Reporting Standard SRS 220.0 (2005)

Exposure Concentrations

Objective of this reporting standard

This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires the trustee of a superannuation entity[1] to give APRA, on an annual basis, a statement of their top 10 exposures, including concentrations in exposure to a single or related counterparty and asset types.

This reporting standard outlines the overall requirements for the provision of the required information to APRA. It should be read in conjunction with:

• Form SRF 220.0 Exposure Concentrations (Form SRF 220.0) and the instructions to that form; and
• the Annual Reporting Requirements and General Instruction Guide

which are attached and form part of this reporting standard.

Purpose

1. Data collected in Form SRF 220.0 is used by APRA for the purpose of prudential supervision.

Application and commencement

2. This reporting standard will apply, from the date of registration of the reporting standard on the Federal Register of Legislative Instruments, to each trustee of a relevant registered superannuation entity, as defined by paragraph 3.

3. A superannuation entity is a relevant registered superannuation entity if, at the end of the most recent reporting period for the entity, it was not:

(a) a small APRA fund;

(b) a self managed superannuation fund; or

(c) a single member approved deposit fund.

Note : Part 2B of the SIS Act makes provision for the registration of superannuation entities. However, although it is expected that most superannuation entities covered by this reporting standard will become registered under Part 2B, either during or after the licensing transition period referred to in the SIS Act, it is not a requirement of the definition of ‘relevant registered superannuation entity’ that a superannuation entity actually be registered under Part 2B. A superannuation entity will be a ‘relevant registered superannuation entity’ if it meets the definition in paragraph 3 of this reporting standard, even if it has not been registered under Part 2B. This note is inserted for the avoidance of doubt.

Information required

4. The trustee of a relevant registered superannuation entity must provide APRA with the information required by Form SRF 220.0, in respect of the entity, for each reporting period.

5. For the avoidance of doubt, if the trustee is trustee of more than one relevant registered superannuation entity, the trustee must separately provide the information required by the form for each of those relevant registered superannuation entities.

Forms and method of submission

6. The information required by this reporting standard must be given to APRA by the trustee of a relevant registered superannuation entity either:

(a) where subparagraph (b) does not apply:

(i) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or

(ii) by manually completing Form SRF 220.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales; or

(b) by means of an agent to whom the trustee has outsourced the function of providing the information on the trustee’s behalf, in which case the agent must provide the information:

(i) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application: or

(ii) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under sub-subparagraph (i), by manually completing Form SRF 220.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.

Note: The ‘Direct to APRA’ software and relevant forms may be obtained from APRA.

Note: See paragraphs 12, 13 and 14 for requirements relating to the authorisation of information provided under this reporting standard (which differ depending on how the information is provided).

Reporting periods and due dates

7. Subject to paragraph 8, the trustee of a relevant registered superannuation entity must provide the information required by this reporting standard in respect of each year of income (within the meaning of subsection 10(1) of the SIS Act of the entity.

Note: Under section 113 of the SIS Act there will be a requirement for the information to be audited, together with annual information required under other reporting standards.

8. APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular relevant registered superannuation entity to require the trustee to provide the information required by this reporting standard in respect of the entity:

(a) more frequently (if, having regard to the particular circumstances of the entity, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the entity); or

(b) less frequently (if, having regard to the particular circumstances of the entity and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the trustee to provide the information on an annual basis).

9. The information required by this reporting standard must be provided to APRA within 4 months after the end of the reporting period to which it relates.

Note: The trustee must also give APRA an audit report relating to the information, and to annual information required under other reporting standards, within this time (see section 36 of the SIS Act).

10. APRA may grant a trustee 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 a trustee under this reporting standard must be the product of processes and controls that have been reviewed and tested by the 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 auditor to form an opinion on the accuracy and reliability of the data.

12. The information provided by a trustee under this reporting standard must be the product of processes and controls developed by the trustee for the internal review and authorisation of that information. It is the responsibility of the trustee to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

Authorisation

13. If the trustee of a relevant registered superannuation entity provides the information required by this reporting standard under subparagraph 6(a), then:

(a) if the trustee uses the ‘Direct to APRA’ application under sub-subparagraph 6(a)(i), an officer of the trustee 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 trustee who have authority from the trustee to transmit data to APRA); and

(b) if the trustee provides the information on paper under sub-subparagraph 6(a)(ii), the completed form must be signed by an officer of the trustee who is authorised by the trustee to complete and lodge the form.

14. If the trustee of a relevant registered superannuation entity provides the information required by this reporting standard through an agent under subparagraph 6(b), then:

(a) the agent will not be required to sign or authorise the information; but

(b) the trustee must:

(i) obtain from the agent a paper copy of the completed form as provided to APRA (whether it was provided under sub-subparagraph 6(b)(i) or (ii)); and

(ii) cause the paper copy to be signed by an officer of the trustee authorised by the trustee to sign the paper copy; and

(iii) lodge the signed paper copy with APRA by mailing it to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, determines to waive the requirement under this sub-subparagraph, in relation to the trustee, or a class of trustees of which the trustee is a member, or all trustees).

Note: APRA may, for example, determine to waive the requirement under sub-subparagraph 14(b)(iii) where a trustee has undertaken to retain the signed copy of the completed form for an agreed period of time.

Minor alterations to form 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 trustees of relevant registered superannuation entities in writing.

Transitional

17. If a reporting period of a relevant registered superannuation entity ended on 30 June 2005, or ends after that date, the trustee of the entity must report under this reporting standard in relation to the entity in respect of that reporting period.

