Financial Sector (Collection of Data) determination No. 49 of 2005 (Cth)

Financial Sector (Collection of Data) determination No. 49 of 2005

Reporting Standard SRS 110.2 (2005)

Financial Sector (Collection of Data) Act 2001

I, Wayne Stephen Byres, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (‘the Act’) MAKE the reporting standard set out in the Schedule, which applies to the trustees referred to in paragraph 2 of the reporting standard.
Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those trustees on the date of registration on the Federal Register of Legislative Instruments.
Dated 2^nd August 2005
[Signed]
Wayne Byres
Executive General Manager
Diversified Institutions Division
APRA
Interpretation

In this Notice

APRA means the Australian Prudential Regulation Authority.

Schedule

Reporting Standard SRS 110.2 (2005)

Derivative Financial Instruments
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It applies when a superannuation entity had total assets of $50 million or more at the end of the most recent year of income for the entity at the time for reporting.[1] The trustee of such an entity must give APRA, on a quarterly basis, certain disclosures regarding the net market value and type of derivative financial instruments held.
This reporting standard outlines the overall requirements for the provision of the required information to APRA. It should be read in conjunction with:
[1] Except where the entity was a small APRA fund, a self-managed superannuation fund, or a single member approved deposit fund at the end of the most recent reporting period under this reporting standard.

Form SRF 110.2 Derivative Financial Instruments (Form SRF 110.2) and the instructions to that form; and
·the Quarterly Reporting Requirements and General Instructions Guide
which are attached and form part of this reporting standard.
Purpose

Data collected in Form SRF 110.2 is used by APRA for the purpose of prudential supervision and by the Australian Bureau of Statistics for statistical purposes, including the compilation of the Australian Financial Accounts.
Application and commencement
This reporting standard will apply, from the date of registration of the reporting standard on the Federal Register of Legislative Instruments, to each trustee of a relevant registered superannuation entity, as defined by paragraph 3.
A superannuation entity is a relevant registered superannuation entity if:

(a) at the end of the most recent year of income (within the meaning of section subsection 10(1) of the SIS Act) of the superannuation entity at the time for reporting, it had total assets of at least $50 million; and
(b) at the end of the most recent reporting period for the entity, it was not:

a small APRA fund;
a self managed superannuation fund; or
a single member approved deposit fund.
Note: For example, if a superannuation entity (other than one excluded by paragraph (b)) satisfied paragraph (a) at the end of its most recent year of income, but during the most recent quarterly reporting period its assets fell below $50 million, the trustee of that entity will still have to report under this reporting standard in respect of that reporting period.
Note: Part 2B of the SIS Act makes provision for the registration of superannuation entities. However, although it is expected that most superannuation entities covered by this reporting standard will become registered under Part 2B, either during or after the licensing transition period referred to in the SIS Act, it is not a requirement of the definition of ‘relevant registered superannuation entity’ that a superannuation entity actually be registered under Part 2B. A superannuation entity will be a ‘relevant registered superannuation entity’ if it meets the definition in paragraph 3 of this reporting standard, even if it has not been registered under Part 2B. This note is inserted for the avoidance of doubt.
Information required

The trustee of a relevant registered superannuation entity must provide APRA with the information required by Form SRF 110.2, in respect of the entity, for each reporting period.
For the avoidance of doubt, if the trustee is trustee of more than one relevant registered superannuation entity, the trustee must separately provide the information required by the form for each of those relevant registered superannuation entities.
Forms and method of submission
The information required by this reporting standard must be given to APRA by the trustee of a relevant registered superannuation entity either:

(a) where subparagraph (b) does not apply:

in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
by manually completing Form SRF 110.2 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales; or

(b) by means of an agent to whom the trustee has outsourced the function of providing the information on the trustee’s behalf, in which case the agent must provide the information:

in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application: or
if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under sub-subparagraph (i), by manually completing Form SRF 110.2 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Note: The ‘Direct to APRA’ software and relevant forms may be obtained from APRA.
Reporting periods and due dates

Subject to paragraph 8, the trustee of a relevant registered superannuation entity must provide the information required by this reporting standard in respect of each quarter based on the year of income (within the meaning of subsection 10(1) of the SIS Act) of the entity.
APRA may, by notice in writing change the reporting periods, or specified reporting periods, for a particular relevant registered superannuation entity to require the trustee to provide the information required by this reporting standard in respect of the entity:

(a) more frequently (if, having regard to the particular circumstances of the entity, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the entity); or
(b) less frequently (if, having regard to the particular circumstances of the entity and the extent to which it requires prudential supervision, APRA considers it unnecessary to require it to provide the information on a quarterly basis).

