Reporting Standard ARS 220.0 (2005)
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Commonwealth legislation
This Act has been repealed and is no longer in force. It is retained for historical reference.
Requires authorised deposit‑taking institutions (ADIs) to report impaired assets to APRA each quarter using Form ARF 220.0; highest‑parent ADIs must also file consolidated group returns (paras 2–4). Reports are submitted electronically or by paper within 15–20 business days and must be produced under audited controls; APRA can change frequency, grant extensions and make minor form changes (paras 5,7–15). Compliance costs fall on ADIs (board, senior management and external auditors) while APRA receives supervisory data to assess credit quality (paras 1,10–13).
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Direct links to the current provisions in Financial Sector (Collection of Data) determination No. 71 of 2005 - Reporting Standard ARS 220.0 (2005) - Impaired Assets.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs), including foreign ADIs operating in Australia through branch operations, but excluding specialist credit card institutions that do not engage in issuing activities, to report to APRA, generally on a quarterly basis, in relation to their impaired assets.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Information required
An ADI (other than a specialist credit card institution that does not engage in issuing activities) must provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Licensed ADI’ for each reporting period.
An ADI (other than a specialist credit card institution that does not engage in issuing activities) that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Consolidated Group’ for each reporting period.
(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.
Subject to paragraph 7, an ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, locally-incorporated special service provider or foreign ADI (other than a specialist credit card institution) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally-incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) that engages in issuing activities or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI 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 ADI who have authority from the ADI to transmit the data to APRA.
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 ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(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.
Transitional
16.17.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.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
foreign ADI means an ADI that is not locally-incorporated.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means incorporated in Australia.
locally-incorporated bank means an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs) in the ADI list.
17.18.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard.
18.19.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, specialist credit card institution, or locally-incorporated special service provider for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification).
Interpretation – other definitions
19.20.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs), including foreign ADIs operating in Australia through branch operations, but excluding specialist credit card institutions that do not engage in issuing activities, to report to APRA, generally on a quarterly basis, in relation to their impaired assets.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Information required
An ADI (other than a specialist credit card institution that does not engage in issuing activities) must provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Licensed ADI’ for each reporting period.
An ADI (other than a specialist credit card institution that does not engage in issuing activities) that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Consolidated Group’ for each reporting period.
(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.
Subject to paragraph 7, an ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, locally-incorporated special service provider or foreign ADI (other than a specialist credit card institution) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally-incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) that engages in issuing activities or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI 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 ADI who have authority from the ADI to transmit the data to APRA.
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 ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(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.
Transitional
16.17.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.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
foreign ADI means an ADI that is not locally-incorporated.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means incorporated in Australia.
locally-incorporated bank means an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs) in the ADI list.
17.18.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard.
18.19.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, specialist credit card institution, or locally-incorporated special service provider for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification).
Interpretation – other definitions
19.20.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a period under paragraph 6 or, if applicable, paragraph 7.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs), including foreign ADIs operating in Australia through branch operations, but excluding specialist credit card institutions that do not engage in issuing activities, to report to APRA, generally on a quarterly basis, in relation to their impaired assets.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Information required
An ADI (other than a specialist credit card institution that does not engage in issuing activities) must provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Licensed ADI’ for each reporting period.
An ADI (other than a specialist credit card institution that does not engage in issuing activities) that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Consolidated Group’ for each reporting period.
(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.
Subject to paragraph 7, an ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, locally-incorporated special service provider or foreign ADI (other than a specialist credit card institution) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally-incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) that engages in issuing activities or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI 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 ADI who have authority from the ADI to transmit the data to APRA.
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 ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(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.
Transitional
16.17.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.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
foreign ADI means an ADI that is not locally-incorporated.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means incorporated in Australia.
locally-incorporated bank means an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs) in the ADI list.
17.18.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard.
18.19.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, specialist credit card institution, or locally-incorporated special service provider for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification).
Interpretation – other definitions
19.20.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
Foreign-owned SCCIs
Locally Incorporated SCCIs
These companies are run by industry bodies and provide services (e.g. payments clearing) to member building societies and credit unions.
One ADI that provides general banking services which does not fall into the other categories.
