Australian Prudential Regulation Authority Amendment Regulations 2004 (No. 1) 2004 No. 277
EXPLANATORY STATEMENT
STATUTORY RULES 2004 No. 277
Issued by authority of the Minister for Revenue and Assistant Treasurer
Australian Prudential Regulation Authority Act 1998
Australian Prudential Regulation Authority Amendment Regulations 2004 (No. 1)
The Australian Prudential Regulation Authority Act 1998 (the Act) establishes the Australian Prudential Regulation Authority (APRA).
Section 60 of the Act provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act
Subsection 56(5) of the Act enables a person (including a member or staff member of APRA) to disclose protected information or produce a protected document to assist a financial sector supervisory agency (as defined in the Act), or another agency specified in the Regulations, to perform its functions or exercise its powers.
The purpose of the proposed amendment to Regulation 5 of the Australian Prudential Regulation Authority Regulations 1998 (the Principal Regulations) is to add the Financial Reporting Council (FRC) to the list of agencies with which APRA is able to share information.
The FRC is a statutory body that was established under section 225(1) of the Australian Securities and Investments Commission Act 1989 and continued in existence by section 261 of the Australian Securities and Investments Commission Act 2001. Its functions were amended by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9). The FRC is responsible for providing broad oversight of the process for setting accounting and auditing standards as well as monitoring the effectiveness of auditor independence requirements in Australia and giving the Minister reports and advice on these matters.
The FRC is not a financial sector supervisory agency for the purpose of the Act and therefore must be specified in the Principal Regulations.
The proposed amendment to Regulation 5 of the Principal Regulations will allow information exchange between APRA and the FRC without breaching the secrecy provisions of section 56 of the Act.
Section l 0A of the Act indicates that APRA should, in performing and exercising its functions and powers, have regard to the desirability of cooperating with other financial sector supervisory agencies, and with other agencies specified in Regulations for the purposes of that section.
The purpose of the proposed regulatory amendment under section 10AA is to add the FRC to the list of agencies prescribed in the context of APRA's cooperation with other agencies. Regulation 6 of the Principal Regulations would be omitted and replaced by a new Regulation 3A such that the provisions of the Principal Regulations appear in the same order as the related sections in the Act.
This information exchange is desirable in order to facilitate adequate monitoring and assessment of auditor independence and other related activities performed by the FRC and APRA.
The Regulations commence on the date of their notification in the Gazette.
Overview
The Australian Prudential Regulation Authority Amendment Regulations 2004 (No. 1) were enacted to address the need for enhanced information exchange between the Australian Prudential Regulation Authority (APRA) and other regulatory bodies, specifically the Financial Reporting Council (FRC). The Australian Prudential Regulation Authority Act 1998 established APRA, and these amendments were made under the authority granted by section 60 of the Act, which allows for the creation of regulations necessary to carry out or give effect to the Act. The policy objective, as outlined in section 10A of the Act, is to ensure that APRA cooperates with other financial sector supervisory agencies and specified agencies, facilitating effective regulation and oversight. By adding the FRC to the list of agencies with which APRA can share information, the amendments aim to support better monitoring and assessment of auditor independence and other related activities, thereby enhancing the overall regulatory framework.
Scope and Application
The Australian Prudential Regulation Authority Amendment Regulations 2004 (No. 1) pertain to the Australian Prudential Regulation Authority (APRA), an entity established under the Australian Prudential Regulation Authority Act 1998. These regulations aim to modify the Australian Prudential Regulation Authority Regulations 1998 (Principal Regulations) by updating the list of agencies with which APRA can share information, specifically adding the Financial Reporting Council (FRC) to this list. The FRC, a statutory body established under the Australian Securities and Investments Commission Act 1989, plays a crucial role in overseeing accounting and auditing standards, as well as monitoring auditor independence in Australia. Given that the FRC is not classified as a financial sector supervisory agency under the Act, its inclusion in the Principal Regulations is necessary to enable lawful information exchange between APRA and the FRC without contravening the secrecy provisions stipulated in section 56 of the Act. This amendment ensures that APRA can cooperate with the FRC to enhance the monitoring and assessment of auditor independence and related activities, thereby promoting effective financial sector oversight.
Key Provisions
The Australian Prudential Regulation Authority Amendment Regulations 2004 (No. 1) propose significant modifications to the existing Australian Prudential Regulation Authority Regulations 1998 (Principal Regulations) under the Australian Prudential Regulation Authority Act 1998 (Act). The key operative sections of the proposed amendment are sections 60 and 10AA of the Act, which allow for the regulation-making power to include matters necessary for carrying out the Act and for specifying agencies with which APRA can share information. The amendment seeks to include the Financial Reporting Council (FRC) as an agency with which APRA can exchange information, which is currently not allowed under the existing secrecy provisions outlined in section 56 of the Act.
These Regulations impose specific obligations on APRA to facilitate the sharing of protected information with the FRC. By amending Regulation 5, the proposed regulations will enable APRA to disclose protected information to the FRC to assist in the FRC’s functions, such as monitoring the effectiveness of auditor independence requirements. Furthermore, under section 10A of the Act, APRA is required to cooperate with other financial sector supervisory agencies and other specified agencies. The amendment to Regulation 3A ensures that the FRC is included in this list, promoting better collaboration between APRA and the FRC to enhance financial oversight and regulation.
There are no explicit offences, penalties, or consequences mentioned in the explanatory statement for breaches of these regulations. However, any breach of the secrecy provisions under section 56 of the Act can result in civil and criminal penalties as outlined in the relevant legislation. The maximum penalties for breaches of these provisions could include substantial fines and imprisonment, depending on the nature and severity of the breach. The Regulations are designed to ensure that the information sharing between APRA and the FRC is conducted in a manner that complies with the existing legal frameworks and does not compromise the confidentiality and integrity of the shared information.