The information required by this reporting standard must be provided to APRA within 25 business days after the end of the reporting period to which it relates.
APRA may grant a trustee an extension of a due date in writing, in which case the new due date for the provision of the information will be the date on the notice of extension.
Quality control
Information required under this reporting standard is not required to be audited or tested by the auditor of the superannuation entity.
The information provided by a trustee under this reporting standard must be the product of processes and controls developed by the trustee for the internal review and authorisation of that information. It is the responsibility of the trustee to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Note: The trustee of a superannuation entity is not required: (a) to digitally sign or authorise the information required by this reporting standard when provided electronically; or (b) to sign the form when submitting the information on paper.
Minor alterations to form and instructions
APRA may make minor variations to:

(a) a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b) the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.

If APRA makes such a variation it must notify trustees of relevant registered superannuation entities in writing.
Transitional
If the due date for providing information in respect of a reporting period of a relevant registered superannuation entity is a day after the date of registration of this reporting standard on the Federal Register of Legislative Instruments, the trustee of that entity must provide the information required by this reporting standard in respect of that reporting period (even if the reporting period itself ended before the date of registration of this reporting standard).
Interpretation
In this reporting standard:
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
business day means an ordinary business day, exclusive of Saturdays, Sundays and public holidays;
due date means the relevant due date under paragraph 9 or, if applicable, paragraph 10;
officer in relation to a trustee of a relevant registered superannuation entity means:

(a)      if the trustee is a corporation – a director or officer of that corporation;
(b)      if the trustee is a natural person – that person; or
(c)      if two or more natural persons are trustees of the entity – one of those persons;
regulated superannuation fund has the meaning given by section 19 of the SIS Act;
relevant registered superannuation entity has the meaning given by paragraph 3 of this reporting standard;
reporting period means a period mentioned in paragraph 7 or, if applicable, paragraph 8;
self managed superannuation fund has the meaning given by section 17A of the SIS Act;
single-member approved deposit fund means an approved deposit fund (within the meaning of subsection 10(1) of the SIS Act) that has only one member;
SIS Act means the Superannuation Industry (Supervision) Act 1993;
small APRA fund means a regulated superannuation fund that has fewer than 5 members and is regulated by APRA under the SIS Act;
superannuation entity has the meaning given by subsection 10(1) of the SIS Act.
Note: Subsection 10(1) of the SIS Act provides that superannuation entity means a regulated superannuation fund, or an approved deposit fund, or a pooled superannuation trust (as defined in the SIS Act).

Reporting Form SRF 110.2
Derivative Financial Instruments

Instruction Guide

Completion of SRF 110.2 Derivative Financial Instruments
This form must be completed on a quarterly basis by trustees of all APRA-regulated superannuation entities excluding Small APRA Funds (SAFs) and Single Member Approved Deposit Funds (SMADFs), where the superannuation entity has total assets of at least than $50m at the end of its most recent financial year.
Trustees of superannuation entities that invest only in PSTs are not required to complete SRF 110.2 Derivative Financial Instruments. These forms can be left blank as D2A recognises blanks as zeros; however they are still required to be submitted as part of the annual return. Trustees of superannuation entities holding Investments in PSTs that have a value of more than 5% of total assets,will be required to report on SRF 120.0 Exposure Concentrations.
Trustees of those superannuation entities that are required to complete SRF 110.2 Derivative Financial Instruments on a quarterly basis must also complete SRF 210.2 Derivative Financial Instruments on an annual basis.
Note: All forms included in the SRF 100 series should be submitted together as a quarterly return, not individually as separate forms.
Purpose
This form collects information on derivative financial instrument exposure of a superannuation entity.
This Guide has been prepared to assist in the completion and lodgement of SRF 110.2 Derivative Financial Instruments. For ease of use, the Guide has been split into three main sections as follows:

Lodgement and validation of SRF110.2 Derivative Financial Instruments;
General guidance – this guidance provides principles that should be applied to all items throughout SRF 110.2 Derivative Financial Instruments; and
Instruction guide for specific items – this guidance should be applied to the specific items which relate to each superannuation entity.
Lodgement and validation of SRF 110.2 Derivative Financial Instruments
Lodgement and authentication codes
This form must be completed and lodged to APRA by a corporate or natural ‘person’ (trustee director or administrator), and not by the superannuation entity as the entity is not a ‘person’.
Once SRF 110.2 Derivative Financial Instruments has been completed and submitted to APRA, an authentication code is generated in D2A from information entered into the form. The authentication code and date submitted appear in the footer of each page of the form. Any change of information entered or resubmission of the form will result in a change to the authentication code.
A receipt indicating successful lodgement of the form will be provided via email. There may be a slight delay in a receipt being provided if the submission is made in the last week of October. Do not resubmit your form however, as the receipt will be generated.
Validation and calculation of totals
When data is entered into the form, the total balances (in the greyed out cells) will not be calculated automatically. The total items will only calculate when the form is validated. Clicking on the word 'validate' in the top left hand corner of the screen and selecting ‘OK’ will result in the total items being calculated and the validation rules appearing for review.
There are three types of validation rules as follows:

