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E2 IFRS Sustainability Disclosure Standards and ethics

Written by Saad Rahman (ACCA)

ACCA · New at Expertise level · 8 questions

Name: ____________________   Date: ____________

  1. Which are the four pillars of the core content of IFRS S1?

    • A Governance, strategy, risk management, and metrics and targets
    • B Planning, control, audit and review
    • C Assets, liabilities, income and expenses
    • D Revenue, cost, profit and tax

  2. IFRS S2 is about:

    • A Financial instruments
    • B Leases
    • C Revenue
    • D Climate-related disclosures

  3. An entity is exposed to the risk of new carbon taxes. What type of climate risk is this?

    • A Transition risk
    • B Liquidity risk
    • C Credit risk
    • D Physical risk

  4. A factory could be damaged by flooding. What type of climate risk is this?

    • A Physical risk
    • B Tax risk
    • C Market risk
    • D Transition risk

  5. Under the IFRS Sustainability Disclosure Standards, information is material if it could influence decisions of:

    • A Only the government
    • B The general public
    • C Investors, lenders and other creditors
    • D Only employees

  6. What does double materiality add to financial materiality?

    • A The entity's impacts on people and the environment
    • B Two sets of financial statements
    • C A tax adjustment
    • D A second audit

  7. Which are Scope 1 emissions?

    • A Direct emissions from sources the entity owns or controls
    • B Emissions from customers' use of products
    • C Emissions from purchased electricity
    • D Emissions in the supply chain

  8. A finance director asks an accountant to overstate an entity's sustainability performance. Which behaviour does this describe?

    • A Prudent reporting
    • B A permitted policy choice
    • C Greenwashing, which threatens integrity
    • D A normal estimate

Answer key

1. A, 2. D, 3. A, 4. A, 5. C, 6. A, 7. A, 8. C

  1. IFRS S2 applies the same structure to climate.

  2. It covers physical and transition risks and opportunities.

  3. Transition risks arise from the move to a low carbon economy.

  4. Physical risks come from acute events or longer-term shifts in climate.

  5. This is financial materiality.

  6. It is used in the European Sustainability Reporting Standards.

  7. Scope 2 is purchased energy and Scope 3 is the value chain.

  8. Misleading statements breach the fundamental principles.