Financial Sector (Collection of Data) determination No. 4 of 2005

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Financial Sector (Collection of Data) determination No. 4 of 2005 Reporting Standard GRS 130.1 (2005) 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 (‘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 the later of 1 July 2005 and the date of registration on the Federal Register of Legislative Instruments.     Dated 21 June 2005     [signed] ……………………............ Charles Littrell Executive General Manager Policy, Research and Statistics Division APRA     Interpretation In this Notice   APRA means the Australian Prudential Regulation Authority.  
Schedule          

 
Reporting Standard GRS 130.1 (2005)
 
Off Balance Sheet Business – Liquidity Support Facilities Obtained
   
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 general insurers (insurers), including foreign general insurers (foreign insurers) operating in Australia through branch operations, to report to APRA, generally on a quarterly and annual basis, their off balance sheet exposures in the form of liquidity support facilities. This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with: ·               the versions of Form GRF 130.1 Off Balance Sheet Business – Liquidity Support Facilities Obtained (Form GRF 130.1) designated for a ‘Licensed Insurer’ and ‘Consolidated Insurance Group’ and the associated instructions (which are attached and all form part of this reporting standard); and ·               Prudential Standard GPS 110 Capital Adequacy for General Insurers and Guidance Notes GGN 110.1, GGN 110.2, GGN 110.3, GGN 110.4 and GGN 110.5.  
Purpose
1.             Data collected in Form GRF 130.1 is used by APRA for the purpose of prudential supervision including assessing an insurer’s compliance with Prudential Standard GPS 110.0 Capital Adequacy for General Insurers.
Application and commencement
2.             This reporting standard applies to all insurers and shall begin to apply to those entities on the later of 1 July 2005 and the date of registration on the Federal Register of Legislative Instruments. 
Information required
3.             An insurer must provide APRA with the information required by the version of Form GRF 130.1 designated for a ‘Licensed Insurer’ for each reporting period. 4.             An insurer that is a highest parent entity in relation to a consolidated insurance group must also provide APRA with the information required by the version of Form GRF 130.1 designated for a ‘Consolidated Insurance Group’ for each reporting period.
Forms and method of submission
5.             The information required by this reporting standard 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; or (b)          manually completed on paper, which must be faxed or mailed to APRA’s head office.             Note: the Direct to APRA application software and paper forms may be obtained from APRA.  Reporting periods and due dates 6.             Subject to paragraph 7, an insurer must provide the information required by this reporting standard: (a)           in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and (b)          in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer. Note: The annual information required by paragraph 3 read with subparagraph 6(b), together with certain annual information required by other reporting standards, will form part of the insurer’s yearly statutory accounts within the meaning of section 3 of the Insurance Act 1973 (the Insurance Act).  This means that the information must be audited in accordance with paragraph 49J(1)(a) of the Insurance Act.  Under subsection 49J(3), the auditor must give the insurer a certificate relating to the yearly statutory accounts, and that certificate must specify the matters provided for in the prudential standards.  (The annual information required from a highest parent entity under paragraph 4 read with subparagraph 6(b) is not required to be audited.  APRA proposes to determine an exemption, under section 7 of the Insurance Act, in relation to the obligations under Part IV Division 4 of the Act in respect of the auditing of this information.) 7.             APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular insurer to require it to provide the information: (a)           more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or (b)          less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 6(a) or (b)). 8.             The information required by paragraph 3 of this reporting standard from an insurer must be provided to APRA by the following times: (a)           in the case of the quarterly information required by subparagraph 6(a) – 20 business days after the end of the reporting period to which the information relates; and (b)          in the case of the annual information required by subparagraph 6(b) – 4 months after the end of the reporting period to which the information relates. Note: Paragraph 49L(1)(a) of the Insurance Act provides that the auditor’s certificate required under subsection 49J(3) of that Act must be lodged with APRA in accordance with the prudential standards.  The prudential standards provide that the certificate must be submitted to APRA together with the yearly statutory accounts.  Accordingly, the auditor’s certificate in relation to the annual information required by paragraph 3 read with subparagraph 6(b) must be provided to APRA by the time specified in subparagraph 8(b) of this reporting standard (unless an extension is granted under paragraph 10). 9.             The information required by paragraph 4 of this reporting standard from an insurer that is a highest parent entity must be provided to APRA by the following times: (a)           in the case of the quarterly information required by subparagraph 6(a) – 30 business days after the end of the reporting period to which the information relates; and (b)          in the case of the annual information required by subparagraph 6(b) – 4 months after the end of the reporting period to which the information relates. 10.         APRA may grant an insurer an extension of a due date in writing, 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 insurer under this reporting standard (other than the information required from a highest parent entity under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the approved auditor of the insurer. 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 on the accuracy and reliability of the data.  12.         The information provided by an insurer under this reporting standard must be subject to processes and controls developed by the insurer for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the insurer to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Authorisation
13.         If an insurer submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the insurer 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.  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 insurer; or (b)          the Chief Financial Officer of the insurer (whatever his or her official title may be).
Minor alterations to forms and instructions
15.         APRA may make minor variations to: (a)           a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or (b)          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 insurers in writing. Transitional 17.         If a reporting period of an insurer ended on 30 June 2005, or ends after that date, the insurer must report under this reporting standard in respect of that reporting period. Interpretation 18.         In this reporting standard: Accounting Standard AASB 1024 means the accounting standard so designated made by the Australian Accounting Standards Board, being the accounting standard that applied in respect of reporting periods (within the meaning of the accounting standard)commencing immediately before 1 January 2005; approved auditor means an auditor who has been approved by APRA under section 40 of the Insurance Act; business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays; consolidated insurance group means a group comprising: (a)           an insurer that is a highest parent entity; and (b)           each subsidiary under the control (within the meaning of Accounting Standard AASB 1024) of that insurer, whether the subsidiary is incorporated in Australia or not; 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. highest parent entity means an insurer that satisfies all of the following conditions: (a)           it is incorporated in Australia; (b)           it has at least one subsidiary under its control (within the meaning of Accounting Standard AASB 1024); and (c)           it is not itself a subsidiary of an insurer that is incorporated in Australia; 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.
Principal Executive Officer means the principal executive officer of the insurer for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the insurer;
reporting period means a period mentioned in subparagraph 6(a) or (b) or, if applicable, paragraph 7. 19.         A reference to a prudential standard or guidance note means the prudential standard or guidance note, made under section 32 of the Insurance Act, mentioned in the reference, as amended from time to time.  If the prudential standard or guidance note has been revoked and replaced, the reference shall be taken to be to the prudential standard or guidance note that has replaced it.