Warnings: Confirmation rules – this rule requires the user to provide confirmation that the data entered into an item is correct, for example that a negative number is correct and should not be positive. To provide confirmation the user should click the confirm box and provide a brief description in support of the item.
Note: Descriptions entered for warnings may not always appear if the return is validated more than once. There is no need to re-enter the description as D2A has saved this description and the comments will be lodged with the return.
Error: Mandatory rules – this indicates an error in an item, for example a description and a value must be included in a table. These errors must be corrected before the return can be lodged.
Cross form validations – this also indicates an error and must be corrected before the return can be lodged, for example Totals disclosed in SRF 110.0 Statement of Financial Position item 12 ‘Net assets available to pay benefits’ must agree with the net assets reported in item 23 ‘Net assets available to pay benefits at the end of the reporting period disclosed on SRF 100.0 Statement of Financial Performance for each quarter.
General guidance for completion of SRF 110.2 Derivative Financial Instruments
Important!
Report all disclosures rounded to the nearest thousand dollars. Do not use decimal numbers i.e. when dividing the value to obtain a rounded balance to the nearest thousand dollars, ensure that the figure is whole.
Important!
There is no materiality limit applied to the disclosure of amounts within SRF 110.2 Derivative Financial Instruments. All balances must be recorded. Amounts cannot be omitted based on materiality levels. Each superannuation entity should use its own judgement in grouping items into meaningful categories (where applicable).
Important!
Zeros are not required where there is no dollar value for an item. If there is no balance for an item, leave it blank, as D2A recognises blanks as zeros.
Important!
If a balance has moved significantly since the previous quarter, the Trustee may be requested to explain or verify this movement to APRA.
Scope
Include

For the purpose of this form only include derivative financial instruments acquired directly by the superannuation entity (i.e. as part of an internal investment management).
Exclude
Derivatives investments held through an external individually managed mandate/portfolio or discretely managed portfolio (i.e. the superannuation entity is not required to look at the underlying investments in investment vehicles to ascertain the derivatives exposure); and
Derivatives investments held indirectly through an investment manager, for example derivatives which form part of the investments of a wholesale trust or Pooled Super Trust in which the superannuation entity invests.

Definitions for specific items
Exchange-traded derivatives contracts and over-the-counter derivatives
Exchange-traded contracts
These refer to derivative contracts that are transacted on recognised futures or options exchange (e.g. the Sydney Futures Exchange) and are subject to daily mark-to-market and margin payment. These contracts are transacted in standardised parcels. The clearing house effectively becomes the counterparty to all derivative positions.
'Over-the-counter' derivative financial instruments (OTC)
These refer to derivative contracts that are not traded on a recognised exchange. Instead these contracts are transacted between individual counterparties (most commonly with a bank). The details of a derivative contract can be negotiated between the contracting parties. For OTC derivative contracts, the other party to the contract is the counterparty.
Derivative financial instruments
Derivatives expose superannuation entities to a full range of investment risks, even though in many cases there may be no, or only a small initial outlay. Superannuation entities should set aside capital to cover the investment risk of these transactions, particularly where derivatives are used for purposes other than hedging risk associated with the underlying position.
Derivatives are generally defined as those instruments/contracts, where the value is based on other products, and/or on prices associated with financial products. Derivative contracts involve:
Future delivery, receipt or exchange of financial items such as cash or another derivative instrument; or
Future exchange of real assets for financial items where the contract may be tradeable and has a market value.
The contracts can either be binding on both parties (e.g. as with a currency swap) or subject to the exercise by one party of a right contained within the contract (as with options).
Derivative products/contracts include but are not limited to the following:
Equity warrants;
Options (including call and put options; exchange-traded and over-the-counter options; interest-rate, bullion, commodity and equity options; warrants);
Interest rate swaps;
Cross-currency interest-rate swaps;
Foreign exchange swaps;
Foreign exchange forwards;
Futures (i.e. bank bill, bond, equity); and
Forward rate agreements.
Exclude the following:
Derivative margin accounts, which hold deposits lodged with an exchange or clearing house as collateral to cover adverse movements in market prices. These balances are to be reported as investments under item 3.1. “Deposits, placements and debt securities” in SRF 110.0 Statement of Financial Position. However these amounts may qualify for reporting under item 6 of this form;
Repurchase/resale agreements despite their similarity to forward rate agreements and/or swaps.

Instruction guide for specific items
Explanation of columns
Report the Net market value under the relevant columns:
Interest Rate Contracts;
Foreign exchange contracts;
Equity contracts;
Precious Metal Contracts (including gold);
Other Market related contracts;
Total.