Interpretation

18. In this reporting standard:

APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;

due date means the relevant due date under paragraph 9 or, if applicable, paragraph 10;

officer in relation to a trustee of a relevant registered superannuation entity means:

(a) if the trustee is a corporation – a director or officer of that corporation;

(b) if the trustee is a natural person – that person; or

(c) if two or more natural persons are trustees of the entity – one of those persons;

regulated superannuation fund has the meaning given by section 19 of the SIS Act;

relevant registered superannuation entity has the meaning given by paragraph 3 of this reporting standard;

reporting period means a period mentioned in paragraph 7 or, if applicable, paragraph 8;

self managed superannuation fund has the meaning given by section 17A of the SIS Act;

single-member approved deposit fund means an approved deposit fund (within the meaning of subsection 10(1) of the SIS Act) that has only one member;

SIS Act means the Superannuation Industry (Supervision) Act 1993;

small APRA fund means a regulated superannuation fund that has fewer than 5 members and is regulated by APRA under the SIS Act;

superannuation entity has the meaning given by subsection 10(1) of the SIS Act.

Note: Subsection 10(1) of the SIS Act provides that superannuation entity means a regulated superannuation fund, or an approved deposit fund, or a pooled superannuation trust (as defined in the SIS Act).

Objective of this reporting standard

This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires the trustee of a superannuation entity[1] to give APRA, on an annual basis, a statement of their top 10 exposures, including concentrations in exposure to a single or related counterparty and asset types.

This reporting standard outlines the overall requirements for the provision of the required information to APRA. It should be read in conjunction with:

• Form SRF 220.0 Exposure Concentrations (Form SRF 220.0) and the instructions to that form; and
• the Annual Reporting Requirements and General Instruction Guide

which are attached and form part of this reporting standard.

Purpose

1. Data collected in Form SRF 220.0 is used by APRA for the purpose of prudential supervision.

Application and commencement

2. This reporting standard will apply, from the date of registration of the reporting standard on the Federal Register of Legislative Instruments, to each trustee of a relevant registered superannuation entity, as defined by paragraph 3.

3. A superannuation entity is a relevant registered superannuation entity if, at the end of the most recent reporting period for the entity, it was not:

(a) a small APRA fund;

(b) a self managed superannuation fund; or

(c) a single member approved deposit fund.

Note : Part 2B of the SIS Act makes provision for the registration of superannuation entities. However, although it is expected that most superannuation entities covered by this reporting standard will become registered under Part 2B, either during or after the licensing transition period referred to in the SIS Act, it is not a requirement of the definition of ‘relevant registered superannuation entity’ that a superannuation entity actually be registered under Part 2B. A superannuation entity will be a ‘relevant registered superannuation entity’ if it meets the definition in paragraph 3 of this reporting standard, even if it has not been registered under Part 2B. This note is inserted for the avoidance of doubt.

Information required

4. The trustee of a relevant registered superannuation entity must provide APRA with the information required by Form SRF 220.0, in respect of the entity, for each reporting period.

5. For the avoidance of doubt, if the trustee is trustee of more than one relevant registered superannuation entity, the trustee must separately provide the information required by the form for each of those relevant registered superannuation entities.

Forms and method of submission

6. The information required by this reporting standard must be given to APRA by the trustee of a relevant registered superannuation entity either:

(a) where subparagraph (b) does not apply:

(i) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or

(ii) by manually completing Form SRF 220.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales; or

(b) by means of an agent to whom the trustee has outsourced the function of providing the information on the trustee’s behalf, in which case the agent must provide the information:

(i) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application: or

(ii) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under sub-subparagraph (i), by manually completing Form SRF 220.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.

Note: The ‘Direct to APRA’ software and relevant forms may be obtained from APRA.

Note: See paragraphs 12, 13 and 14 for requirements relating to the authorisation of information provided under this reporting standard (which differ depending on how the information is provided).

Reporting periods and due dates

7. Subject to paragraph 8, the trustee of a relevant registered superannuation entity must provide the information required by this reporting standard in respect of each year of income (within the meaning of subsection 10(1) of the SIS Act of the entity.

Note: Under section 113 of the SIS Act there will be a requirement for the information to be audited, together with annual information required under other reporting standards.

8. APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular relevant registered superannuation entity to require the trustee to provide the information required by this reporting standard in respect of the entity:

(a) more frequently (if, having regard to the particular circumstances of the entity, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the entity); or

(b) less frequently (if, having regard to the particular circumstances of the entity and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the trustee to provide the information on an annual basis).

9. The information required by this reporting standard must be provided to APRA within 4 months after the end of the reporting period to which it relates.

Note: The trustee must also give APRA an audit report relating to the information, and to annual information required under other reporting standards, within this time (see section 36 of the SIS Act).

10. APRA may grant a trustee 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 a trustee under this reporting standard must be the product of processes and controls that have been reviewed and tested by the 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 auditor to form an opinion on the accuracy and reliability of the data.

12. The information provided by a trustee under this reporting standard must be the product of processes and controls developed by the trustee for the internal review and authorisation of that information. It is the responsibility of the trustee to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

Authorisation

13. If the trustee of a relevant registered superannuation entity provides the information required by this reporting standard under subparagraph 6(a), then:

(a) if the trustee uses the ‘Direct to APRA’ application under sub-subparagraph 6(a)(i), an officer of the trustee 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 trustee who have authority from the trustee to transmit data to APRA); and

(b) if the trustee provides the information on paper under sub-subparagraph 6(a)(ii), the completed form must be signed by an officer of the trustee who is authorised by the trustee to complete and lodge the form.

14. If the trustee of a relevant registered superannuation entity provides the information required by this reporting standard through an agent under subparagraph 6(b), then:

(a) the agent will not be required to sign or authorise the information; but

(b) the trustee must:

(i) obtain from the agent a paper copy of the completed form as provided to APRA (whether it was provided under sub-subparagraph 6(b)(i) or (ii)); and

(ii) cause the paper copy to be signed by an officer of the trustee authorised by the trustee to sign the paper copy; and

(iii) lodge the signed paper copy with APRA by mailing it to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, determines to waive the requirement under this sub-subparagraph, in relation to the trustee, or a class of trustees of which the trustee is a member, or all trustees).