General directions and notes
Reporting entity
The Impaired Assets form is to be completed by all ADIs (other than Specialist Credit Card Institutions (SCCIs) that engage only in credit card acquiring activities) on both a Licensed ADI and Consolidated ADI Group basis (where applicable).
Foreign ADIs[1] and Specialist Credit Card Institutions (SCCIs) operating through branches in Australia are required to complete this form for the Australian branch only.
This refers to the operations of the reporting ADI on a stand-alone basis.
This refers to the global operations of the ADI and all its controlled entities (where relevant), consolidated in accordance with Australian accounting standards (AASB 1024 ‘Consolidated Accounts’).
‘Controlled entity’, ‘parent entity’. These terms are defined in accordance with AASB.
The basis of consolidation required in this form is in accordance with the prudential Consolidated ADI Group. The prudential consolidated group should also be determined in accordance with Australian accounting standards, notably AASB 1024 with the following modifications:
(1) Include the following:
(2) Exclude subsidiary entities involved in the following business activities:
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks, Foreign ADIs and Special Service Providers should submit the completed form to APRA within 20 business days after the end of the relevant reporting quarter. Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and Specialist Credit Card Institutions (SCCIs) should submit the completed form to APRA within 15 business days after the end of the relevant reporting quarter.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place, and for other ADIs, in whole Australian dollars (no decimal place).
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 1012 ‘Foreign Currency Translation’.
The general requirements of AASB 1012 for translation are:
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.
Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows:
Reporting basis
Parts 1A and 2A are to be completed on an “audited” basis while Parts 1B and 2B are to be completed on a “best endeavours” basis.
Classification schema
The classification scheme used in ARF 220.0 Impaired Assets is consistent with the classification scheme used in ARF 320.0 Statement of Financial Position (Domestic Books) and ARF 323.0 Statement of Financial Position (Licensed ADI).
Sector definitions
This comprises individuals, or groups of individuals, resident in Australia whose dealings with other sectors are for personal or household purposes.
Exclude
Include
Exclude
Non-financial corporations
This comprises private trading corporations and private unincorporated businesses.
Private trading corporations
Private trading corporations are those owned and controlled by the private sector whose main activity is producing goods or non-financial services for sale.
Include
Exclude
This comprises individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included in this sub-sector are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.
Reporting Form ARF 220.0
Impaired Assets
General directions and notes
Reporting entity
The Impaired Assets form is to be completed by all ADIs (other than Specialist Credit Card Institutions (SCCIs) that engage only in credit card acquiring activities) on both a Licensed ADI and Consolidated ADI Group basis (where applicable).
Foreign ADIs[1] and Specialist Credit Card Institutions (SCCIs) operating through branches in Australia are required to complete this form for the Australian branch only.
This refers to the operations of the reporting ADI on a stand-alone basis.
This refers to the global operations of the ADI and all its controlled entities (where relevant), consolidated in accordance with Australian accounting standards (AASB 1024 ‘Consolidated Accounts’).
‘Controlled entity’, ‘parent entity’. These terms are defined in accordance with AASB.
The basis of consolidation required in this form is in accordance with the prudential Consolidated ADI Group. The prudential consolidated group should also be determined in accordance with Australian accounting standards, notably AASB 1024 with the following modifications:
(1) Include the following:
(2) Exclude subsidiary entities involved in the following business activities:
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks, Foreign ADIs and Special Service Providers should submit the completed form to APRA within 20 business days after the end of the relevant reporting quarter. Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and Specialist Credit Card Institutions (SCCIs) should submit the completed form to APRA within 15 business days after the end of the relevant reporting quarter.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place, and for other ADIs, in whole Australian dollars (no decimal place).
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 1012 ‘Foreign Currency Translation’.
The general requirements of AASB 1012 for translation are:
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.
Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows:
Reporting basis
Parts 1A and 2A are to be completed on an “audited” basis while Parts 1B and 2B are to be completed on a “best endeavours” basis.
Classification schema
The classification scheme used in ARF 220.0 Impaired Assets is consistent with the classification scheme used in ARF 320.0 Statement of Financial Position (Domestic Books) and ARF 323.0 Statement of Financial Position (Licensed ADI).