Exchange traded derivatives
Record the aggregate net market value for each contract type (i.e. interest rate contracts, equity contracts).
Over-the-counter derivatives
This section of the form requires the reporting of the aggregate net market value of all over the counter derivative contract positions of the reporting superannuation entity.

Total derivative financial instruments
Represents the value reported for item 1 plus item 2. Total should agree to the sum of item 3.4 and item 6 on SRF 110.0 Statement of Financial Position.
Total derivative financial instruments used to hedge underlying exposures of the entity
Report the total net market value of derivative financial instruments for each market contract type that are contracted by the superannuation entity for the purposes of hedging the price movement of underlying assets and liabilities of the superannuation entity.
Total derivative financial instruments classified into the following:
These refer to all derivative contracts both exchange-traded and over-the-counter contracts. Classify the net market value (as reported in item 4) for each market type into the following:

5.1.   Warrants
A warrant is an option issued in the form of a security, usually written for a longer term. A warrant has the same function as an option: it provides the right to buy a specific amount of the underlying securities or shares, but is itself tradeable. Warrants are available in a range of types such as debt or equity.
5.2.   Bought options
Report option positions where the superannuation entity has purchased an option position (i.e. a call or put option) and has the right but not the obligation to exercise the option against the writer and request delivery of the underlying security or cash settlement.
5.2.1.     Call options
5.2.2.     Put options
5.3.   Written (sold) options
Report option positions where the superannuation entity has written/sold option positions (i.e. call or put options) and as a result has an obligation to deliver the underlying product or cash, if exercised by the holder of the option position, sold by the entity.
5.3.1.    Call options
5.3.2.    Put options
5.4.   All Other
Record the value of all other types of derivative products the superannuation entity has exposure to (other than those disclosed individually above in points 5.1 to 5.3.2).

Value of assets of the superannuation entity that are pledged to secure derivative positions
Report the value of money or asset (e.g. listed equity securities) that are pledged or lodged with an entity, to support the derivative positions/exposures of the superannuation entity.

Quarterly Reporting Requirements and General Instruction Guide
Entities subject to quarterly reporting
Trustees of superannuation entities that are regulated by APRA, including the following entities, are required to complete the quarterly reporting requirements listed in the Reporting Requirements Table below where the total assets of the superannuation entity are equal to or exceed $50m at the end of the most recent year of income of the entity:

Public Offer Superannuation entities;
Other APRA regulated superannuation entities;
Multi-Member Approved Deposit Funds;
Pooled Superannuation Trusts; and
Eligible Rollover Funds.
Excluded
Small APRA Funds (SAFs); and
Single-member Approved Deposit Funds.
Reporting Requirements Table

Form Number Form Name

SRF 100.0 Statement of Financial Performance

SRF 110.0 Statement of Financial Position

SRF 110.1 Selected Disclosure of Investments (Version A)

SRF 110.1 Selected Disclosure of Investments (Version B)

SRF 110.2 Derivative Financial Instruments

SRF 120.0 Exposure Concentrations

SRF 110.1 Selected Disclosure of Investments (Version A) and (Version B)
A trustee of a superannuation entity with total assets equal to or greater than $50m at the end of the entity’s most recent year of income is only required to complete one version of this form. The version of this form that will be appropriate for a superannuation entity will depend on whether a superannuation entity has total assets that qualify it to be considered within the largest 200 superannuation entities in the industry.
Where a superannuation entity has total assets that qualify it to be considered within the largest 200 superannuation entities in the industry, it is required to complete version B of this form. The ABS has indicated that it requires only these entities to be subject to the specific reporting requirements that are contained in this form.
Version A of this form is only to be completed by a trustee of a superannuation entity where the total assets of the superannuation entity are equal to or greater than $50m at the end of the entity’s last year of income but the superannuation entity is not considered to be within the largest 200 entities in the industry, in terms of total asset size. Version A of this form only includes the specific reporting requirements of the APRA.
APRA will advise those superannuation entities that are within the ‘top 200’ grouping and the reporting package will be customised (in the D2A reporting forms) so that the correct version is automatically applied to the superannuation entity.
Application of the threshold for quarterly reporting
The application of quarterly reporting is to be determined by trustees of superannuation entities at the start of the financial year. A determination at the start of the financial year regarding the application of the quarterly reporting requirements to the superannuation entity is effective for the entire financial year regardless of subsequent increases and decreases in asset size of the superannuation entity during that financial year (e.g. where the total assets of the superannuation entity subsequently decrease below the $50m in total assets threshold).
Audit requirements
Quarterly reporting requirements are not subject to audit.