Note: APRA may, for example, determine to waive the requirement under sub-subparagraph 14(b)(iii) where a trustee has undertaken to retain the signed copy of the completed form for an agreed period of time.

Minor alterations to form 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 trustees of relevant registered superannuation entities in writing.

Transitional

17. If a reporting period of a relevant registered superannuation entity ended on 30 June 2005, or ends after that date, the trustee of the entity must report under this reporting standard in relation to the entity in respect of that reporting period.

Interpretation

18. In this reporting standard:

APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;

due date means the relevant due date under paragraph 9 or, if applicable, paragraph 10;

officer in relation to a trustee of a relevant registered superannuation entity means:

(a) if the trustee is a corporation – a director or officer of that corporation;

(b) if the trustee is a natural person – that person; or

(c) if two or more natural persons are trustees of the entity – one of those persons;

regulated superannuation fund has the meaning given by section 19 of the SIS Act;

relevant registered superannuation entity has the meaning given by paragraph 3 of this reporting standard;

reporting period means a period mentioned in paragraph 7 or, if applicable, paragraph 8;

self managed superannuation fund has the meaning given by section 17A of the SIS Act;

single-member approved deposit fund means an approved deposit fund (within the meaning of subsection 10(1) of the SIS Act) that has only one member;

SIS Act means the Superannuation Industry (Supervision) Act 1993;

small APRA fund means a regulated superannuation fund that has fewer than 5 members and is regulated by APRA under the SIS Act;

superannuation entity has the meaning given by subsection 10(1) of the SIS Act.

Note: Subsection 10(1) of the SIS Act provides that superannuation entity means a regulated superannuation fund, or an approved deposit fund, or a pooled superannuation trust (as defined in the SIS Act).

Instruction Guide

Completion of SRF 220.0 Exposure Concentrations

This form must be completed on an annual basis by all trustees of APRA-regulated superannuation entities excluding Small APRA Funds (SAFs) and Single Member Approved Deposit Funds (SMADFs).

This form can be left blank as D2A recognises blanks as zeros; however it is still required to be submitted as part of the annual return. Trustees of superannuation entities, holding Investments in PSTs that have a value of more than 5% of total assets, are required to report on SRF 220.0 Exposure Concentrations.

(Trustees of those superannuation entities with total assets of at least $50m at the end of the most recent year of income of the entity that are required to complete SRF 120.0 Exposure Concentrations on a quarterly basis must also complete this form on an annual basis.)

Note: All forms included in the SRF 200 series should be submitted together as an annual return, not individually as separate forms.

Purpose

The large exposure form is required by APRA for the provision of information on concentrations in exposure of a superannuation entity. For example, regarding the performance of a particular investment held by a superannuation entity, or a counterparty to which the superannuation entity has an exposure/investment with (i.e. moneys invested at call).

Exposures are only required to be reported in this form where the exposure is greater than 5% of the net market value of total assets of the superannuation entity, as reported in SRF 210.0 Statement of Financial Position under item 5 ‘Total assets’. If there are more than 10 such exposures, only the largest 10 are required to be reported on this form. (Note: All exposures, whether of an asset or liability nature per item 1 of this form, are to be determined with reference to 5% of total assets).

Information reported in this form is prudentially important, as it forms part of APRA’s monitoring and analysis framework for a superannuation entity and the superannuation industry.

This Guide has been prepared to assist in the completion and lodgement of SRF 220.0 Exposure Concentrations. For ease of use, the Guide has been split into three main sections as follows:

• Lodgement and validation of and changes to SRF 220.0 Exposure Concentrations;
• General guidance – this guidance provides principles that should be applied to all items throughout SRF 220.0 Exposure Concentrations; and
• Instruction guide for specific items – this guidance should be applied to the specific items which relate to each superannuation entity.

Lodgement and validation of SRF 220.0 Exposure Concentrations

Lodgement and authentication codes

This form must be completed and lodged to APRA by a corporate or natural ‘person’ (trustee director or administrator), and not by the superannuation entity as the entity is not a ‘person’.

Once SRF 220.0 Exposure Concentrations has been completed and submitted to APRA, an authentication code is generated in D2A from information entered into the form. The authentication code and date submitted appear in the footer of each page of the return (‘return’ equates to all 9 forms). Any change of information entered or resubmission of the return will result in a change to the authentication code. The authentication codes and date submitted should be used by auditors to determine that the four forms audited (SRF 200.0 Statement of Financial Performance, SRF 210.0 Statement of Financial Position, SRF 220.0 Exposure Concentrations and SRF 230.0 Transactions with Related Parties) have been submitted.

The same authentication code on all the forms lodged will give trustees some 'comfort' that their attestations on SRF 260.0 Trustee Statement relate to the other forms submitted as the return. Different authentication codes should be taken by trustees that their attestations are not consistent with other forms and APRA may take the view that the return has therefore not been signed and authorised by the trustee.

A receipt indicating successful lodgement of the return will be provided via email. There may be a slight delay in a receipt being provided if the submission is made in the last week of October. Do not resubmit your return however, as the receipt will be generated.

Validation and calculation of totals

When data is entered into the form, the total balances (in the greyed out cells) will not be calculated automatically. The total items will only calculate when the form is validated. Clicking on the word 'validate' in the top left hand corner of the screen and selecting ‘OK’ will result in the total items being calculated and the validation rules appearing for review.

