Financial Sector (Collection of Data) (reporting standard) determination No. 28 of 2009
Reporting Standard GRS 450.0_G (2009) Interest in Controlled Entities, Associates and Joint Ventures
Financial Sector (Collection of Data) Act 2001
I, John Roy Trowbridge, a Member of APRA and 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 financial sector entities of the kind specified 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 entities on registration of this instrument on the Federal Register of Legislative Instruments.
Dated 21August 2009
[Signed]
John Trowbridge
Member Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.
Schedule
Reporting Standard GRS 450.0_G (2009) Interest in Controlled Entities, Associates and Joint Ventures comprises the 19 pages commencing on the next page.
Reporting Standard GRS 450.0_G (2009)
Interest in Controlled Entities, Associates and Joint Ventures
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires Level 2 insurance groups to report to APRA, generally on a semi-annual and annual basis, in relation to their interest in controlled entities, associates and joint ventures.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
· Form GRF 450.0_G Interest in Controlled Entities, Associates and Joint Ventures (Form GRF 450.0_G) for a Level 2 insurance group and the associated instructions (which are attached and all form part of this reporting standard); and
· any prudential standards referenced in the attached instructions.
Purpose
1. Data collected in Form GRF 450.0_G is used by APRA for the purpose of prudential supervision of Level 2 insurance groups.
Application and commencement
2. This reporting standard applies to all Level 2 insurance groups for reporting periods commencing on or after 30 June 2009.
Information required
3. A Level 2 insurance group must provide APRA with the information required by the Form GRF 450.0_G for each reporting period specified in paragraph 5 for the Level 2 insurance group.
Forms and method of submission
4. The information required by this reporting standard must be given to APRA either:
(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b) by manually completing Form GRF 450.0_G on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the Level 2 insurance group has outsourced the function of providing the information on the Level 2 insurance group’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
Reporting periods and due dates
5. Subject to paragraph 6, a Level 2 insurance group must provide the information required by this reporting standard:
(a) in respect of each half year based on the financial year (as defined in Prudential Standard GPS 001 Definitions (GPS 001)) of the Level 2 insurance group on an unaudited basis; and
(b) in respect of each financial year (as defined in GPS 001) of the Level 2 insurance group on an audited basis.
Note: The annual information required by paragraphs 3, 4 and 5(b) together with certain annual information required by other reporting standards, will form part of the Level 2 insurance group’s annual accounts within the meaning of GPS 001. Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Groups (GPS 311) contains the relevant provisions governing audits.
6. APRA may, by notice in writing to the parent entity, change the reporting periods, or specified reporting periods, for a particular Level 2 insurance group to require it to provide the information:
(a) more frequently (if, having regard to the particular circumstances of the Level 2 insurance group, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the Level 2 insurance group); or
(b) less frequently (if, having regard to the particular circumstances of the Level 2 insurance group and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the Level 2 insurance group to provide the information as frequently.
7. The information required by paragraph 3 of this reporting standard from a Level 2 insurance group must be provided to APRA by the following times:
(a) in the case of the half yearly information required by subparagraph 5(a) – three months after the end of the reporting period to which the information relates; and
(b) in the case of the audited annual information required by subparagraph 5(b) – four months after the end of the reporting period to which the information relates.
Note: GPS 311 requires a Level 2 insurance group to ensure that its Group Auditor conducts a limited assurance review of the group’s annual accounts. Accordingly, the Group Auditor’s report(s) as required by GPS 311 (relating to the information required by paragraph 3) must be provided to APRA by the time specified in subparagraph 7(b) of this reporting standard (unless an extension is granted under paragraph 8).
8. APRA may by notice in writing to the parent entity grant a Level 2 insurance group an extension of a due date for the provision of the information, in which case the new due date will be the date on the notice of extension.
9. On the written application of the parent entity of a Level 2 insurance group, APRA may by notice in writing to the parent entity exclude the requirement under subparagraph 5(a) to provide half yearly information.
Quality control
10. The information provided by a Level 2 insurance group under this reporting standard must be the product of processes and controls that have been reviewed and tested by the Group Auditor of the Level 2 insurance group. This will require the Group 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:
(a) an annual basis to enable the Group Auditor to form an opinion on the accuracy and reliability of the data; and
(b) at least a limited assurance engagement consistent with the professional standards and guidance notes issued by the Auditing and Assurance Standards Board (AUASB) as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Groups.