Sector definitions
This comprises individuals, or groups of individuals, resident in Australia whose dealings with other sectors are for personal or household purposes.
Exclude
Include
Exclude
Non-financial corporations
This comprises private trading corporations and private unincorporated businesses.
Private trading corporations
Private trading corporations are those owned and controlled by the private sector whose main activity is producing goods or non-financial services for sale.
Include
Exclude
This comprises individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included in this sub-sector are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.
Authorised deposit-taking institutions refers to corporations in relation to which an authority under subsection 9(3) is in force.
Include
Exclude
Registered Financial Corporations
Include
Exclude
Insurance corporations
Include
Exclude
Pension funds
Include
Exclude
Other financial institutions
Include
Exclude
This comprises all other entities not classified as households, community service organisations, non-financial corporations, and financial corporations.
Scope
The form covers the full range of problem exposures, which ADIs hold, and is not limited to problem loans.
In measuring off balance sheet credit exposures the following measurement policies should be adopted:
When reporting the extent of specific provisions raised against all off balance sheet credit exposures, include those recorded in the notes to ADIs' published financial statements as "other liabilities".
Unless otherwise instructed report:
Specific instructions
Part 1A – Impaired assets
Impaired assets are defined as those items for which the ultimate collectability of principal and interest is compromised. APRA’s prudential standard on credit quality requires ADIs to classify their impaired assets as (1) non‑accrual items, (2) restructured items or (3) other assets acquired through security enforcement (including other real estate owned).
Non-accrual items
The term "non-accrual items" applies to those facilities on which income may no longer be accrued ahead of its receipt. The following should be considered in classifying a facility as a non‑accrual item:
Performance
The return asks ADIs to separately report those non‑accrual items that are subject to no (or immaterial), partial or full performance. APRA’s intention is to better understand the nature of items that ADIs might report as non‑accrual and to enable it to assess the potential impact on the ADI’s overall performance.
No performance – report those exposures on which the ADI is not receiving any material payments. This category should also capture exposures on which an ADI is receiving only sporadic payments.
Partial performance – report those exposures on which the ADI is receiving partial payments relative to the required contractual obligations. Where partial performance is disclosed, ADIs should be able to identify a threshold of performance that defines this category. While it is not APRA’s intention to specify a minimum, the threshold chosen by the ADI should be sufficient to provide a meaningful distinction from the previous category (no performance).
Full performance – report those exposures on which full payments are being received, but which have been placed on a non-accrual basis for another reason. That is, because some reasonable doubt exists about ultimate collectability of the exposure, a specific provision has been raised, or write down taken or some other reasons has prompted this action.
Non‑accrual items – with and without provisions
ADIs should separately report those facilities classified as non‑accrual against which specific provisions have been created and those non‑accrual items against which no specific provision is held. For those ADIs applying the prescribed provisioning methodology described in Guidance Note AGN 220.3 Prescribed Provisioning and reported in terms of ARF 220.3 Prescribed Provisioning, provisions so created are regarded as specific in nature and should be reported as such on ARF 220.0 Impaired Assets.
Restructured items
A restructured item is defined as one in which the original contractual terms have been modified to provide for concessions of interest or principal for reasons related to the financial difficulties of a customer rendering the facility non-commercial to the ADI. In considering whether a facility is non-commercial, an ADI needs to consider whether it would extend credit on similar terms and conditions to a new borrower exhibiting similar risk characteristics. A formal (written) agreement must exist between the ADI and borrower before a facility can be classified restructured.
It is APRA’s general expectation that restructured facilities will not represent a substantial part of an ADI’s total assets.
Restructured items – with and without provisions
Restructured items should be split into those against which there are no specific provisions held and those with provisions that have arisen as part of the restructuring arrangement. The value of specific provisions held against the latter should also be reported. Report only those specific provisions raised prior to, or at the time of, the restructuring. If specific provisions are raised subsequent to the restructuring, the facility should be classified as non‑accrual. The category of restructured with specific provision is primarily designed to address those few instances where ADIs, in employing their problem asset management strategies, create a specific provision ahead of virtually certain write‑off. It is APRA’s general expectation that the extent of facilities reported in this category will be minor and unlikely to continue to be reported in this category for a long period of time.