There are three types of validation rules as follows:

1. Warnings: Confirmation rules – this rule requires the user to provide confirmation that the data entered into an item is correct, for example that a negative number is correct and should not be positive. To provide confirmation the user should click the confirm box and provide a brief description in support of the item.

Note: Descriptions entered for warnings may not always appear if the return is validated more than once. There is no need to re-enter the description as D2A has saved this description and the comments will be lodged with the return.

2. Error: Mandatory rules – this indicates an error in an item, for example a description and a value must be included in a table. These errors must be corrected before the return can be lodged.

3. Cross form validations – this also indicates an error and must be corrected before the return can be lodged, for example Totals disclosed in SRF 210.1 Selected Disclosure of Investments must agree with the investments reported in item 3 ‘Investments’ on SRF 210.0 Statement of Financial Position.

Changes to SRF 220.0 Exposure Concentrations

As detailed above, any change of information entered or resubmission of the return will result in a change to the authentication code. SRF 220.0 Exposure Concentrations is one of the four forms which requires audit, with a copy of the audit report being provided to APRA together with the annual return. If an amendment is made to the return after the audit report relating to the return has been submitted to APRA, then a copy of the amended return must be:

• Lodged with APRA; and
• Forwarded to the auditor of the return. The auditor will then consider the magnitude and significance of the amendment to the returns in order to assess whether the audit report will have to be re-issued.

General guidance for completion of SRF 220.0 Exposure Concentrations

Important!

Report all disclosures rounded to the nearest thousand dollars. Do not use decimal numbers i.e. when dividing the value to obtain a rounded balance to the nearest thousand dollars, ensure that the figure is whole.

Important!

There is no materiality limit applied to the disclosure of amounts within SRF 220.0 Exposure Concentrations. All balances must be recorded. Amounts cannot be omitted based on materiality levels. Each superannuation entity should use its own judgement in grouping items into meaningful categories (where applicable).

Important!

Zeros are not required where there is no dollar value for an item. If there is no balance for an item, leave it blank, as D2A recognises blanks as zeros.

Important!

If a superannuation entity has a number of like investments in the same counterparty, then these should be reported in aggregate.

For example, if a superannuation entity holds a number of bank bills with the same counterparty, reporting in aggregate is acceptable, as opposed to reporting them individually.

Important!

A liability for accrued member benefits does not form part of an exposure concentration. All accrued benefits are excluded from SRF 220.0 Exposure Concentrations.

Related party

A related party is defined in the current Australian Accounting Standards. For the purposes of Part A column 4 and Part B column 6:

• parties are considered to be related if one party has the ability to either control the other party or to exercise significant influence over the other party in making financial and operating decisions; and
• a related party transaction arises from a transfer of resources or obligations, including services of individuals or entities, between related parties, regardless of whether a price is charged.

The following specific guidelines should be taken into consideration:

Trustee of the reporting superannuation entity

This selection will be applicable where the exposure is between the reporting superannuation entity and the Trustee of the reporting superannuation entity.

For the purpose of this section, trustee of the reporting superannuation entity includes:

• A corporate trustee;
• A director of the corporate trustee;
• An individual acting as a trustee rather than a corporate trustee; and
• The spouse of a Trustee, or a spouse of a director of the corporate trustee of the reporting superannuation entity.

Trustee or director of a group entity of the approved trustee

This selection will be applicable where the exposure between the reporting superannuation entity and directors of an entity that is part of the consolidated group economic entity of the approved trustee. This includes exposures with the following directors who are not also a trustee or a director of the corporate trustee of the reporting superannuation entity (where they are such exposures are to be recorded under point A above):

• Directors of the parent entity(s) of the approved trustee; and
• Directors of subsidiaries of the parent entity of the approved trustee.

Group entities of the consolidated group economic entity

This selection will be applicable where the exposure between the reporting superannuation entity and an entity that is part of the consolidated group economic entity to which the approved trustee belongs. This will include the following group entities:

• The parent entity(s) of the approved trustee;
• Controlled entities of the parent entity(s) of the approved trustee; and
• Joint ventures or associates of the parent entity(s) of the approved trustee.

A related entity of the trustee or a of director of the corporate trustee, of the superannuation entity and that entity is not a group entity

This selection will be applicable where the exposure between the reporting superannuation entity and an entity that is related to a trustee or a director of the corporate trustee of the reporting superannuation entity, but that entity is not part of the consolidated group economic entity to which the approved trustee belongs.

An entity that is related to a trustee, or a director of the corporate trustee of the reporting superannuation entity is to be interpreted as including:

• The trustee, or director of the corporate trustee of the reporting superannuation entity, is a director of that entity/business; and
• The spouse of a trustee, or the spouse of a director of the corporate trustee of the reporting superannuation entity, is a director of that entity/business.

Subsidiary, associate or joint venture of the reporting superannuation entity

This selection will be applicable where the exposure between the reporting superannuation entity and any subsidiaries, associates or joint ventures of the reporting superannuation entity.

This form is separated into 2 parts:

Part A – ‘look through’ not required

Exposures greater than 5% of the total assets of the superannuation entity to:

• directly held investments;
• investments that are held with external investment managers (such as investments in Pooled Superannuation Trusts or unit trusts); and
• investments held via individually managed mandates/portfolios. This requires the reporting of the superannuation entity’s aggregate investment value held with an individual external manager (i.e. a ‘look through’ basis is not required in Part A).

Part B – ‘look through’ is required

Exposures greater than 5% of the total assets of the superannuation entity to:

• directly held investments;
• investments that are held with external investment managers (such as investments in Pooled Superannuation Trusts or unit trusts); and
• investments held via individually managed mandates/portfolios. In this part a ‘look through’ to the underlying investments is required for individually managed mandates/portfolios. Exclude the aggregate investment to these managers as these are reported in Part A.