 
Reporting Form GRF 130.1 Off-Balance Sheet Business - Liquidity Support Facilities Obtained
Instruction Guide
Introduction This form collects information on an insurer’s (reinsurer’s) off-balance sheet liquidity arrangements.
Audit requirements
The form relating to authorised insurance entities and reinsurance entities is required to be subject to audit review and testing. The scope and nature of audit testing required is outlined in the applicable Audit Guidance Statement issued by the Auditing and Assurance Board of the Australian Accounting Research Foundation. Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973.  This means that: ·               the completed form for the financial year must be audited by the approved auditor of the insurer (see paragraph 49J(1)(a) of the Act);   ·               the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));  ·               the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3));  ·               the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
Reporting entity
Forms are to be completed for the following reporting entities only where required: 1.             Branch insurers of a foreign parent insurer (reference to licensed insurer in the form means total operations of the branch, excluding the parent operations); 2.             Authorised insurance entities, including mutual entities (reference to licensed insurer in the form means total operations of the licensed entity); and 3.             Authorised reinsurance entities (reference to licensed insurer in the form means total operations of the licensed entity). 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 1012 ‘Foreign Currency Translation’. The general requirements of AASB 1012 for translation are: 1.             Foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date; and 2.             Other items outstanding at the reporting date must not be retranslated subsequent to initial recognition of the transaction. Monetary items are defined to mean money held and assets and liabilities that are to be received or paid in fixed or determinable amounts of money (e.g. claims payments, reinsurance recoveries). Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows: ·               Where the exchange rate is fixed in the contract, at that fixed exchange rate; and ·               Where the exchange rate varies, at the spot rate at the reporting date.  Reporting period Insurers are required to report the information in the reporting form on a quarterly and annual basis. ·               The quarterly information is to be completed in respect of each quarter based on the financial year of the insurer, not the calendar year. ·               The annual information is to be completed in respect of the financial year of the insurer. ·               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 insurer. See the Reporting Requirements table for details.
Reporting lag
This form must be lodged for each of the reporting units within the number of business days after the end of the quarter as set out in the Reporting Requirements table.
Specific instructions This section captures information on liquidity support facilities contracted by the insurer (reinsurer) to supplement its liquidity management practices. Approved Balance Available Report the total approved balance of the facility. Undrawn Balance Available Report the balance of the facility that has not been used or drawn-down by the insurer at the reporting date. Standby facilities These facilities are approved and committed to the insurer. These generally require written notice by the insurer to trigger draw down (access) to the funds. Facilities with same day drawdown Report those standby facilities that are able to be drawn down (funds accessed) the same day as notice is given by the insurer of its intention to draw down on the standby facility. Facilities with 2-5 day drawdown Report those standby facilities that are able to be drawn down (funds accessed) within 2-5 days after notice from the insurer is given of its intention to draw down on the standby facility (i.e. a 2-5 day waiting period). Facilities with greater than 5 days drawdown Report those standby facilities that are only able to be drawn down (funds accessed) 5 days after notice from the insurer is given of its intention to draw down (i.e. a 5 day waiting period). Bill Acceptance/Discount Facilities These are another form of liquidity/funding. The funding is provided to the insurer by a facility that discounts bills (e.g. bank accepted bills). Principal and interest (discount) owing on the bill is repaid or ‘rolled over’ by the insurer on maturity of the bill. Total Liquidity Support Facilities Which Are With Related Entities Report liquidity support facilities that are provided by related entities of the insurer (e.g. parent entity of the insurer or a related entity of the parent entity).  

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