11. The information provided by a Level 2 insurance group under this reporting standard must be subject to processes and controls developed by the Level 2 insurance group for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the parent entity of the Level 2 insurance group to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Authorisation
12. If an officer of a parent entity[1] of a Level 2 insurance group provides the information required by this reporting standard:
(a) under subparagraph 4(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the parent entity of the Level 2 insurance group who have authority from the parent entity of the Level 2 insurance group to transmit data to APRA); or
(b) under subparagraph 4(b), the completed form must be signed in accordance with paragraph 13.
13. If a Level 2 insurance group provides the information required by this reporting standard through an agent under either subparagraphs 4(a) or (b), the agent will not be required to sign or authorise the information. However, the Level 2 insurance group must:
(a) obtain from the agent a paper copy of the completed form as provided to APRA (whether it was provided under subparagraph 4(a) or (b)); and
(b) cause the paper copy to be signed in accordance with paragraph 13; and
(c) lodge the signed paper copy with APRA by mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement to lodge the signed paper copy with APRA by varying this reporting standard in relation to the Level 2 insurance group).
Note: APRA may, for example, determine to waive the requirement under subparagraph 13(c) where a Level 2 insurance group has undertaken to retain the signed copy of the completed form for an agreed period of time.
14. If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a) the Principal Executive Officer of the parent entity of the Level 2 insurance group; or
(b) the Chief Financial Officer of the parent entity of the Level 2 insurance group (whatever his or her official title may be).
Minor alterations to forms and instructions
15. APRA may make minor variations to the instructions to a form, 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 the parent entity of each Level 2 insurance group in writing.
Transition
17. Where APRA has granted a period of transition to a Level 2 insurance group by determining a later effective date for:
(a) Prudential Standard GPS 111 Capital Adequacy: Level 2 Insurance Group;
(b) Prudential Standard GPS 221 Risk Management: Level 2 Insurance Group; and
(c) Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Group
a later effective date for this Reporting Standard will apply to the Level 2 insurance group as determined by APRA.
Adjustments
18. The parent entity of a Level 2 insurance group may apply in writing to APRA to vary the reporting requirements of GRF 450.0_G Interest in Controlled Entities, Associates and Joint Ventures in relation to that Level 2 insurance group. APRA may in its discretion in writing approve such an application.
Interpretation
19 In this reporting standard (including the attachments):
(a) Unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard GPS 001 Definitions;
(b) APRA-authorised reinsurer means an insurer carrying on reinsurance business. For the purposes of this definition, a Lloyd’s underwriter as defined under the Act is an APRA-authorised reinsurer if it carries on reinsurance business;
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays;
capital standards means the prudential standards which relate to capital adequacy as defined in Prudential Standard GPS 001 Definitions;
foreign insurer means a foreign general insurer within the meaning of the Insurance Act;
Note: A reference to a ‘branch’ or ‘branch operation’ is a reference to the Australian operations of a foreign insurer.
Group Auditor has the meaning given in Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Groups;
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning of the Insurance Act;
Note: In the forms and instructions, a reference to an ‘authorised insurer’, ‘authorised insurance entity’ or ‘licensed insurer’ is a reference to an insurer, and a reference to an ‘authorised reinsurance entity’ is a reference to an insurer whose business consists only of undertaking liability by way of reinsurance.
Non-APRA authorised reinsurer means any reinsurer that is not an APRA-authorised reinsurer;
Principal Executive Officer means the current principal executive officer of the entity, regardless of title, and whether or not he or she is a member of the governing board of the entity;
reporting period means a period mentioned in subparagraph 5(a) or (b) or, if applicable, paragraph 6.
20 A reference to a prudential standard is a reference to the applicable prudential standard made under section 32 of the Insurance Act, as amended from time to time. If the prudential standard has been revoked and replaced, the reference shall be taken to be to the prudential standard that has replaced it.
Reporting Form GRF 450.0_G
Interest in Controlled Entities, Associates and Joint Ventures (Level 2 Insurance Group)
Instruction Guide
Introduction
This form collects information on the Level 2 insurance group’s interest in:
Ø consolidated entities of Level 2 insurance group;
Ø controlled entities that are non-consolidated subsidiaries of Level 2 insurance group; and
Ø associates and joint ventures.