Important!

As for SRF 210.0 Statement of Financial Position, the ‘look through’ requirement does not extend to underlying investments in collective vehicles held with external investment managers e.g. Pooled Superannuation Trusts and listed unit trusts and unlisted public offer unit trusts, which should be reported in aggregate.

Examples of disclosure required – investments exposure

Example 1:

A superannuation entity holds ten different trusts (or investments) with one investment manager.

Exposure

• Each of the ten trusts (or investments) are in excess of 5% of total assets of the entity.

Disclosure required

• The aggregate of these trusts (or investments) should be reported in Part A with the name of the investment manager being disclosed under column (1).
• The ten different trusts (or investments) should then be reported in Part B under column (1).
• Where collective vehicles are used (i.e. investments have been reported in item 3.6 on SRF 210.0 Statement of Financial Position) and the investment manager uses the same ABN for each collective investment, aggregate the investments as a single exposure for reporting in Parts A & B.

Example 2:

A superannuation entity holds the following investments.

1. Exposure - Direct share holding in XYZ Corporation Limited which is >5% of total assets.

Disclosure required - This is reported in both Part A and Part B.

2. Exposure - Investment in ABC Pooled Super Trust which is >5% of total assets.

Disclosure required - This is reported in both Part A and Part B.

3. Exposure - Individual mandate managed by DEF Investment Manager which is >5% of total assets. This portfolio includes an investment in SampleCorp Ltd shares and in Prime Unit Trust, both of which are individually >5% of the superannuation entity’s total assets.

Disclosure required - In Part A report the investment with DEF Investment Manager as a single line item, but do not report the underlying investments in this portfolio (i.e. look through basis is not employed). In Part B report separately the investment in SampleCorp and the investment in Prime Unit Trust (i.e. look through basis is required), but do not report the aggregate investment in DEF Investment Manager.

Scope

1.1. A large exposure does not include the portfolio value or exposure to an asset class such as domestic equities, property, or an industry sector unless the value represents an investment in an individual asset (e.g. equity securities issued by one corporation) or a group of related counterparties (refer to 1.5 for guidance on determining related counterparties).

1.2. Exposures include claims and commitments of the superannuation entity recorded both on and off the balance sheet that are of the following nature:

(a) Credit exposures (i.e. such as a money market placement with a Bank or holding of a corporation’s debt securities);

(b) Asset exposures that are not in the nature of a credit exposure (e.g. a direct property investment);

(c) Exposures in the nature of a liability or obligation to a single party or group of related parties.

1.3. Off-balance sheet exposures refer to items that are not recognised in the statement of financial position of the superannuation entity, such as contingent assets and liabilities.

1.4. Where credit risk is unequivocally transferred to a third party by an irrevocable letter of credit or a direct guarantee, the exposure is to the third party.

1.5. In determining whether a group of counterparties are related, the reporting superannuation entity should treat:

• Counterparties as related where they are linked by cross guarantees, common ownership, ability to control, financial interdependency, or other connections which, in the superannuation entity’s assessment, identify the counterparties as representing a single risk; and
• All exposures underwritten by the same guarantor as a single risk.

1.6. Exposures of the reporting superannuation entity to related parties should be included.

Example of approach to aggregate exposure – single counterparty

The following is provided as a brief example of the approach APRA expects to be adopted in calculating the aggregate exposure to a single counterparty.

Example 3:

A superannuation entity holds the following investments in ABC Bank Limited:

1. Listed equity securities of ABC Bank Limited;
2. ‘Over the Counter’ derivative financial instruments with ABC Bank Limited;
3. Funds placed or deposited with ABC Bank Limited;
4. Holding of debt securities issued by or guaranteed by ABC Bank Limited;
5. Direct property investment in which ABC Bank Limited is a lessee of over 50% of the commercial property.

APRA expects the following exposures to be aggregated in calculating the aggregate counterparty exposure to ABC Bank Limited:

• The net market value of ‘Over the Counter’ derivative financial instruments with ABC Bank Limited where the derivative positions with ABC Bank Ltd are in a net gain position to the reporting superannuation entity (i.e. the reporting superannuation entity stands to receive funds or securities from ABC Bank Limited to settle the derivative position);
• The value of funds placed or deposited with ABC Bank Limited; and
• The net market value of the investment in debt securities issued by or guaranteed by ABC Bank Limited.

The value of listed equity securities of ABC Bank Limited held by the superannuation entity are not included in this aggregate calculation, as APRA considers it is unreasonable to extend the exposure concentration analysis to these type of holdings, even though the market value of such an investment would be adversely effected by a downgrading in the credit rating of ABC Bank Limited.

While the value of the superannuation entity’s holding of listed equity securities of ABC Bank Limited is not required to be aggregated as outlined above with other investments in ABC Bank Limited, the value of the holdings of listed equity securities of ABC Bank Limited will need to be individually reported in this form where the value of such a holding represents one of the 10 largest exposures of the superannuation entity.

Instruction guide for specific items

Part A

Disclose in PART A the 10 largest exposures (that are greater than 5% of the net market value of total assets) to external directly managed mandates/portfolios. Refer Example 1.

Important!

Exposure concentrations of investments should only be reported under SRF 220.0 Exposure Concentrations Part A column (3) ‘Net market value’ if they represent greater than 5% of total assets calculated using SRF 210.0 Statement of Financial Position item 5 ‘Total assets’ i.e. each individual line item disclosed at Part A must be greater than 5% of total assets.

Important!

The total sum of SRF 220.0 Exposure Concentrations Part A column (3) ‘Net market value’ must not exceed the total assets reported in SRF 210.0 Statement of Financial Position item 5 ‘Total assets’.

1. Name

Provide the name of the entity or counterparty for each exposure listed.

