Financial Sector (Collection of Data) (reporting standard) determination No. 64 of 2013 - SRS 114.0 - Operational Risk Financial Requirement

Link to law: https://www.comlaw.gov.au/Details/F2013L00956

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Financial Sector (Collection of Data) (reporting standard) determination No. 64 of 2013
Reporting Standard SRS 114.0 Operational Risk Financial Requirement
Financial Sector (Collection of Data) Act 2001
 
I, Steven John Davies, delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) DETERMINE Reporting Standard SRS 114.0 Operational Risk Financial Requirement, in the form set out in the Schedule, which applies to financial sector entities to the extent provided in paragraph 3 of the reporting standard.
 
Under section 15 of the Act, I DECLARE that the reporting standard applies to those financial sector entities on and after 1 July 2013.
 
This instrument commences on the date of registration on the Federal Register of Legislative Instruments.
 
Dated: 3 June 2013
 
[signed]
 
 
Steven John Davies
General Manager
Statistics
Interpretation
In this Determination:
APRA means the Australian Prudential Regulation Authority.
financial sector entity has the meaning given by section 5 of the Act.
Schedule
 
Reporting Standard SRS 114.0 Operational Risk Financial Requirement comprises the 13 pages commencing on the following page.

 
Reporting Standard SRS 114.0
Operational Risk Financial Requirement
Objective of this Reporting Standard
This Reporting Standard sets out the requirements for the provision of information to APRA relating to the operational risk financial requirement for an RSE licensee.
It includes Form SRF 114.0 Operational Risk Financial Requirement and associated specific instructions and must be read in conjunction with Prudential Standard SPS 114 Operational Risk Financial Requirement.
 
Authority
1.             This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
2.             Information collected in Form SRF 114.0 Operational Risk Financial Requirement (SRF 114.0) is used by APRA for the purposes of prudential supervision and publication, including assessing compliance with Prudential Standard SPS 114 Operational Risk Financial Requirement.
Application and commencement
3.             This Reporting Standard applies to each registrable superannuation entity (RSE) licensee (RSE licensee).
4.             This Reporting Standard applies for reporting periods ending on or after 1 July 2013.
Information required
5.             An RSE licensee to which this Reporting Standard applies must provide APRA with the information required by SRF 114.0 in respect of each reporting period.
Forms and method of submission
6.             The information required by this Reporting Standard must be given to APRA in electronic format using the ‘Direct to APRA’ application or, where ‘Direct to APRA’ is not available, by a method notified by APRA, in writing, prior to submission.
Note: the ‘Direct to APRA’ application software (also known as ‘D2A’) may be obtained from APRA.
Reporting periods and due dates
7.             Subject to paragraph 8, an RSE licensee to which this Reporting Standard applies must provide the information required by this Reporting Standard in respect of each year of income of the RSE licensee.
8.             If, having regard to the particular circumstances of an RSE licensee, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by paragraph 7, APRA may, by notice in writing, change the reporting periods for the particular RSE licensee.
9.             The information required by this Reporting Standard must be provided to APRA:
(a)           for reporting periods ending on or after 1 July 2013 but before 1 July 2015 – within four months after the end of the year of income to which the information relates;
(b)          for reporting periods ending on or after 1 July 2015 – within three months after the end of the year of income to which the information relates; and
(c)           in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
10.         APRA may grant, in writing, an RSE licensee an extension of a due date, in which case the new due date for the provision of the information will be the date on the notice of extension.
Quality control
11.         The information provided by an RSE licensee under this Reporting Standard must be the product of systems, procedures and internal controls that have been reviewed and tested by an RSE auditor.[1] This will require the RSE auditor to review and test the RSE licensee’s systems, procedures and internal controls designed to enable the RSE licensee to report reliable information to APRA. This review and testing must be done on:
(a)           an annual basis or more frequently if necessary to enable the RSE auditor to form an opinion on the reliability and accuracy of information; and
(b)          at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of SPS 310.
12.         All information provided by an RSE licensee under this Reporting Standard must be subject to systems, processes and controls developed by the RSE licensee for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the RSE licensee to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Authorisation
13.         When an officer or agent of an RSE licensee provides the information required by this Reporting Standard using the ‘Direct to APRA’ software, it will be necessary for the officer or agent to digitally sign the relevant information using a digital certificate acceptable to APRA.
14.         If the information required by this Reporting Standard is provided by an agent who submits using the ‘Direct to APRA’ software on the RSE licensee’s behalf, the RSE licensee must:
(a)           obtain from the agent a copy of the completed form with the information provided to APRA; and
(b)          retain the completed copy.
15.         An officer or agent of an RSE licensee who submits the information under this Reporting Standard for, on behalf of, the RSE licensee must be authorised by either:
(a)           the Chief Executive Officer of the RSE licensee; or
(b)          the Chief Financial Officer of the RSE licensee.
Variations
16.         APRA may, by written notice to an RSE licensee, vary the reporting requirements of SRF 114.0 in relation to that RSE licensee.
Interpretation
17.         In this Reporting Standard:
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
Chief Executive Officer means the chief executive officer of the RSE licensee, by whatever name called, and whether or not he or she is a member of the Board of the RSE licensee[2];
Chief Financial Officer means the chief financial officer of the RSE licensee, by whatever name called;
due date means the relevant date under paragraph 9 or, if applicable, paragraph 10.
reporting period means a period mentioned in paragraph 7 or, if applicable, paragraph 8;
RSE means a registrable superannuation entity as defined in section 10(1) of the SIS Act;
RSE auditor means an auditor appointed by the RSE licensee to perform functions under this Reporting Standard;
RSE licensee has the meaning given in section 10(1) of the SIS Act;
SIS Act means Superannuation Industry (Supervision) Act 1993; and
year of income means ‘income year’ as defined in section 995-1 of the Income Tax Assessment Act 1997.
 