Reporting period

Quarterly reporting periods are based on the year of income of the superannuation entity not a calendar year basis. Quarters are defined as four periods of three whole months each.
Important!
The financial information requested in these quarterly forms is to be reported as at the last day of the reporting period on a financial year to date basis of the superannuation entity, rather than for the individual quarter alone.
Lodgement requirements
Forms required on a quarterly basis are to be lodged within 25 business days after the end of the reporting quarter. The lodgement deadline is predominantly a requirement of the Australian Bureau of Statistics for the purposes of collating and preparing the national aggregates and statistics.
Four sets of quarterly returns are required each year.
Amendments
Where the superannuation entity makes a material adjustment to any data relating to quarter(s) for which a return has been lodged, amended quarterly returns for the quarter (and for any subsequent quarters affected by the adjustment) must be lodged with APRA within 25 business days of the adjustment being made.
Basis of preparation
In completing these forms, unless otherwise specifically stated in the instruction guide for each form:
Basis of accounting (Cash vs Accruals):
The forms should be prepared on a basis consistent with the accounting treatment (cash or accruals basis) adopted by the superannuation entity for annual financial reporting purposes. APRA would ordinarily expect that regulated superannuation entities are ‘reporting entities’, and will therefore apply an accruals basis, in accordance with the requirements of Australian Accounting Standards and the guidance in APRA Superannuation Circular No. V.A.2.
Important!
Once selected, the basis of accounting used must be consistent for all 4 quarterly returns and the corresponding annual return;
Direct vs Indirect investments:
Certain items on the forms distinguish between ‘directly held’ investments and those which are not directly held.

Directly held investments are those made by the superannuation entity in its own name, as part of the internal investment management function. This includes investments held by a custodian where these are held in Trust for the entity and the superannuation entity retains the decision-making function regarding the making and redeeming of particular investments within the portfolio.
Investments that are not directly held include underlying investments that are held with external investment managers (such as investments in PSTs or unit trusts), and investments held via individually managed mandates/portfolios where the decision-making function regarding the making and redeeming of particular investments within the portfolio may rest with the investment manager.
Disclosures regarding investments that are not directly held are not required to be made on a look-through basis.
Netting off of Amounts:
Unless otherwise specifically stated, data in the forms should be reported on a gross basis, with no netting, even where the institutions comply with the prerequisites for netting outlined in the current Australian Accounting Standards..
Scope:
The forms are to be prepared based on the total transactions of the superannuation entity regardless of the residency status of members or the location or registration of the asset or liability items;
Do not include a consolidation of any controlled entities;
Unless otherwise indicated, report all items on the form as positive numbers; and
Superannuation entities are to follow Australian Accounting Standards and other mandatory reporting requirements and other statutory requirements where possible, regarding the interpretation, recognition and measurement of items of income, expense, assets and liabilities; notably AAS 25 ‘Financial Reporting of Superannuation Plans’.
Net Market Value:
AAS 25 requires a superannuation entity to adopt net market value measurement where the superannuation entity is deemed to be a reporting entity. For the purposes of prudential reporting all superannuation entities are to adopt net market value measurement irrespective of their deemed reporting entity status.
Net market value has the same meaning as defined in the Australian accounting standard/AAS 25. A definition is provided in the ‘Glossary of Terms’. Any change in the values at which such assets are measured must be recognised as revenues (or losses) in the reporting period in which the change occurs.
Accounting Standards AAS 4 ‘Depreciation’, AAS 10 ‘Recoverable Amount of Non-Current Assets’ and AASB 1041 ‘Revaluation of Non-Current Assets’ do not apply to such investments.
Market value of charged/encumbered assets
If an asset is in any way subject to a charge, covenant, encumbrance, option to purchase or any other arrangement by way of agreement or statute, that restricts the net market value of the asset, the market value needs to reflect the existence of these arrangements. For example, if the superannuation entity has agreed to deliver an asset to a purchaser at a price below the arms length market value, the market value cannot exceed the agreed price.
Unit of measurement
The above forms are to be prepared in thousands of Australian dollars (AUD), rounded to the nearest thousand, i.e. with no decimal place. As a general rule, amounts denominated in foreign currency are to be converted to AUD in accordance with the requirements of the current Australian accounting standards regarding Foreign Currency Translation.
The general requirements for translation are:

Foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date.
Other items outstanding at the reporting date must not be re-translated subsequent to initial recognition of the transaction.
Monetary items are defined to mean money held and assets and liabilities that are to be received or paid in fixed or determinable amounts of money (e.g. claim payments, reinsurance recoveries).
Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows:

Where the exchange rate is fixed in the contract, at that fixed exchange rate; and
Where the exchange rate varies, at the spot rate at the reporting date.
The general requirements for the accounting treatment of exchange differences arising on translation are:

Exchange differences must be recognised as either revenues or expenses in the calculation of net profit or loss, in the reporting period in which the exchange rates change.
Exchange differences that arise in respect of foreign currency monetary items which are directly attributable to the acquisition, construction or production of an asset that takes a long period of time to get ready for its intended use or sale, must be capitalised (net of any effects of a hedge) as part of the cost of that asset.
General definitions
The Glossary contains definitions of commonly used terms in the forms and instruction guides to the forms, listed in the Reporting Requirements Table.