Audit requirements
The annual return of GRF 450.0_G Interest in Controlled Entities, Associates and Joint Ventures (Level 2 Insurance Group) required under paragraphs 3 and 5(c) of Reporting Standard GRS 450.0_G must be subject to a limited assurance[2] review by the Group Auditor (see Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Groups (GPS 311)).
The Group Auditor must prepare a review report on the basis of a limited assurance engagement in accordance with the requirements of GPS 311. Assurance in the review report will be provided in the form of negative assurance. To express negative assurance in the review report, the auditor will use limited procedures to obtain sufficient appropriate evidence. Enquiries of the Level 2 insurance group’s staff and analytical procedures will be the primary tools used to obtain evidence. These procedures will not provide all the evidence that would be required in an audit.
The scope and nature of audit testing required is outlined in the Standard on Assurance Engagement ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information issued by the Auditing and Assurance Standards Board.
Reporting entities
GRF 450.0_G Interest in Controlled Entities, Associates and Joint Ventures (Level 2 Insurance Group) is to be completed by the parent entity of a Level 2 insurance group as defined under Prudential Standard GPS 001 Definitions (GPS 001).
Consolidation at Level 2 should cover the Level 2 insurance group as defined under GPS 001.
Unit of measurement
This form is to be presented in Australian dollars (AUD), rounded to thousands of dollars, with no decimal place.
Amounts denominated in foreign currency are to be converted to AUD in accordance with Australian accounting standards.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with Australian accounting standards.
Basis of preparation
In completing this form, Level 2 insurance groups are requested to follow the recognition and measurement requirements specified in this instruction guide.
Materiality
Level 2 insurance groups are required to report only material interests in controlled entities, associates and joint ventures. Threshold levels for materiality are to be agreed with APRA. Matters that APRA may take into account in determining whether a non-consolidated subsidiary, associate or joint venture is material include, but are not limited to:
· the net assets;
· the total liabilities; and
· the total revenue
of the non-consolidated subsidiary in comparison to those of the Level 2 insurance group.
Reporting period
Level 2 insurance groups are required to report the information in the reporting form. This information is to be reported on three occasions in a Level 2 insurance group’s financial year. A Level 2 insurance group is required to submit:
· semi-annual return which is to be completed in respect of each half year from the start of the financial year of the Level 2 insurance group; and
· an audited annual return which will be based on a limited assurance review by the Group Auditor (see Audit requirements).
The financial information requested in this form is to be reported as at the last day of the reporting period on a financial year to date basis of the Level 2 insurance group.
Reporting lag
Submission times for Level 2 reporting forms are as follows (in accordance with GRS 450.0_G Interest in Controlled Entities, Associates and Joint Ventures):
The semi-annual return is to be lodged within three months after the end of the reporting period. The audited annual return is to be lodged within four months after the end of the reporting period.
Adjustments
The parent entity of a Level 2 insurance group may apply in writing to APRA to vary the reporting requirements of GRF 450.0_G Interest in Controlled Entities (Level 2 Insurance Group), Associates and Joint Ventures in relation to that Level 2 insurance group. APRA may, at its discretion, approve such an application in writing.
Specific instructions
This form is separated into the following parts:
1. Part A: Interest in consolidated entities of the Level 2 insurance group
2. Part B: Interest in controlled entities that are non-consolidated subsidiaries of the Level 2 insurance group
3. Part C: Interest in Associates and Joint Ventures
The requirements for each of these are detailed below:
Part A: Interest in consolidated entities of the Level 2 insurance group
For the purposes of this form, ‘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.
For the purposes of this form, ‘consolidated entities’ includes reporting entities included in Level 2 insurance group.
A.1: Interest in consolidated entities - Australian
For the purposes of this form, “consolidated entities - Australian” includes only the Australian reporting entities included in Level 2 insurance group. Do not include International reporting entities here.
For prudential reporting purposes ‘Australian business’ is as defined in GPS 001.
Consolidated entities which are not insurers within the Level 2 insurance group but are incorporated in Australia should also be reported here.
(1) Name of consolidated entity
Report the full name of each consolidated entity.
