 17

Define Materiality:

Answer 17

refers to whether a piece of information or material is likely to influence an investor’s decision. Accordingly, items that involve small amounts of money are not material.

Question 18

Define Greenwashing

Answer 18

is when a company makes vague statements designed to give the impression that the company is pursuing environmental sustainability.