Item Definition

Associates

Associate is defined consistent with the definition provided by Australian accounting standard AASB 1016/AAS 14 ‘Accounting for Investments in Associates’.

Associate means an investee, not being:

(a)       a subsidiary of the investor; or

(b)       a partnership of the investor; or

(c)       an investment acquired and held exclusively with a view to its disposal in the near future.

over which the investor has significant influence^.

Significant influence means the capacity of an entity to affect substantially (but not control) either, or both, of the financial and operating policies of another entity.

Controlled entity/Subsidiary

Definitions of controlled entities/subsidiaries should be consistent with the requirements of the current Australian accounting standards on ‘Consolidated Financial Reports’.

Accounting standards define a controlled entity/“subsidiary" as meaning an entity, which is controlled by a parent entity. A parent entity is defined as an entity, which controls another entity.
Entity means any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives.

Control means the capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable that other entity to operate with it in pursuing the objectives of the controlling entity.

Assets
Assets is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts.

Liabilities
Liabilities is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts.

Fair Value

Fair value means the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction, and is determined as follows:

1.    The quoted market price in an active and liquid market (ie market value); or

2.    when there is infrequent activity in a market, the market is not well established, small volumes are traded relative to the asset or liability to be valued, or a quoted market price is not available – an estimate of a price for the asset or liability in an active and liquid market.

For the purposes of the APRA forms, fair value should ignore transaction costs. Market value is defined for accounting purposes as a subset of fair value - refer to the definitions of market value and net market value below.

Finance Lease

A finance lease over an asset is an arrangement under which the lessor

effectively transfers to the lessee substantially all the risks and benefits incident to ownership of the leased asset, and where legal ownership may eventually be transferred.

Goodwill

Current Australian accounting standards regarding ‘Accounting for Goodwill’ provide that goodwill represents the future benefits from unidentifiable assets. Only goodwill which is purchased by the entity as part of the acquisition of an asset(s) can be recognised (i.e. internally generated goodwill must not be recognised).

Goodwill which is purchased by the entity, must be measured as the excess of the cost of acquisition incurred by the entity over the fair value of the identifiable net assets acquired.

Purchased goodwill must be amortised so that it is recognised as an expense in the profit and loss account on a straight-line basis, over the period from the date of acquisition to the end of the period of time during which the benefits are expected to arise. This period must not exceed twenty years from the date of acquisition.

Impairment
For the purposes of the APRA forms, impairment means that it is no longer considered probable that amounts of principal (or market value) and any associated amounts of accrued income (e.g. interest, dividends, distributions associated with the investment/asset) will be able to be collected by the superannuation entity.

Investment
Investment is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts.

In relation to superannuation entities, this generally means an asset held by the superannuation entity for the accretion of wealth by way of revenues such as interest, royalties, dividends, rentals and capital appreciation, but does not include operating assets.

Joint ventures

Defined in accordance with current Australian accounting standards regarding ‘Interests in Joint Ventures’. Joint venture means a contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control. Joint ventures can take the form of a joint venture entity or joint venture operation.

Joint venture entity means a joint venture that is in the form of an entity and does not include:

(a)      an entity that is acquired and held exclusively with a view to its disposal in the near future

(b)      an entity that operates under severe long-term restrictions which impair significantly its ability to make distributions to the venturer.

Joint venture operation means a joint venture that is not a joint venture entity and does not include an entity that:

(a)      is acquired and held exclusively with a view to its disposal in the near future

(b)      operates under severe long-term restrictions that impair significantly its ability to make distributions to the venturer.

Life office/Life company A life insurance company is a company registered under the Life Insurance Act 1995. They provide insurance against death and disability and may also operate superannuation entities. Also known as life office.

Market value

Market value is defined for accounting purposes as a subset of fair value, and means the amount which could be expected to be received from the disposal of an asset in an active and liquid market.

For the purposes of the forms, market value should ignore transaction costs. Refer also to the definition of net market value below.

Net market value Net market value means the amount which could be expected to be received from the disposal of an asset in an active and liquid market (i.e. market value) after deducting costs expected to be incurred in realising the proceeds of such a disposal. Refer also to the definition of market value above.