2. ABN

Where the investment/exposure is to an entity, provide the Australian Business Number (ABN) of that entity. When there is no ABN for the entity in question, leave this field blank.

Completion of the ABN fields is not mandatory to lodge returns. If the ABN is not recorded in the superannuation entities’ system, or is not known, leave the ABN blank. A Warning confirmation validation rule in D2A will request confirmation that the investment entity has not applied for an ABN. Tick the box as confirmation and enter the comment that ABN is not known.

3. Net market value

Report the net market value of the holdings as at the end of the reporting period for each exposure listed (report the net fair value if there is no net market value available).

• Report exposures in descending order with the largest exposures listed first.
• For this item, report asset exposures as a positive number and liability exposures as a negative number.

4. Related party

For the purposes of this form a related party of the superannuation entity includes an exposure(s) within the following categories (drop down box). Input “Yes” where the exposure is with a related party otherwise input “No”.

5. Rating grade

Refer to definitions provided in Part B column (7).

As per Part B, column (7), if a rating grade is unknown or not available use rating grade 6. Where investment managers cannot confirm their ratings a rating grade 6 should also be used.

Part B

Disclose in Part B the 10 largest exposures (that are greater than 5% of the net market value of total assets) of the superannuation entity. Refer Example 1.

Include the underlying investments the subject of external individually managed mandates or discretely managed portfolios. In Part B a ‘look through’ to the underlying investments is required for these portfolios.

Exclude the aggregate investment held with these managers.

Important!

Exposure concentrations of investments should only be reported under SRF 220.0 Exposure Concentrations Part B column (5) ‘Net market value’ if they represent greater than 5% of total assets calculated using SRF 210.0 Statement of Financial Position item 5 ‘Total assets’ i.e. each individual line item disclosed at Part B must be greater than 5% of total assets.

Important!

The total sum of SRF 220.0 Exposure Concentrations Part B column (5) ‘Net market value’ must not exceed the total assets reported in SRF 210.0 Statement of Financial Position item 5 ‘Total assets’.

1. Type

The type (description) of on-balance sheet exposures is determined from the following generic headings. When providing information in this column select from a drop down selection in the form providing the following classifications as applicable. Where none of the headings are applicable please provide a brief description:

(i) Securities purchased under agreement to resell

(ii) Receivables

• Total investment income receivables;
• Members contributions receivable;
• Employer contributions receivable;
• Contributions receivable from the Government;
• Insurance proceeds receivable; and
• Other receivables (provide a description).

(iii) Investments

• Deposits;
• Placement, loans and debt securities;
• Equity securities of listed corporation and units in listed unit trust;
• Equity securities of unlisted corporation, units in unlisted private trust and interest in venture;
• Property holdings;
• Pooled Super Trusts;
• Wholesale trusts;
• Investment and/or insurance policies held in statutory fund of life companies;
• Investment in unlisted retail/public offer unit trust;
• Leased assets; and
• Other investments (provide a description).

(iv) Direct holdings of derivative financial instruments

(v) Borrowings

• Securities sold under agreements to repurchase; and
• Other.

(vi) Total Payables and Creditors

(vii) Members benefits payable

Example reporting for column 1 and 2 (below)

2. Name

Provide the name of the entity or counterparty for each exposure listed.

3. ABN

Where the investment/exposure is to an entity, provide the Australian Business Number (ABN) of that entity. When there is no ABN for the entity in question, leave this field blank.

As per Part A, completion of the ABN fields is not mandatory to lodge returns.

4. Externally managed

Where appropriate, mark “Y” for yes or “N” for no in this column for each exposure listed. For the purposes of this form, “Externally Managed Exposure” means an asset or investment:

• in a Pooled Superannuation Trust (PST);
• in a wholesale trust;
• in a listed or unlisted unit trust including a retail/public offer unit trusts; and
• that is subject to an external individually managed mandate or portfolio (i.e. an underlying asset of this portfolio that constitutes a large exposure to the superannuation entity).

5. Net market value

Report the net market value of the holdings as at the end of the reporting period for each exposure listed (report the net fair value if there is no net market value available).

• Report exposures in descending order with the largest exposures listed first.
• For this item, report asset exposures as a positive number and liability exposures as a negative number.

6. Related party

For the purposes of this form a related party of the superannuation entity includes an exposure(s) within the following categories. Input “Yes” where the exposure is with a related party, otherwise input “No”.

7. Rating grade

Report in this column where applicable, the APRA rating grade of a large counterparty exposure of the superannuation entity (i.e. report ratings 1 to 6 where applicable). The table below lists the APRA rating grade and the corresponding common rating grades from rating agencies.

Classification of rating grade of counterparty

The counterparty grades set out in the table below are to be used in classifying the rating grades for the purposes of this form. This table discloses the corresponding counterparty ratings of a number of rating agencies and the general classification APRA will apply to these ratings. The superannuation entity should request these rating grades directly from the counterparty (i.e. the other party with whom the transaction is being made) or investment manager, and should not rely on consumer rating agencies which rate collective investments.

Where the superannuation entity has investments with multiple rating from two or more of the rating agencies in the table above, the superannuation entity should consistently apply the rating of a single agency wherever possible. For example, a superannuation entity may have a number of counterparties that are rated by S&P and Fitch. In this case the entity should use a single agency that will be consistently applied whenever the individual ratings conflict.

The ratings in the above table from the respective rating agencies are generally consistent with long term rating/debt securities. Where superannuation entities invest in counterparties/securities that have only been issued with short term counterparty rating, then superannuation entities should attempt to match these ratings into the above grades.

Unknown rating grade

If a rating grade is unknown or not available use rating grade 6. Where investment managers cannot confirm their ratings a rating grade 6 should also be used.