SRF 114.0: Operational Risk Financial Requirement
 
Australian Business Number
Institution Name

 

Reporting Period
Scale Factor
Reporting Consolidation

 

 
ORFR basis
 
1. How is the ORFR held (RSE licensee)?
ORFR holding

 
ORFR trustee capital

 
ORFR reserve

 
ORFR trustee capital and ORFR reserve

 
Details of the RSE licensee's ORFR
 
Across RSE licensee's business operations
Attributed to RSEs (excluding SAFs and SMADFs)
Attributed to SAFs or SMADFs
Not attributed to an RSE, SAF or SMADF

(1)
(2)
(3)
(4)

2. ORFR target amount
 

3. ORFR reserves

4. ORFR trustee capital
 
 

5. ORFR tolerance limit
 

 
Transition and replenishment plans
 
6. Does the RSE licensee have a transition plan or replenishment plan in force?
Transition or replenishment plan

 
Yes, transition plan

 
Yes, replenishment plan

 
No

 
6.1. Transition or replenishment plan effective date
 

6.2. Transition or replenishment plan expected date to meet the ORFR
 

 
7. Details of payments made to address an operational risk event
 
Description
Date
ORFR trustee capital
ORFR reserve

(1)
(2)
(3)
(4)

 

 
 
Movements in ORFR trustee capital
 
8. Transfers into ORFR trustee capital
 
8.1. Deductions from members’ benefits
 

8.2. Compensation payments from trustee insurance policies
 

8.3. Compensation payments from service providers
 

8.4. Other transfers into ORFR trustee capital

8.4.1. Details of other transfers into ORFR trustee capital

Description
Value

(1)
(2)



8.5. Total
 

 
9. Transfers out of ORFR trustee capital
 
9.1. Payments to address an operational risk event

9.2. Other transfers out of ORFR trustee capital

9.2.1. Details of other transfers out of ORFR trustee capital

Description
Value

(1)
(2)



9.3. Total
 

 
10. ORFR trustee capital surplus distributed
 
10.1. Distributed to member accounts         
 

10.2. Distributed to employer-sponsor         
 

10.3. Distributed to other recipient

10.3.1. Details of other recipient

Description
Value

(1)
(2)