Other real estate owned (OREO)
OREO is defined as real estate acquired by an ADI in full or partial settlement of a loan or similar facility through enforcement of security arrangements. This category excludes real estate acquired for occupation by ADI staff, and property controlled under “mortgagee in possession” rights.
Report holdings of OREO at net current market value. The assets should continue to be reported until the ADI has disposed of the holding.
Other assets acquired through security enforcement
This category covers other than real estate assets acquired by an ADI in full or partial settlement of a loan or similar facility through enforcement of security arrangements (e.g. debt-for-equity swaps). Report the value of other assets acquired through security enforcement at net current market value after taking into account any appropriate discount factor attributable to uncertain market liquidity conditions. This latter point reflects the likely lack of demand for the asset that has resulted in the ADI holding the asset as a consequence of its exposure recovery activity. Continue to report these assets until they have been sold or the entire exposure is written off.
New impaired assets
Report the value of exposures newly classified as impaired during the quarter.
Specific provisions
As noted above, report the amount of specific provisions held against the relevant categories for non‑accrual items, restructured items, OREO and other assets acquired through security enforcement.
Security held against non-accrual items
Report separately the total value of security held against non-accrual items depending upon whether specific provisions are held or not (items R00913 and R00914 respectively). Should any security held exceed the outstanding balance of an individual non-accrual item the excess should be excluded.
Security held against restructured items
Report separately the total value of security held against restructured items depending upon whether specific provisions are held or not (items R00915 and R00916 respectively). Should any security held exceed the outstanding balance of an individual restructured item the excess should be excluded.
Interest/income received
ADIs are asked to report interest, fees, etc. actually received during the quarter from borrowers/counterparties in relation to those exposures classified as impaired (non‑accrual, restructured and assets acquired through security enforcement).
In some cases, ADIs may deem to have received income if there has been a debit to some form of working account. However, in order for this income to be recognised for the purposes of this return, the working account must:
ADIs should calculate the effective interest rate being earned on restructured items by reference to the principal outstanding following restructuring (i.e. after taking into account write-offs, provisions that arise as part of the restructuring arrangement or repayments in the form of assets or equity). A restructured facility must be earning a rate of interest that is equal to or greater than the ADI’s average cost of funds at the date of the restructuring. If this is not the case, the facility should be classified as non-accrual.
Report the value of income brought to account during the quarter from assets acquired through security enforcement (including other real estate owned). Any income received should be reported net of identifiable expenses (apart from funding costs) incurred in generating such income. Where, in aggregate, expenses exceed income received, report a negative balance.
Interest/income forgone
For all categories of impaired assets, report all interest/income foregone during the quarter. Interest/income foregone is defined as the difference between what the ADI would have received had the exposure performed as contracted and that interest/income actually received. ADIs are asked to report the extent of interest/income foregone on non‑accrual and restructured items for the relevant quarter covered by the return.
Part 1B – Impaired assets
Part 1B classifies the total balance of impaired assets by sector.
Part 2A – Past due items
As items that are 90 days past due but well-secured[2] represent a higher degree of risk than facilities meeting contractual arrangements, APRA requires ADIs to separately report these items. A facility subject to a regular repayment schedule is regarded as “90 days past due” when: (a) at least 90 calendar days have elapsed since the due date of a contractual payment which has not been met in full; and (b) the total amount outside contractual arrangements is equivalent to at least 90 days worth of contractual payments. Such a facility is regarded as well-secured when the ADI judges that the net current market value of associated security is sufficient to ensure that the ADI will recover the entire amount owing. By way of example, and assuming monthly repayment installments, if a contractual payment was made on 30 March, the facility is past due when the payment on 30 April is not made. Assuming no further payments and monthly installments, the facility should be classified as 90 days past due on 30 July. ADIs will note that this represents 120 days since a payment was made but the equivalent of 90 days worth of contractual payments being past due.
An item ceases to be classified as past due when arrears have been reduced so that the exposure is no longer 90 days past due.