Annual Reporting Requirements and General Instruction Guide

Entities subject to annual reporting

Trustees of superannuation entities that are regulated by APRA, including trustees of the following entities, are required to complete the APRA Annual Return comprising the forms listed in the Reporting Requirements Table.

• Public Offer Superannuation Entities;
• Other APRA regulated superannuation entities;
• Multi-Member Approved Deposit Funds;
• Pooled Superannuation Trusts; and
• Eligible Rollover Funds.

Excluded

• Small APRA Funds (SAFs); and
• Single-member Approved Deposit Funds.

Reporting Requirements Table

APRA Annual Return

All the forms listed in the above table comprise the APRA Annual Return.

Audit requirements

Those forms comprising the APRA Annual Return that are subject to audit are highlighted in the Reporting Requirements Table above.

The nature of the audit requirements for these forms will be as developed in conjunction with the Auditing and Assurance Standards Board of Australia.

Reporting period

The information requested in the above forms is to be reported for the financial year of the superannuation entity.

Lodgement requirements

The APRA Annual Return is required to be lodged with APRA within 4 months after the end of the financial year of the superannuation entity together with the Independent Audit Report from the auditor of the superannuation entity covering those forms that are noted as subject to audit.

Amendments

Where the trustee of a superannuation entity makes a material adjustment to any data relating to the financial year for which the return has been lodged, an amended APRA Annual Return must be lodged with APRA.

Basis of preparation

In completing these forms unless otherwise specifically stated in the instruction guide for each form:

Basis of accounting (Cash vs Accruals):

The forms should be prepared on a basis consistent with the accounting treatment (cash or accruals basis) adopted by the superannuation entity for annual financial reporting purposes. APRA would ordinarily expect that regulated superannuation entities are ‘reporting entities’, and will therefore apply an accruals basis, in accordance with the requirements of Australian Accounting Standards and the guidance in APRA Superannuation Circular No. V.A.2.

Important!

For those superannuation entities subject to APRA quarterly reporting: Once selected, the basis of accounting used must be consistent for all 4 quarterly returns and the corresponding annual return.

Direct vs Indirect investments:

Certain items on the forms distinguish between ‘directly held’ investments and those which are not directly held.

• Directly held investments are those made by the superannuation entity in its own name, as part of the internal investment management function. This includes investments held by a custodian where these are held in Trust for the entity and the superannuation entity retains the decision-making function regarding the making and redeeming of particular investments within the portfolio.
• Investments that are not directly held include underlying investments that are held with external investment managers (such as investments in PSTs or unit trusts), and investments held via individually managed mandates/portfolios where the decision-making function regarding the making and redeeming of particular investments within the portfolio may rest with the investment manager.

Netting off of Amounts:

Unless otherwise specifically stated, data in the forms should be reported on a gross basis, with no netting, even where the institutions comply with the prerequisites for netting outlined in the current Australian Accounting Standards, notably ‘Set-off and Extinguishment of Debt’.

Include:

• All transactions of the superannuation entity regardless of the residency status of members or the location or registration of assets or liabilities;
• Unless otherwise indicated, report all items on the form as positive numbers;
• Investments and other exposures held directly by the superannuation entity (i.e. as part of its internal investment management); and
• Investments and other exposures generated or held as part of an external individually managed mandate/portfolio or discretely managed portfolio of the superannuation entity (i.e. the superannuation entity is required to ‘look through’ investments in these structures to report the underlying investments, other exposures and liabilities of these arrangements).

Exclude:

• Do not include a consolidation of any controlled entities; and
• The ‘look through’ provision does not apply to investments by the superannuation entity in investment management structures other than external individually managed mandates, in terms of reporting the underlying exposure of these investment vehicles (i.e. it does not extend to reporting the underlying investments in PSTs or public offer unit trusts; such investments are to be reported as investments in managed funds).

Trustees of superannuation entities are to follow the Australian Accounting Standards, notably AAS 25 ‘Financial Reporting of Superannuation Plans’ and other mandatory and legislative requirements where applicable, regarding the interpretation, recognition and measurement of items of income, expense, assets and liabilities. AAS 25 requires a trustee of a superannuation entity to adopt net market value measurement where the superannuation entity is deemed to be a reporting entity. For the purposes of prudential reporting all trustees of superannuation entities are to adopt net market value measurement irrespective of their deemed reporting entity status.

Net market value has the same meaning as defined in the Australian accounting standards notable AAS 25. A definition is provided in the ‘Glossary of Terms’. Any change in the values at which such assets are measured must be recognised as revenues (or losses) in the reporting period in which the change occurs.

Accounting Standards AAS 4 ‘Depreciation’, AAS 10 ‘Recoverable Amount of Non-Current Assets’ and AASB 1041 ‘Revaluation of Non-Current Assets’ do not apply to such investments.

Market value of charged/encumbered assets

If an asset is in any way subject to a charge, covenant, encumbrance, option to purchase or any other arrangement by way of agreement or statute, that restricts the net market value of the asset, the market value needs to reflect the existence of these arrangements. For example, if the superannuation entity has agreed to deliver an asset to a purchaser at a price below the arms length market value, the market value cannot exceed the agreed price.

Unit of measurement

The above forms are to be prepared in thousands of Australian dollars (AUD), rounded to the nearest thousand, i.e. with no decimal place. As a general rule, amounts denominated in foreign currency are to be converted to AUD in accordance with the requirements of the current Australian accounting standards, notably Foreign Currency Translation.

The general requirements for translation are:

1. Foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date.
2. Other items outstanding at the reporting date must not be re-translated 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 (eg. claim 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.