(2) APRA regulated general insurer
If the consolidated entity is an APRA regulated general insurance entity input ‘yes’, otherwise input ‘no’.
(3) Ownership percentage %
Disclose the percentage of the Level 2 insurance group’s ownership of shares or units of the consolidated entity. Report the ownership percentage without any “%” symbol.
(4) Goodwill and identifiable intangible assets
Report the carrying value of goodwill and identifiable intangible assets of each entity within the Level 2 insurance group (as held on the group’s balance sheet) in accordance with Australian accounting standards.
Where goodwill is assigned to cash generating units and these units do not align with legal entities, an approach to completing this form needs to be agreed with APRA.
(5) Gross assets
Report the gross value of assets in each consolidated entity of the Level 2 insurance group. Gross assets are to be reported as positive values.
(6) Gross liabilities
Report the gross value of liabilities in each consolidated entity of the Level 2 insurance group. Gross liabilities are to be reported as positive values.
A.2: Interest in consolidated entities - International
For the purposes of this form, “consolidated entities - International” includes only the international reporting entities included in Level 2 insurance group. Do not include Australian reporting entities here.
Consolidated entities which are not insurers within the Level 2 insurance group but are incorporated outside of Australia should also be reported here.
(1) Name of consolidated entity
Report the full name of each consolidated entity.
(2) Ownership percentage %
Disclose the percentage of the Level 2 insurance group’s ownership of shares or units of the consolidated entity. Report the ownership percentage without any “%” symbol.
(3) Goodwill and identifiable intangible assets
Report the carrying value of goodwill and identifiable intangible assets of each entity (as held on the group’s balance sheet) in accordance with Australian accounting standards.
Where goodwill is assigned to cash generating units and these units do not align with legal entities, an approach to completing this form needs to be agreed with APRA.
(4) Region (for which Gross Assets and Gross Liabilities are reported)
Report the region which most appropriately reflects the location of the gross assets and gross liabilities of the entity.
International business, as defined in GPS 001, is to be reported according to the following geographical regions[3]:
New Zealand;
South East Asia;
Asia Pacific;
USA
Americas;
UK/Europe; and Other.
Once regions are defined, they should generally be maintained thereafter for consistency. However, this does not prevent the Level 2 insurance group from altering its reporting regions where necessary, provided APRA is notified of any changes.
(5) Gross assets
Report the gross value of assets in each entity of the Level 2 insurance group. Gross assets are to be reported as positive values.
(6) Gross liabilities
Report the gross value of liabilities in each entity of the Level 2 insurance group. Gross liabilities are to be reported as positive values.
Part B: Interest in controlled entities that are non-consolidated subsidiaries[4] of the Level 2 insurance group
For the purposes of this form, ‘controlled entities’ is to be interpreted as defined in AASB 127 ‘Consolidated and Separate Financial Statements’. Report controlled entities that are consolidated under Australian accounting standards but are treated, for prudential reporting purposes, as non-consolidated subsidiaries of the Level 2 insurance group under GPS 001.
(1) Name of controlled entity
Report the full name of each controlled entity.
(2) Description/Nature of business
In the space provided, detail a brief description of the main business conducted by the entity.
(3) APRA regulated
If the controlled entity is an APRA regulated entity input ‘yes’, otherwise input ‘no’.
(4) Country of incorporation
Report the country in which the entity is incorporated.
(5) Ownership percentage %
Disclose the percentage of the Level 2 insurance group’s ownership of shares or units of the controlled entity. Report the ownership percentage without any “%” symbol.
(6) Value of investment in controlled entity
Disclose the value of the investment of the Level 2 insurance group in the controlled entity as represented by the value of the non-consolidated subsidiary per the group’s financial statements prepared in accordance with Australian accounting standards.
(7) Net tangible assets of the controlled entity
Report the net tangible assets of the controlled entity. Net tangible assets are to be determined in accordance with the Australian accounting standards or the relevant local equivalents of International Financial Reporting Standards and are to be reported at 100 per cent of the value rather than the group’s share of ownership.
(8) Region (for which Gross Assets and Gross Liabilities are reported)
Report the region which most appropriately reflects the location of the gross assets and gross liabilities of the non-consolidated entity.