In the case of facilities that do not have a preset repayment schedule (e.g. overdrafts and revolving credit facilities), 90 days past due refers to the period where facilities have remained continuously outside approved arrangements but are well-secured.
The return asks ADIs to separately report those exposures that are individually managed and those that are managed on a portfolio basis.
Individually managed facilities
These are troublesome exposures that are managed on a transaction basis and typically subject to individual review. As discussed below, ADIs should separately report those facilities 90 days past due but well-secured in terms of different credit products common in the Australian financial system. That is, separately report these troublesome exposures as revolving credit, credit cards, housing loans, term loans, lease financing or other loans.
Portfolio managed facilities
Exposures managed on a portfolio basis are typically homogenous and often approved and managed using statistical management techniques. Portfolio managed exposures are often not subject to formal regular review other than in cases where payments are behind agreed repayment schedules or indebtedness is outside approved limits.
Any past due facilities managed on a portfolio basis can be excluded from the definition of impaired assets and remain on an accrual basis until the dollar value of contractual payments is up to 180 days past due (i.e. six months worth of repayments). The commencement of the 180 days is to take place from the date on which the contractual payment of principal and/or interest is not met. Once the dollar amount of past due amounts represent 180 days of contractual payments, an ADI should decide whether it is prepared to subject the accounts to individual review or to write them off. If the ADI chooses to conduct individual reviews, then the facilities can remain on an accrual basis if the ADI is satisfied that the facility is well-secured. Where the facility is not well-secured, the ADI should immediately create an appropriate specific provision and move the facility to a non-accrual basis.
ADIs managing facilities on a portfolio basis should report the total value of facilities 90 days past due but less than 180 days past due. As for individually managed facilities, ADIs should separately report in terms of loan type. For all category of loan product sought, distinguish between those exposures that are recorded on Australian or overseas books.
To provide APRA with a basis upon which to gauge the degree of delinquency in facilities managed on a portfolio basis, ADIs should separately report the total portfolio size in terms of the individual credit product type specified below. APRA also asks those ADIs managing facilities on a portfolio basis to indicate the extent of portfolio-related provisions that have been created with respect to those facilities that are less than 90 days past due.
Revolving credit
A revolving credit is a credit facility that is typically approved for a given period of time but does not have a fixed repayment schedule.
Report the total outstanding balance of loans of a revolving credit nature that fall within the definition of the relevant category of past due reporting. Exclude loans to Australian householders for the purpose of housing (e.g. equity lines of credit secured by residential property). Facilities of this nature should be reported under “Housing loans”.
Credit cards
Credit cards are a common consumer credit arrangement that allows the consumer the option of borrowing against a pre‑approved line of credit. They are typically unsecured.
Report the total outstanding balance of credit card facilities that are outside contractual arrangements for more than 90 consecutive days but are well-secured under the heading “Individually managed facilities”. Any credit card facility that is not well-secured but is outside contractual arrangements for more than 90 consecutive days should be classified as non‑accrual unless it is managed as part of a portfolio as described in paragraph 4 of Guidance Note AGN 220.1 Impaired Assets Definitions.
Report the total outstanding balance of credit card facilities that are managed on a portfolio basis but are more than 90 days past due and less than 180 days past due.
Housing loans
For the purpose of this return, housing loans are those facilities, both amortising and line of credit that are primarily secured by a registered mortgage over a residential property. They may be for any purpose including the construction, purchase of dwellings for owner occupation or investment or commercial ventures. ADIs should note that this definition differs from that used in the Statement of Financial Condition Reports (ARF 322.0 Exposures to Related Entities and ARF 323.0 Statement of Financial Position).
Report the total outstanding balance of housing loans that are past due in accordance with whether facilities are managed on an individual or portfolio basis.
Term loans
Report the total outstanding balance of loans that have a fixed term and are past due in terms of the above guidance. Exclude loans to householders for the purpose of housing.
Lease financing
Leasing finance is a method of financing the acquisition of an asset (e.g. motor vehicle or business equipment) by the user under which the ADI buys the asset from a third party and leases it to the user in return for lease rental payments. A component of the lease rental payment relates to interest and another component to the reduction of principal.
Report the total outstanding balance of lease financing that is outside contractual arrangements in line with the preceding guidance.
