Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2008
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Financial Sector (Collection of Data) Act 2001 (the Act), paragraph 13(1)(a)
Acts Interpretation Act 1901, subsection 33(3)
Under section 13 of the Act, APRA may, by legislative instrument, determine reporting standards that are required to be complied with by financial sector entities with respect to certain documents as set out in paragraphs 13(1)(a)(i) and (ii), including statements.
Under paragraph 13(1)(a) of the Act, APRA may, by writing, determine reporting
standards with which financial sector entities must comply. Such standards relate to
reporting financial or accounting data and other information regarding the business or
activities of the entities. Subsection 33(3) of the Acts Interpretation Act 1901
provides that where an Act confers a power to issue an instrument the power shall,
unless the contrary intention appears, be construed as including a power exercisable in
the like manner and subject to the like conditions (if any) to vary any such
instrument.
Financial Sector (Collection of Data) (reporting standard) determination No. 57 of 2008 (the instrument) varies Reporting Standard SRS 260.0 (2005) Trustee Statement (the Standard). Form SRF 260.0: Trustee Statement – 200 Series (Form SRF 260.0) and Reporting Form SRF 260.0 Trustee Statement Instruction Guide (the Instruction Guide) form part of the Standard.
The instrument shall take effect on the day after the date of registration on the Federal Register of Legislative Instruments.The instrument shall take effect on the date of registration on the Federal Register of Legislative Instruments.
- Background
International Financial Reporting Standards (IFRS)IFRS
From 1 January 2005, Australian reporting entities adopted Australian equivalents of IFRS.
Under IFRS, superannuation entities are required to report under AAS 25 Financial Reporting by Superannuation Plans as there is no IFRS equivalent standard. However, Pooled Superannuation Trusts (PSTs) do not satisfy the AAS 25 definition of a superannuation entity and hence, do not report under AAS 25 but rather are required to prepare financial statements in accordance with IFRS when they meet the definition of a reporting entity.
In order to minimise dual reporting, APRA has elected to adopt IFRS for PSTs, subject to the exception that ‘unitholder funds’ should be reported to APRA on a pre-IFRS (i.e. AGAAP) basis, in essence retaining their character as an equity item rather than a liability item.
Non-compliance reporting
Form SRF 260.0: Trustee Statement – 200 Series (Form SRF 260.0) and Reporting Form SRF 260.0 Trustee Statement Instruction Guide (the Instruction Guide) form part of the Reporting Standard SRS 260.0 (2005) Trustee Statement (the Standard).
CForm SRF 260.0 currently requires trustees are required to attest to compliance with numerous sections of the legislative framework governing superannuation within Form SRF 260.0report a. Howeverll instances of non-compliance, as opposed to only significant instances of non-compliance. there is no significance test applied to reporting requirements contained in Form SRF 260.0.
Section 29JA of the Superannuation Industry (Supervision) Act 1993 (SIS Act) imposes an obligation on RSE licensees to report breaches of licence conditions to APRA. It is a condition imposed on all RSE licences, under paragraph 29E(1)(a) of the SIS Act, that the RSE licensee comply with the ‘RSE licensee law’.
Amendments to section 29JA of the Superannuation Industry Supervision Act 1993 (SIS Act) which commenced on 1 January 2008 mean that only significant breaches of RSE licensee law are required to be reported to APRA. ‘RSE licensee law’ means:
(a) the Act;
(b) the SIS Act or the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations);
(c) the Financial Institutions Supervisory Levies Collection Act 1998;
(d) the provisions of the Corporations Act 2001 listed in a subparagraph of paragraph (b) of the definition of ‘regulatory provision’ in section 38A of the SIS Act or specified in the SIS Regulations made for the purposes of subparagraph (b)(xvi) of that definition, as applying in relation to superannuation interests; and
(e) any other provisions of any other law of the Commonwealth specified in regulations made for the purposes of this paragraph.
The Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 amended subsection 29JA(1) of the SIS Act so that only significant breaches of RSE licensee law are nowrequired to be reported to APRA.[1]
This has The resulted in an is inconsistency between the current requirements of Form SRF 260.0the Standard and the breach reporting requirements contained in section 29JA of the SIS Act.
Variation to the Instruction Guide
A paragraph headed “Breach reporting and SRF 260.0” has been inserted on page 5 of the Instruction Guide in the section "General guidance for completion of SRF 260.0 Trustee Statement" making it clear that trustees are to attest to non-compliance within SRF 260.0 for significant breaches as defined in section 29JA of the SIS Act only. Trustees are not required to attest to non-compliance with breaches that are not significant.
2. Purpose of the instrument
The purpose of the instrument is to vary the Standard in order to:
- clarify how certain parts of Form SRF 260.0 should be completed;
- remove obsolete legislative provisions from Form SRF 260.0;
- clarify that APRA has elected to adopt IFRS for PSTs with the exception of unitholder funds; and
- require trustees to only report instances of
breachesnon-complianceofwith RSE licensee law that are significant. This bringsitintoalignment with the reporting requirements of section 29JA of the SIS Act.
3. Operation of instrument
Variation to Form SRF 260.0
Items 1 and 2 of the instrument clarify that items 3.2 and 5.2 in Form SRF 260.0 are only required to be completed by trustees who have answered ‘N’ at items 3.1 and 5.1 respectively.
Item 3 of the instrument removes sections 1012G(3) and 1012G(3A) of the Corporations Act 2001 from the table. The removal of these sections is based on advice from ASIC that this information is not necessary to meet ASIC’s regulatory objectives.
Variation to the Instruction Guide
Item 4 inserts two paragraphs into the Instruction Guide in the section ‘General guidance for completion of SRF 260.0 Trustee Statement’.
The paragraph headed ‘International Financial Reporting Standards (IFRS) for pooled superannuation trusts’ has been inserted to clarify the effect of IFRS on the regulatory reporting framework of PSTs from 1 July 2005.
The paragraph headed ‘Breach reporting and SRF 260.0’ makes it clear that trustees are to attest to non-compliance within Form SRF 260.0 for significant breaches as defined in section 29JA of the SIS Act only.
4. 3. Consultation
By letter dated 29 September 2005, APRA wrote to the trustees of PSTs in order to advise them of the proposed regulatory reporting arrangements post-IFRS adoption. Trustees were given the opportunity to advise APRA if the new reporting arrangement for PSTs would cause significant problems. Trustees of PSTs that found the transition to IFRS difficult were able to seek transitional relief from APRA until the December 2005 quarter.
There has been no consultation with industry in relation to the other changes effected by this instrument. Consultation was considered unnecessary as the changes to compliance reporting ensure consistency between APRA’s reporting framework and broader legislative requirements and reduce the reporting obligations for entities.
There has been no consultation with industry in relation to the changes the subject of this instrument. Consultation was considered unnecessary as the changes ensure consistency between APRA’s reporting framework and broader legislative requirements which have previously been consulted on. There is no disadvantage to industry as a result of the proposed changes.
[1] The amendments to section 29JA of the SIS Act commenced on 1 January 2008.