Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2007 MRS 140.0 Investments Direct Interest Rate Holdings (Cth)
Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2007
Reporting standard MRS 140.0 Investments – Direct Interest Rate Holdings
Financial Sector (Collection of Data) Act 2001
I, Charles Watts Littrell, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 and subsection 33(3) of the Acts Interpretation Act 1901:
REVOKE the Reporting Standard MRS 140.0: Investments – Direct Interest Rate Holdings; and
DETERMINE the Reporting Standard MRS 140.0 Investments – Direct Interest Rate Holdings in the form set out in the Schedule, which applies to the financial sector entities referred to in paragraph 1 of the reporting standard.
Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those financial sector entities on the later of 30 June 2007 and the date of registration on the Federal Register of Legislative Instruments.
Dated 29 June 2007
[Signed]
Charles Littrell
Executive General Manager
Policy, Research and Statistics
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Schedule
Reporting Standard MRS 140.0 Investments – Direct Interest Rate Holdings comprises 14 pages commencing on the following page.
Reporting Standard MRS 140.0
Investments – Direct Interest Rate Holdings
| Objective of this reporting standard This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires medical defence organisations (‘MDOs’, as defined in paragraph 17) to report to APRA on a half-yearly basis in relation to their Investments – Direct Interest Rate Holdings. This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with reporting form MRF 140.0 Investments – Direct Interest Rate Holdings and the instructions to that form (each of which is attached and forms part of this reporting standard). |
Application
1. This reporting standard applies to all MDOs.
Information required
2. An MDO must, after the end of each reporting period, and in accordance with the instructions, duly complete the form in respect of the reporting period, and provide the completed form (the ‘report’) to APRA by the due date.
Method of submission
3. Reports must be given to APRA either:
(a)in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application;
(b)in Microsoft Excel format on a 3.5 inch diskette, which must be posted to APRA’s head office at Level 26, 400 George Street, Sydney, NSW 2000; or
(c)manually completed on paper, which must be faxed or mailed to APRA’s head office.
Note: the Direct to APRA application software and forms may be obtained from APRA but will not be available immediately upon commencement of this standard. Therefore, initially, only methods of submission (b) and (c) will be available.
Reporting periods
4. Subject to paragraphs 5 and 6, the reporting periods are the half-yearly period ending on 30 June 2007 and each successive half-yearly period (ending on 31 December or 30 June) after that.
5. APRA may, by notice in writing, change the reporting periods for a particular MDO so that it is required to report in respect of half-yearly reporting periods based upon the MDO’s own year of income.
Note: this will be relevant where the MDO’s year of income does not end on 30 June or 31 December.
6. APRA may, by notice in writing change the reporting periods for a particular MDO to require it to provide the information:
(a)more frequently (APRA may require this when, having regard to the particular circumstances of the MDO, APRA considers it necessary or desirable for the MDO to report more frequently for the purposes of monitoring the financial position of the MDO); or
(b)less frequently (APRA may do so when, having regard to the particular circumstances of the MDO and the extent to which its financial position requires monitoring, it is unnecessary to require it to report on a half-yearly basis).
Due dates
7. Reports under this standard must be provided to APRA no later than:
(a)in the case of a report in respect of a half-yearly period ending on the last day of the MDO’s year of income – 4 months after that day; and
(b)in the case of all other reports – 20 business days after the end of the reporting period.
8. APRA may, in writing, grant an MDO an extension of the due date for submission of a report, in which case the new due date will be the date on the notice of extension.
Audit and auditor’s certificate
9. Reports under this standard must be the product of processes and controls that have been reviewed and tested by a registered company auditor. This will require the auditor to review and test the systems, processes, and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the approved auditor to form an opinion as to the accuracy and reliability of the data.
10. In relation to each year of income of an MDO (including a year of income ending on 30 June 2007), the MDO must provide APRA with an annual certificate, signed by a registered company auditor, which must either:
(a)state that in the auditor’s opinion the information provided to APRA under this standard in respect of the year of income is accurate and reliable; or
(b)state that in the auditor’s opinion the information provided to APRA under this standard in respect of the year of income is not accurate or reliable and specify the ways in which the information is not accurate or reliable and the grounds upon which the auditor has come to this conclusion.
A certificate under this paragraph must be provided to APRA no later than four months after the last day of the year of income to which it relates. It may be combined with certificates under corresponding paragraphs of other reporting standards (made under section 13 of the Financial Sector (Collection of Data) Act 2001) applying to the MDO.