 
 


10.4. Total
 

Reporting Form SRF 114.0
Operational Risk Financial Requirement
Instructions
These instructions assist completion of Reporting Form SRF 114.0 Operational Risk Financial Requirement (SRF 114.0). SRF 114.0 collects information relating to the operational risk financial requirement (ORFR) of an RSE licensee, specifically how the RSE licensee chooses to meet the ORFR, transition and replenishment plans and payments from the ORFR. Information reported in SRF 114.0 is required primarily for prudential and publication purposes.
Reporting level
SRF 114.0 must be completed for each RSE licensee.
Reporting basis and unit of measurement
Report all items on SRF 114.0 in accordance with the Australian Accounting Standards unless otherwise specified.
Items on SRF 114.0 must be reported as at the end of the reporting period or with respect to transactions that occurred during the reporting period.
Items on SRF 114.0 are to be reported as thousands of dollars and dates. Report dates as DD/MM/YYYY.
These instructions specify the reporting basis and unit of measurement that applies to each item.
Specific instructions
Terms highlighted in bold italics indicate that the definition is provided in these instructions.  
ORFR basis
Item 1 collects information about how the financial resources to meet the RSE licensee’s ORFR are held, namely whether it is held as trustee capital, a reserve or a combination of trustee capital and a reserve.
Reporting basis: report item 1 as at the end of the reporting period.
Item 1
Report how the financial resources to meet the RSE licensee’s ORFR are held in item 1 as ORFR trustee capital, ORFR reserve or a combination of ORFR trustee capital and at least one ORFR reserve with respect to the RSE licensee’s business operations.
If ORFR reserve is reported in item 1, leave item 8 to item 10 inclusive blank.

ORFR trustee capital
Represents trustee capital held by the RSE licensee for the purposes of meeting the operational risk financial requirement. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

ORFR reserve
Represents the reserve held within an RSE within the RSE licensee's business operations for the purposes of meeting the operational risk financial requirement. An ORFR reserve must be separately identifiable from member accounts and reserves held in the RSE for other purposes. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Details of the RSE licensee’s ORFR
Item 2 to item 5 inclusive collect information on certain features of the RSE licensee’s ORFR, including the ORFR target amount, the ORFR trustee capital held and the ORFR tolerance limit and how these amounts are attributed across the RSE licensee’s business operations.
Reporting basis: report item 2 to item 5 inclusive as at the end of the reporting period.
Unit of measurement: report item 2 to item 5 inclusive in thousands of dollars.
Item 2
Item 2 column 1 is a derived item. Report in item 2 the ORFR target amount in item 2 that is attributed across the RSE licensee’s business operations in column 1 as the sum of the ORFR target amount reported as attributed to RSEs (excluding SAFs and SMADFs) in column 2, attributed to SAFs and SMADFs in column 3 and not attributed to any particular RSE, SAF or SMADF in column 4.

ORFR target amount
Represents the target amount of financial resources to address the operational risks of each RSE within the RSE licensee's business operations. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

RSE licensee’s business operations
Represents all activities as an RSE licensee (including the activities of each RSE within its business operations) and all other activities of the RSE licensee to the extent that they are relevant to, or may impact on, its activities as an RSE licensee.

 
Item 3
Item 3 column 1 is a derived item. Report in item 3 the amount of ORFR reserve in item 3 that is attributed across the RSE licensee’s business operations in column 1 as the sum of the ORFR reserve reported as attributed to RSEs (excluding SAFs and SMADFs) in column 2 and attributed to SAFs and SMADFs in column 3.
 
Item 4
Item 4 column 1 is a derived item. Report in item 4 the amount of ORFR trustee capital in item 4 that is attributed across the RSE licensee’s business operations in column 1 as the sum of the ORFR trustee capital reported as attributed to RSEs (excluding SAFs and SMADFs) in column 2, attributed to SAFs and SMADFs in column 3 and not attributed to an RSE, SAF or SMADF in column 4.
The ORFR trustee capital reported in item 4 must equal the sum of the value reported for this item in the previous reporting period and transfers into ORFR trustee capital reported in item 8 minus transfers out of ORFR trustee capital reported in item 9.
 