Outside equity interest
Defined consistent with current Australian accounting standards regarding ‘Consolidated Financial Reports’ outside equity interest" means the equity in the economic entity (consolidated group), other than that which can be attributed to the ownership group of the parent entity.

Parent entity
Parent entity is defined consistent with current Australian accounting standards regarding ‘Consolidated Financial Reports’ and simply means an entity which controls another entity.

Pooled Superannuation Trust (PST) A PST is a trust in which assets of a number of superannuation entities, approved deposit funds (ADFs) or other PSTs are invested and managed by a professional manager. The investment income of the PST is taxed at concessional rates within the PST.

Principal Value Represents the notional or face value.

Related parties/entities

For the purposes of this form, related entities are to be interpreted consistently with the meaning as in current Australian accounting standards regarding ‘Related Party Disclosures’. It provides that related party means, in relation to a reporting entity, any:

(a)      other entity that at any time during the financial year, has control or significant influence over the reporting entity; or

(b)      other entity that at any time during the financial year, is subject to control or significant influence by the reporting entity (i.e. subsidiary or an associated entity); or

(c)      other entity that, at any time during the financial year, is controlled by the same entity that controls the reporting entity. Referred to as a situation in which entities are subject to common control (i.e. Joint Ventures); or

(d)      other entity that, at any time during the financial year, is controlled by the same entity that significantly influences the reporting entity; or

(e)      other entity that, at any time during the financial year, is significantly influenced by the same entity that controls the reporting entity; or

(f)       director of the reporting entity or any of their director-related entities; or

(g)      director of any other entity identified as a related party under any of paragraphs (a) to (e), or any of their director-related entities;

but excludes any other entity (except those identified as a related party under paragraph (f)) where the related party relationship results solely from normal dealings of:

(h)      financial institutions; or

(i)       authorised trustee corporations; or

(j)       fund managers; or

(k)      trade unions; or

(l)       statutory authorities; or

(m)      government departments; or

(n)      local governments

Current Australian accounting standards define director-related entities as meaning “the spouses of such directors, relatives of such directors or spouses and any other entity under the joint or several control or significant influence of such directors, spouses or relatives”.
Relative in relation to a person is defined in the Corporations Act to mean the spouse, partner, son, daughter, or brother or sister of the person.

Reporting period

In relation to APRA forms:

·        Reporting period end for all APRA forms (i.e. annual and quarterly reporting) is based on the year of income of the superannuation entity, not a calendar year.

·        The financial information requested in the forms is to be reported as at the last day of the reporting period on a year of income to date basis of the superannuation entity.

Form Number	Form Name
SRF 100.0	Statement of Financial Performance
SRF 110.0	Statement of Financial Position
SRF 110.1	Selected Disclosure of Investments (Version A)
SRF 110.1	Selected Disclosure of Investments (Version B)
SRF 110.2	Derivative Financial Instruments
SRF 120.0	Exposure Concentrations