Other loans
Report the total outstanding balance of loans that satisfy the preceding criteria with respect to being 90 days past due or more that cannot be readily classified in the other credit product types.
Facilities for which a prescribed provision is raised
All facilities against which an ADI is required to raise a prescribed provision in terms of Guidance Note AGN 220.3 Prescribed Provisioning will need to be recognised as a non‑accrual item for the purposes of this return and in its financial accounts. ADIs applying the prescribed provisioning methodology should be particularly alert to those Category Four Facilities that are irregular for more than 14 days. Facilities in this category must be reported as non‑accrual from the date that the prescribed provision is struck (i.e. once the facility is irregular for more than 14 days).
Part 2B – Past due items
Part 2B classifies the total amount of past due items by sector.
Note on References to Accounting Standards
This Note is about references in these instructions to an accounting standard or accounting standards, e.g. where the instructions say that something must be done in accordance with a particular AASB or international accounting standard, or must be done in accordance with the accounting standards (however described) generally.
Where you see such a reference, you must read it as meaning the version of the accounting standard, or versions of the accounting standards, applying to reporting periods (within the meaning of the accounting standards) beginning immediately before 1 January 2005.
Accordingly, the new AASB standards for 2005 are not to be applied.
Similarly, a reference to principles or conventions (however described) governing an accounting procedure or treatment shall be taken to refer to principles or conventions applicable in relation to reporting periods (within the meaning of the accounting standards) that began immediately before 1 January 2005.
Authorised deposit-taking institutions refers to corporations in relation to which an authority under subsection 9(3) is in force.
Include
Exclude
Registered Financial Corporations
Include
Exclude
Insurance corporations
Include
Exclude
Pension funds
Reporting Form ARF 220.0
Impaired Assets
General directions and notes
Reporting entity
The Impaired Assets form is to be completed by all ADIs (other than Specialist Credit Card Institutions (SCCIs) that engage only in credit card acquiring activities) on both a Licensed ADI and Consolidated ADI Group basis (where applicable).
Foreign ADIs[1] and Specialist Credit Card Institutions (SCCIs) operating through branches in Australia are required to complete this form for the Australian branch only.
This refers to the operations of the reporting ADI on a stand-alone basis.
This refers to the global operations of the ADI and all its controlled entities (where relevant), consolidated in accordance with Australian accounting standards (AASB 1024 ‘Consolidated Accounts’).
‘Controlled entity’, ‘parent entity’. These terms are defined in accordance with AASB.
The basis of consolidation required in this form is in accordance with the prudential Consolidated ADI Group. The prudential consolidated group should also be determined in accordance with Australian accounting standards, notably AASB 1024 with the following modifications:
(1) Include the following:
(2) Exclude subsidiary entities involved in the following business activities:
Reporting period
The form is to be completed as at the last day of the stated reporting quarter. Locally incorporated banks, Foreign ADIs and Special Service Providers should submit the completed form to APRA within 20 business days after the end of the relevant reporting quarter. Credit Unions, Cairns Penny Savings & Loans Limited, Building Societies and Specialist Credit Card Institutions (SCCIs) should submit the completed form to APRA within 15 business days after the end of the relevant reporting quarter.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place, and for other ADIs, in whole Australian dollars (no decimal place).
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 1012 ‘Foreign Currency Translation’.
The general requirements of AASB 1012 for translation are:
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.
Monetary items arising under foreign currency derivative contracts at the reporting date must be translated as follows:
Reporting basis
Parts 1A and 2A are to be completed on an “audited” basis while Parts 1B and 2B are to be completed on a “best endeavours” basis.
Classification schema
The classification scheme used in ARF 220.0 Impaired Assets is consistent with the classification scheme used in ARF 320.0 Statement of Financial Position (Domestic Books) and ARF 323.0 Statement of Financial Position (Licensed ADI).
Sector definitions
This comprises individuals, or groups of individuals, resident in Australia whose dealings with other sectors are for personal or household purposes.
Exclude
Include
Exclude
Non-financial corporations
This comprises private trading corporations and private unincorporated businesses.