Item 5
Report the ORFR tolerance limit in item 5.

ORFR tolerance limit
Represents the limit that reflects the level, across the RSE licensee’s business operations, that reflects the level below ORFR target amount where the RSE licensee must take action to replenish financial resources held to meet the operational risk financial requirement. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Transition and replenishment plans
Item 6 collects information on an RSE licensee’s transition plans and replenishment plans as required in SPS 114.
Reporting basis: report item 6.1 and item 6.2 as at the end of the reporting period.
Unit of measurement: report dates in item 6.1 and item 6.2 as DD/MM/YYYY.
Item 6
If an RSE licensee has a transition plan or a replenishment plan for the ORFR in force, report ‘yes, transition plan’ or ‘yes, replenishment plan’ in item 6; otherwise, report ‘no’. Report ‘yes, replenishment plan’ when a replenishment plan is in force at the same time as a transition plan. If ‘no’ is reported in item 6, leave item 6.1 and item 6.2 blank.
If an RSE licensee has a transition plan or a replenishment plan for the ORFR in force, report the effective date of the plan in item 6.1.
If an RSE licensee has a transition plan or a replenishment plan for the ORFR in force, report the expected date, as documented on the transition or replenishment plan, for reaching the ORFR target amount in item 6.2.

Transition plan
Represents a plan for the RSE licensee to reach its ORFR target amount for the first time. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

 
 
Replenishment plan
Represents a plan for the RSE licensee to reach its ORFR target amount when the financial resources held to meet the operational risk financial requirement are below its ORFR tolerance limit after the RSE licensee has reached its operational risk financial requirement for the first time. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.
Payments to address an operational risk event
Item 7 collects information on payments by the RSE licensee out of the ORFR to address an operational risk event in accordance with SPS 114.
Reporting basis: report item 7 with respect to transactions that occurred during the reporting period.
Unit of measurement: report item 7, column 3 and column 4 in thousands of dollars; report a date in item 7, column 2 as DD/MM/YYYY.
Item 7
Report each of the payments to address an operational risk event on separate lines in item 7.
Report the description of the payment in column 1 and the date the payment was made in column 2. Report the type of operational risk event as part of the description in column 1.
If ORFR trustee capital was used, in part or in full, to make payments to address an operational risk event, report the amount of ORFR trustee capital used in column 3.
If one or more ORFR reserves within RSEs were used, in part or in full, to make payments to address an operational risk event, report the aggregate amount of all ORFR reserve used in column 4.

Payments to address an operational risk event
Represents the amount of money transferred out in order to address an operational risk event that has met the RSE licensee's criteria for determining when and how the financial resources held to meet the operational risk financial requirement can be called upon. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Movements in ORFR trustee capital
Item 8 and item 9 collect information on movements into and out of ORFR trustee capital.
Reporting basis: report item 8 and item 9 with respect to transactions that occurred during the reporting period.
Unit of measurement: report item 8 and item 9 in thousands of dollars.
 
Item 8
Report transfers into ORFR trustee capital in item 8 as gross of transfers out of ORFR trustee capital.
Item 8.4 is a derived item. Report other transfers into ORFR trustee capital in item 8.4 as total transfers into ORFR trustee capital reported in item 8.5 minus the sum of deductions from members benefits reported in item 8.1, compensation payments from trustee insurance policies reported in item 8.2 and compensation payments from service providers reported in item 8.3.
Report details of other transfers into ORFR trustee capital on separate lines in item 8.4.1.
Report a description of the other transfers into ORFR trustee capital in column 1 and the value in column 2. Report a description in column 1 that includes the source of the transfer.