Authorisation
11. Reports under this standard must also be subject to processes and controls developed by the MDO for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the MDO to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
12. If an MDO submits a report under this standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the MDO to digitally sign, authorise and encrypt the relevant data. For this purpose APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the insurer who have authority from the insurer to transmit the data to APRA.
13. If a report under this standard is completed in Microsoft Excel format and provided on diskette, the diskette must be sent to APRA with a letter signed by either the Principal Executive Officer or Chief Financial Officer of the MDO.
14. If a report under this standard is completed and provided in paper form, it must be signed by either the Principal Executive Officer or Chief Financial Officer of the MDO.
Minor alterations to forms and instructions
15. APRA may make minor variations to:
(a)the form, and the instructions to the form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b)the instructions, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
16. If APRA makes such a variation it must notify affected MDOs in writing.
Interpretation
17. In this standard:
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998.
business day means an ordinary business day, excluding weekends and public holidays.
Chief Financial Officer means the person having the function of chief financial officer of the MDO, by whatever na me called, and whether or not he or she is a member of the governing board of the MDO, and if there is no such person means a person who performs similar functions to those commonly performed by a chief financial officer.
due date means the relevant date under paragraph 7 or 8.
form means the attached form.
instructions means the attached instructions.
MDO means a corporation to which section 5A of the Financial Sector (Collection of Data) Act 2001 applies (but, for the avoidance of doubt, does not include a general insurer within the meaning of the Insurance Act 1973).
Principal Executive Officer means the principal executive officer of the MDO for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the MDO.
registered company auditor has the meaning in section 9 of the Corporations Act 2001.
Note: That section provides that registered company auditor:
(a) means a person registered as an auditor under Part 9.2 of the Corporations Act; and
(b) in relation to a body corporate that is not a company—includes a person qualified to act as the body's auditor under the law of the body's incorporation.
report has the meaning given in paragraph 2.
reporting period means the relevant period under paragraph 4, 5 or 6
year of income in relation to an MDO means the accounting period adopted by the MDO for the purposes of the Income Tax Assessment Act 1936 or for taxation purposes generally (whether or not that period is the same as the standard financial year beginning on 1 July and ending on 30 June).
Reporting Form MRF 140.0
Investments – Direct Interest Rate Holdings
Instruction Guide
Introduction
This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.
Reporting Obligations
MDOs are required to report on a half-yearly basis (that is, six-monthly intervals), based on their financial year.
For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.
For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.
Audit Requirements
This form must be subject to audit review and testing on an annual basis or more frequently, if necessary, to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.
Definitions
Definitions for data reporting items required by this form have been provided, where possible, in the instructions under the section headed ‘Specific Instructions’.
Basis of Preparation
Unit of Measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
Assets
The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8 Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).
MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
MRF 140.3 Investments – Loans and Advances (MRF 140.3)
MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)
Investments reported in this form (and other forms listed above) must be measured at fair value. These investments must not be valued at cost. Fair value has the same meaning as defined in AASB 139 Financial Instruments: Recognition and Measurement (AASB 139),
Holding of units in unit trusts
Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:
Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
Holdings must be disclosed as unlisted or listed units.
Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing
Treatment is to be consistent with AASB 139.
Where the transferee of the security effectively receives a lender’s rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities are not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.
Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.
Securities transacted not settled (i.e. trade date accounting)
Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlement periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off-Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).
Related party/entity
Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124).
Parent
Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).
Subsidiaries
Subsidiaries are to be interpreted in accordance with AASB 127.
Associates
Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).
Joint ventures
Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).
Specific Instructions
Deposits or placements
These primarily include deposits or placements that are of a money market type basis. These may be available on demand (11am accounts, money market or 24-hour money), and must be held as part of the MDO’s investments portfolio.
Do not include any deposits at call that are used by the MDO for daily liquidity/operations (i.e. funds that are not specifically included as investment funds). These are to be disclosed as deposits at call in MRF 300.0.
1.1 Authorised Deposit-taking Institutions (ADIs)
Includes funds lodged with banks, credit unions, building societies and other ADIs authorised under the Banking Act 1959.
1.2 Other
Include placements and money market accounts held with entities other than ADIs.
Short-term securities
‘Short-term’ refers to holdings of securities with an original term to maturity (as opposed to residual term to maturity), that is equal to or less than 1 year.