For prudential reporting purposes ‘Australian business’ is as defined in GPS 001.
International business, as defined in GPS 001, is to be reported according to the following geographical regions:
New Zealand;
South East Asia;
Asia Pacific;
USA
Americas;
UK/Europe; and Other.
Once regions are defined, they should generally be maintained thereafter for consistency. However, this does not prevent the Level 2 insurance group from altering its reporting regions where necessary, provided APRA is notified of any changes.
(9) Gross assets
Report the gross value of assets of the non-consolidated subsidiaries of the Level 2 insurance group. Gross assets are to be reported as positive values.
(10) Gross liabilities
Report the gross value of liabilities of the non-consolidated subsidiaries of the Level 2 insurance group. Gross liabilities are to be reported as positive values.
(11) Adequate capital
APRA may, under paragraph 59 of Prudential Standard GPS 111 Capital Adequacy: Level 2 Insurance Groups (GPS 111), require a Level 2 insurance group to deduct from capital an amount to cover the undercapitalisation of a non-consolidated subsidiary of the group. Consequently, Level 2 insurance groups are required to undertake an assessment of the capital levels of non-consolidated subsidiaries. Details of any assessment undertaken must be included in the Level 2 insurance group’s business plan.
If the non-consolidated subsidiary is adequately capitalised on a standalone basis input ‘yes’, otherwise input ‘no’.
Part C: Interest in associates and joint ventures
For the purposes of this form, the reference to “associates” is to be interpreted as defined in AASB 128 ‘Investments in Associates’.
Reference to joint ventures in this form includes joint venture entities and joint venture operations. Joint venture entities and joint venture operations are to be interpreted as defined in AASB 131 ‘Interests in Joint Ventures’.
(1) Name of associate/Joint venture
Report the full name of each associate or joint venture.
(2) Description/Nature of business
Provide a brief description of the main business conducted by the associate or joint venture.
(3) APRA regulated general insurer
If the associate or joint venture is an APRA regulated general insurance entity input ‘yes’, otherwise input ‘no’.
(4) Country of incorporation
Report the country in which the associate or the joint venture is incorporated.
(5) Percentage (%) ownership or Interest in associate or joint venture
Disclose the percentage of the Level 2 insurance group’s ownership or interest in the associate or the joint venture. Report the ownership percentage without any “%” symbol.
(6) Value of interest in associate or joint venture
Report the value of the investment in the associate or joint venture using the accounting method adopted in the financial statements of the Level 2 insurance group in accordance with Australian accounting standards.
(7) Net tangible assets of associate or joint venture
Report the net tangible assets of the associate or joint venture. Net tangible assets are to be determined in accordance with International Financial Reporting Standards (IFRS). Any other recognised accounting framework (e.g. US GAAP) may be used only when approved by APRA. Net tangible assets are to be reported at 100 per cent of the value rather than the group’s share of ownership.
(8) Net income recognised from interest in associate or joint venture
Disclose the net income recognised from the Level 2 insurance group’s interest in the associate or joint venture.
(9) Region (for which Gross Assets and Gross Liabilities are reported)
Report the region which most appropriately reflects the location of the gross assets and gross liabilities of the associate or joint venture.
For prudential reporting purposes ‘Australian business’ is as defined in GPS 001.
International business, as defined in GPS 001, is to be reported according to the following geographical regions:
New Zealand;
South East Asia;
Asia Pacific;
USA
Americas;
UK/Europe; and Other.
Once regions are defined, they should generally be maintained thereafter for consistency. However, this does not prevent the Level 2 insurance group from altering its reporting regions where necessary, provided APRA is notified of any change.
(10) Gross assets
Report the gross value of assets of the associates and joint venture operations of the Level 2 insurance group. Gross assets are to be reported as positive values.
(11) Gross liabilities
Report the gross value of liabilities of the associates and joint venture operations of the Level 2 insurance group. Gross liabilities are to be reported as positive values.
[1] As defined in Prudential Standard GPS 001 Definitions (GPS 001).
[2] Limited assurance is as defined according to Framework for Assurance Engagements issued by the AUASB as may be amended from time to time.
[3] For the purposes of prudential reporting, Lloyd’s syndicates are to be reported as international business.
[4] See Prudential Standard GPS 001 Definitions (GPS 001).