Transfers into ORFR trustee capital
Represents amounts transferred into ORFR trustee capital, resulting in an increase in ORFR trustee capital. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Deductions from members benefits
Represents money transferred from deductions to member accounts or through fees and charges to members in relation to building the financial resources to meet the operational risk financial requirement. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Compensation payments from trustee insurance policies
Represents money transferred from compensation payments from trustee insurance policies to replenish the financial resources held to meet the operational risk financial requirement after a loss. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Compensation payments from service providers
Represents money transferred from compensation payments from agreements with service providers to replenish the financial resources held to meet the operational risk financial requirement after a loss. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

 
Item 9
Report transfers out of ORFR trustee capital in item 9, gross of transfers into ORFR trustee capital.
Item 9.1 is a derived item. Report payments to address an operational risk event in item 9.1 as equal to the sum of the payments that have been reported as paid from ORFR trustee capital in item 7 column 3.
Item 9.2 is a derived item. Report other transfers out of ORFR trustee capital in item 9.2 as total transfers out of ORFR trustee capital reported in item 9.3 minus payments to address an operational risk event reported in item 9.1.
Report details of other transfers out of ORFR trustee capital on separate lines in item 9.2.1. The sum of the items in column 2 must equal the amount of other transfers out of ORFR trustee capital reported in item 9.2. Report the aggregate of ORFR trustee capital surplus distributed in item 9.2.1 and report the detail in item 10.
Report a description of the other transfers out of ORFR trustee capital in column 1 and the value in column 2. Report a description in column 1 that includes the destination of the transfer.

Transfers out of ORFR trustee capital
Represents amounts transferred out of ORFR trustee capital resulting in a decrease in ORFR trustee capital. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

ORFR trustee capital surplus distributed
Item 10 collects information on distributions of an ORFR surplus.
Reporting basis: report item 10 with respect to transactions that occurred during the reporting period.
Unit of measurement: report item 10 in thousands of dollars.
Item 10
If an RSE licensee distributed an ORFR trustee capital surplus during the period, report item 10; otherwise, leave item 10 blank.
Report the value of the ORFR trustee capital surplus distributed to member accounts in item 10.1 and distributed to employer sponsors in item 10.2.
Item 10.3 is a derived item. Report the value of ORFR trustee capital surplus distributed to other recipients in item 10.3 as total transfers out of ORFR trustee capital reported in item 10.4 minus ORFR trustee capital surplus distributed to member accounts in item 10.1 and distributed to employer sponsors in item 10.2.
Report details of ORFR trustee capital surplus distributed to other recipients on separate lines in item 10.3.1. The sum of the items in column 2 must equal the value of ORFR trustee capital surplus distributed to other recipients reported in item 10.3.
Report a description of the other recipient in column 1 and the value in column 2.

ORFR trustee capital surplus
Represents an amount of the financial resources held in the form of ORFR trustee capital to meet the ORFR target amount that the RSE licensee has determined exceeds the ORFR target amount, and the excess financial resources are not needed for it to continue to meet this amount. Reference: Prudential Standard SPS 114 Operational Risk Financial Requirement.

Member account
Represents a distinct entry recorded in the register of member accounts (or other equivalent mechanism).

 
Employer sponsor
Represents an employer sponsor as given within the meaning in s. 16(1) of the SIS Act.
Interpretation
For the purposes of these instructions:
·                operational risk financial requirement (ORFR) has the meaning given in SPS 114;
·                RSE means a registrable superannuation entity as defined in section 10(1) of the SIS Act;
·                RSE licensee has the meaning given in section 10(1) of the SIS Act;
·                single member approved deposit fund (SMADF) means a superannuation entity that is an approved deposit fund, within the meaning given in section 10(1) of the SIS Act, that has only one member;
·                SIS Act means the Superannuation Industry (Supervision) Act 1993;
·                small APRA fund (SAF) means a regulated superannuation fund, within the meaning given in section 10(1) of the SIS Act, which has fewer than five members; and
·                SPS 114 means Prudential Standard SPS 114 Operational Risk Financial Requirement.

[1]           Refer also to Prudential Standard SPS 310 Audit and Related Matters (SPS 310).
[2]           Refer to Prudential Standard SPS 510 Governance.