Item	Definition
Associates	Associate is defined consistent with the definition provided by Australian accounting standard AASB 1016/AAS 14 ‘Accounting for Investments in Associates’. Associate means an investee, not being: (a) a subsidiary of the investor; or (b) a partnership of the investor; or (c) an investment acquired and held exclusively with a view to its disposal in the near future. over which the investor has significant influence^. Significant influence means the capacity of an entity to affect substantially (but not control) either, or both, of the financial and operating policies of another entity.
Controlled entity/Subsidiary	Definitions of controlled entities/subsidiaries should be consistent with the requirements of the current Australian accounting standards on ‘Consolidated Financial Reports’. Accounting standards define a controlled entity/“subsidiary" as meaning an entity, which is controlled by a parent entity. A parent entity is defined as an entity, which controls another entity. Entity means any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives. Control means the capacity of an entity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable that other entity to operate with it in pursuing the objectives of the controlling entity.
Assets	Assets is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts.
Liabilities	Liabilities is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts.
Fair Value	Fair value means the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction, and is determined as follows: 1. The quoted market price in an active and liquid market (ie market value); or 2. when there is infrequent activity in a market, the market is not well established, small volumes are traded relative to the asset or liability to be valued, or a quoted market price is not available – an estimate of a price for the asset or liability in an active and liquid market. For the purposes of the APRA forms, fair value should ignore transaction costs. Market value is defined for accounting purposes as a subset of fair value - refer to the definitions of market value and net market value below.
Finance Lease	A finance lease over an asset is an arrangement under which the lessor effectively transfers to the lessee substantially all the risks and benefits incident to ownership of the leased asset, and where legal ownership may eventually be transferred.
Goodwill	Current Australian accounting standards regarding ‘Accounting for Goodwill’ provide that goodwill represents the future benefits from unidentifiable assets. Only goodwill which is purchased by the entity as part of the acquisition of an asset(s) can be recognised (i.e. internally generated goodwill must not be recognised). Goodwill which is purchased by the entity, must be measured as the excess of the cost of acquisition incurred by the entity over the fair value of the identifiable net assets acquired. Purchased goodwill must be amortised so that it is recognised as an expense in the profit and loss account on a straight-line basis, over the period from the date of acquisition to the end of the period of time during which the benefits are expected to arise. This period must not exceed twenty years from the date of acquisition.
Impairment	For the purposes of the APRA forms, impairment means that it is no longer considered probable that amounts of principal (or market value) and any associated amounts of accrued income (e.g. interest, dividends, distributions associated with the investment/asset) will be able to be collected by the superannuation entity.
Investment	Investment is to be interpreted in accordance with the Australian Accounting Standards and authoritative pronouncements and Statements of Accounting Concepts. In relation to superannuation entities, this generally means an asset held by the superannuation entity for the accretion of wealth by way of revenues such as interest, royalties, dividends, rentals and capital appreciation, but does not include operating assets.
Joint ventures	Defined in accordance with current Australian accounting standards regarding ‘Interests in Joint Ventures’. Joint venture means a contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control. Joint ventures can take the form of a joint venture entity or joint venture operation. Joint venture entity means a joint venture that is in the form of an entity and does not include: (a) an entity that is acquired and held exclusively with a view to its disposal in the near future (b) an entity that operates under severe long-term restrictions which impair significantly its ability to make distributions to the venturer. Joint venture operation means a joint venture that is not a joint venture entity and does not include an entity that: (a) is acquired and held exclusively with a view to its disposal in the near future (b) operates under severe long-term restrictions that impair significantly its ability to make distributions to the venturer.
Life office/Life company	A life insurance company is a company registered under the Life Insurance Act 1995. They provide insurance against death and disability and may also operate superannuation entities. Also known as life office.
Market value	Market value is defined for accounting purposes as a subset of fair value, and means the amount which could be expected to be received from the disposal of an asset in an active and liquid market. For the purposes of the forms, market value should ignore transaction costs. Refer also to the definition of net market value below.
Net market value	Net market value means the amount which could be expected to be received from the disposal of an asset in an active and liquid market (i.e. market value) after deducting costs expected to be incurred in realising the proceeds of such a disposal. Refer also to the definition of market value above.
Outside equity interest	Defined consistent with current Australian accounting standards regarding ‘Consolidated Financial Reports’ outside equity interest" means the equity in the economic entity (consolidated group), other than that which can be attributed to the ownership group of the parent entity.
Parent entity	Parent entity is defined consistent with current Australian accounting standards regarding ‘Consolidated Financial Reports’ and simply means an entity which controls another entity.
Pooled Superannuation Trust (PST)	A PST is a trust in which assets of a number of superannuation entities, approved deposit funds (ADFs) or other PSTs are invested and managed by a professional manager. The investment income of the PST is taxed at concessional rates within the PST.
Principal Value	Represents the notional or face value.
Related parties/entities	For the purposes of this form, related entities are to be interpreted consistently with the meaning as in current Australian accounting standards regarding ‘Related Party Disclosures’. It provides that related party means, in relation to a reporting entity, any: (a) other entity that at any time during the financial year, has control or significant influence over the reporting entity; or (b) other entity that at any time during the financial year, is subject to control or significant influence by the reporting entity (i.e. subsidiary or an associated entity); or (c) other entity that, at any time during the financial year, is controlled by the same entity that controls the reporting entity. Referred to as a situation in which entities are subject to common control (i.e. Joint Ventures); or (d) other entity that, at any time during the financial year, is controlled by the same entity that significantly influences the reporting entity; or (e) other entity that, at any time during the financial year, is significantly influenced by the same entity that controls the reporting entity; or (f) director of the reporting entity or any of their director-related entities; or (g) director of any other entity identified as a related party under any of paragraphs (a) to (e), or any of their director-related entities; but excludes any other entity (except those identified as a related party under paragraph (f)) where the related party relationship results solely from normal dealings of: (h) financial institutions; or (i) authorised trustee corporations; or (j) fund managers; or (k) trade unions; or (l) statutory authorities; or (m) government departments; or (n) local governments Current Australian accounting standards define director-related entities as meaning “the spouses of such directors, relatives of such directors or spouses and any other entity under the joint or several control or significant influence of such directors, spouses or relatives”. Relative in relation to a person is defined in the Corporations Act to mean the spouse, partner, son, daughter, or brother or sister of the person.
Reporting period	In relation to APRA forms: · Reporting period end for all APRA forms (i.e. annual and quarterly reporting) is based on the year of income of the superannuation entity, not a calendar year. · The financial information requested in the forms is to be reported as at the last day of the reporting period on a year of income to date basis of the superannuation entity.