The general requirements for accounting treatment of exchange differences arising on translation are:

1. Exchange differences must be recognised as either revenues or expenses in the calculation of net profit or loss in the reporting period in which the exchange rates change.
2. Exchange differences that arise in respect of foreign currency monetary items which are directly attributable to the acquisition, construction or production of an asset that takes a long period of time to get ready for its intended use or sale, must be capitalised (net of any effects of a hedge) as part of the cost of that asset.

General definitions

The Glossary Terms contains definitions of commonly used terms in the instruction guides and the forms listed in the Reporting Requirements Table.

Form Name

Subject to Audit

Statement of Financial Performance

Yes

Statement of Financial Position

No

Derivative Financial Instruments

Transactions with Associated Parties

Reporting period

The information requested in the above forms is to be reported for the financial year of the superannuation entity.

Lodgement requirements

The APRA Annual Return is required to be lodged with APRA within 4 months after the end of the financial year of the superannuation entity together with the Independent Audit Report from the auditor of the superannuation entity covering those forms that are noted as subject to audit.

Amendments

Where the trustee of a superannuation entity makes a material adjustment to any data relating to the financial year for which the return has been lodged, an amended APRA Annual Return must be lodged with APRA.

Basis of preparation

In completing these forms unless otherwise specifically stated in the instruction guide for each form:

Basis of accounting (Cash vs Accruals):

The forms should be prepared on a basis consistent with the accounting treatment (cash or accruals basis) adopted by the superannuation entity for annual financial reporting purposes. APRA would ordinarily expect that regulated superannuation entities are ‘reporting entities’, and will therefore apply an accruals basis, in accordance with the requirements of Australian Accounting Standards and the guidance in APRA Superannuation Circular No. V.A.2.

Important!

For those superannuation entities subject to APRA quarterly reporting: Once selected, the basis of accounting used must be consistent for all 4 quarterly returns and the corresponding annual return.

Direct vs Indirect investments:

Certain items on the forms distinguish between ‘directly held’ investments and those which are not directly held.

• Directly held investments are those made by the superannuation entity in its own name, as part of the internal investment management function. This includes investments held by a custodian where these are held in Trust for the entity and the superannuation entity retains the decision-making function regarding the making and redeeming of particular investments within the portfolio.
• Investments that are not directly held include underlying investments that are held with external investment managers (such as investments in PSTs or unit trusts), and investments held via individually managed mandates/portfolios where the decision-making function regarding the making and redeeming of particular investments within the portfolio may rest with the investment manager.

Netting off of Amounts:

Unless otherwise specifically stated, data in the forms should be reported on a gross basis, with no netting, even where the institutions comply with the prerequisites for netting outlined in the current Australian Accounting Standards, notably ‘Set-off and Extinguishment of Debt’.

Include:

• All transactions of the superannuation entity regardless of the residency status of members or the location or registration of assets or liabilities;
• Unless otherwise indicated, report all items on the form as positive numbers;
• Investments and other exposures held directly by the superannuation entity (i.e. as part of its internal investment management); and
• Investments and other exposures generated or held as part of an external individually managed mandate/portfolio or discretely managed portfolio of the superannuation entity (i.e. the superannuation entity is required to ‘look through’ investments in these structures to report the underlying investments, other exposures and liabilities of these arrangements).

Exclude:

• Do not include a consolidation of any controlled entities; and
• The ‘look through’ provision does not apply to investments by the superannuation entity in investment management structures other than external individually managed mandates, in terms of reporting the underlying exposure of these investment vehicles (i.e. it does not extend to reporting the underlying investments in PSTs or public offer unit trusts; such investments are to be reported as investments in managed funds).

Trustees of superannuation entities are to follow the Australian Accounting Standards, notably AAS 25 ‘Financial Reporting of Superannuation Plans’ and other mandatory and legislative requirements where applicable, regarding the interpretation, recognition and measurement of items of income, expense, assets and liabilities. AAS 25 requires a trustee of a superannuation entity to adopt net market value measurement where the superannuation entity is deemed to be a reporting entity. For the purposes of prudential reporting all trustees of superannuation entities are to adopt net market value measurement irrespective of their deemed reporting entity status.

Net market value has the same meaning as defined in the Australian accounting standards notable AAS 25. A definition is provided in the ‘Glossary of Terms’. Any change in the values at which such assets are measured must be recognised as revenues (or losses) in the reporting period in which the change occurs.

Accounting Standards AAS 4 ‘Depreciation’, AAS 10 ‘Recoverable Amount of Non-Current Assets’ and AASB 1041 ‘Revaluation of Non-Current Assets’ do not apply to such investments.

Market value of charged/encumbered assets

If an asset is in any way subject to a charge, covenant, encumbrance, option to purchase or any other arrangement by way of agreement or statute, that restricts the net market value of the asset, the market value needs to reflect the existence of these arrangements. For example, if the superannuation entity has agreed to deliver an asset to a purchaser at a price below the arms length market value, the market value cannot exceed the agreed price.

Unit of measurement

The above forms are to be prepared in thousands of Australian dollars (AUD), rounded to the nearest thousand, i.e. with no decimal place. As a general rule, amounts denominated in foreign currency are to be converted to AUD in accordance with the requirements of the current Australian accounting standards, notably Foreign Currency Translation.

The general requirements for translation are:

1. Foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date.
2. Other items outstanding at the reporting date must not be re-translated 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 (eg. claim 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.

The general requirements for accounting treatment of exchange differences arising on translation are:

1. Exchange differences must be recognised as either revenues or expenses in the calculation of net profit or loss in the reporting period in which the exchange rates change.
2. Exchange differences that arise in respect of foreign currency monetary items which are directly attributable to the acquisition, construction or production of an asset that takes a long period of time to get ready for its intended use or sale, must be capitalised (net of any effects of a hedge) as part of the cost of that asset.