Bills of Exchange
2.1 Bank accepted bills
Report bills of exchange that are accepted by a bank authorised under the Banking Act 1959 with consent to use the word ‘bank’.
2.2 Other
Report all other bills of exchange other than bank accepted bills.
Commercial paper and promissory notes issued by:
Include certificates of deposit, other one name paper and securities lent or sold under repurchase agreements, as per the categories below.
2.3 ADIs
ADIs include banks, credit unions and buildings societies authorised under the Banking Act 1959.
2.4 General insurers
Includes institutions authorised under the Insurance Act 1973 that undertake general insurance business.
2.5 Securitisers
These are financial vehicles that issue short and/or long-term securities (called asset-backed securities) using specifically selected assets (e.g. mortgages, receivables). They provide backing (collateral) for the securities and generate the payment streams necessary to fulfil interest and principal requirements for investors. Include holdings of mortgage backed securities and other asset backed securities (other than mortgage backed).
2.6 Private trading corporations
Private trading corporations are those owned by the private sector. Include all Australian resident private corporate trading enterprises and non-profit institutions (exclude non-resident enterprises) and intra-group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 and parent companies with significant holdings of shares in private trading companies.
2.7 Registered Financial Corporations (RFCs)
Registered Financial Corporations refers to corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified as Categories D or Other. A list of corporations registered under the Financial Sector (Collection of Data) Act 2001 and their classification are available on the APRA website.
Include:
Money market corporations (D); and
Other (formerly categories E, F and G).
Exclude:
Intra group financiers and retailers registered under Financial Sector (Collection of Data) Act 2001.
Cash management trusts (Note cash management trusts are to be reported in MRF 140.4).
2.8 Australian Commonwealth Government Corporations
Trading enterprises owned by the Commonwealth are those businesses which are owned and controlled by the Australian Commonwealth Government.
Include all resident trading enterprises owned 50% or more by the Commonwealth Government or controlled by the Commonwealth Government through legislation, decree or regulation.
2.9 Australian Commonwealth Government
Include Treasury notes.
Exclude:
Treasury bonds (include these in long term securities);
Government trading enterprises (report as Australian Commonwealth Government Corporations);
Departments of the Australian Capital Territory and Northern Territory Governments (report as Other Australian Government (State, territory and local government); and
Reserve Bank of Australia and Commonwealth Government financial institutions (record as Australian Commonwealth Government Corporations).
2.10 Other Australian Government (State, Territory and local government)
Include securities issued by other Australian governments.
Other Australian governments include State, Territory and local governments that provide non-market goods and services principally financed by taxes to regulate economic activity, maintain law and order and to redistribute income and wealth by means of transfers. They provide non-market goods and services, free of charge or at nominal prices well below the cost of production.
2.11 National government of a foreign country
Include securities issued by a national government of foreign country.
2.12 Other
Include securities issued by counterparties other than those specifically listed above.
Long-term debt securities
‘Long-term’ refers to holdings of securities which have an original term to maturity (as opposed to residual term to maturity), that is greater than 1 year. These should be categorised in the same manner as short-term securities (refer 2.3-2.12 above).
Include commercial paper, other one name paper and securities lent or sold under repurchase agreements.
Total direct interest rate investments
The investments detailed above should also be reported in accordance with the applicable counterparty grade (refer items 4.1-4.5). These grades are detailed in Attachment 1.
The aggregate balance of the investments detailed above that are denominated in a currency other than the Australian currency should also be reported (refer item 4.6).
Total direct interest rate investments
Report deposits/placements with, or debt securities issued, in accordance with the categories detailed on the form.
ATTACHMENT 1: Counterparty Grades
| Grade | Standard & Poor’s | Moody’s | AM Best | Fitch |
| 1 | AAA | Aaa | A++ | AAA |
| 2 | AA+ | Aa1 | A+ | AA+ |
| 3 | A+ | A1 |
| A+ |
| 4 | BBB+ | Baa1 | B++ B+ | BBB+ |
| 5 | BB+ or below | Ba1 or below | B or below | BB+ or below |
Unrated assets or exposures should be classified as Grade 4.
MDOs should, in general, use the same rating agency for determining counterparty gradings. Where the MDO has counterparties with multiple ratings from two or more of the rating agencies in the table above, the MDO should consistently choose the ratings of a single agency whenever possible. For example, the MDO may have a number of counterparties that are rated by Standard & Poor’s and AM Best. In this case, the MDO should choose a single agency that will be consistently used whenever the individual ratings conflict.
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