Private trading corporations
Private trading corporations are those owned and controlled by the private sector whose main activity is producing goods or non-financial services for sale.
Include
Exclude
This comprises individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included in this sub-sector are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.
Authorised deposit-taking institutions refers to corporations in relation to which an authority under subsection 9(3) is in force.
Include
Exclude
Registered Financial Corporations
Include
Exclude
Insurance corporations
Include
Exclude
Pension funds
Include
Exclude
Other financial institutions
Include
Exclude
This comprises all other entities not classified as households, community service organisations, non-financial corporations, and financial corporations.
Scope
The form covers the full range of problem exposures, which ADIs hold, and is not limited to problem loans.
In measuring off balance sheet credit exposures the following measurement policies should be adopted:
When reporting the extent of specific provisions raised against all off balance sheet credit exposures, include those recorded in the notes to ADIs' published financial statements as "other liabilities".
Unless otherwise instructed report:
Specific instructions
Part 1A – Impaired assets
Impaired assets are defined as those items for which the ultimate collectability of principal and interest is compromised. APRA’s prudential standard on credit quality requires ADIs to classify their impaired assets as (1) non‑accrual items, (2) restructured items or (3) other assets acquired through security enforcement (including other real estate owned).
Non-accrual items
The term "non-accrual items" applies to those facilities on which income may no longer be accrued ahead of its receipt. The following should be considered in classifying a facility as a non‑accrual item:
Performance
The return asks ADIs to separately report those non‑accrual items that are subject to no (or immaterial), partial or full performance. APRA’s intention is to better understand the nature of items that ADIs might report as non‑accrual and to enable it to assess the potential impact on the ADI’s overall performance.
No performance – report those exposures on which the ADI is not receiving any material payments. This category should also capture exposures on which an ADI is receiving only sporadic payments.
Partial performance – report those exposures on which the ADI is receiving partial payments relative to the required contractual obligations. Where partial performance is disclosed, ADIs should be able to identify a threshold of performance that defines this category. While it is not APRA’s intention to specify a minimum, the threshold chosen by the ADI should be sufficient to provide a meaningful distinction from the previous category (no performance).
Full performance – report those exposures on which full payments are being received, but which have been placed on a non-accrual basis for another reason. That is, because some reasonable doubt exists about ultimate collectability of the exposure, a specific provision has been raised, or write down taken or some other reasons has prompted this action.
Non‑accrual items – with and without provisions
ADIs should separately report those facilities classified as non‑accrual against which specific provisions have been created and those non‑accrual items against which no specific provision is held. For those ADIs applying the prescribed provisioning methodology described in Guidance Note AGN 220.3 Prescribed Provisioning and reported in terms of ARF 220.3 Prescribed Provisioning, provisions so created are regarded as specific in nature and should be reported as such on ARF 220.0 Impaired Assets.
Restructured items
A restructured item is defined as one in which the original contractual terms have been modified to provide for concessions of interest or principal for reasons related to the financial difficulties of a customer rendering the facility non-commercial to the ADI. In considering whether a facility is non-commercial, an ADI needs to consider whether it would extend credit on similar terms and conditions to a new borrower exhibiting similar risk characteristics. A formal (written) agreement must exist between the ADI and borrower before a facility can be classified restructured.
It is APRA’s general expectation that restructured facilities will not represent a substantial part of an ADI’s total assets.
Restructured items – with and without provisions
Restructured items should be split into those against which there are no specific provisions held and those with provisions that have arisen as part of the restructuring arrangement. The value of specific provisions held against the latter should also be reported. Report only those specific provisions raised prior to, or at the time of, the restructuring. If specific provisions are raised subsequent to the restructuring, the facility should be classified as non‑accrual. The category of restructured with specific provision is primarily designed to address those few instances where ADIs, in employing their problem asset management strategies, create a specific provision ahead of virtually certain write‑off. It is APRA’s general expectation that the extent of facilities reported in this category will be minor and unlikely to continue to be reported in this category for a long period of time.
Other real estate owned (OREO)
OREO is defined as real estate acquired by an ADI in full or partial settlement of a loan or similar facility through enforcement of security arrangements. This category excludes real estate acquired for occupation by ADI staff, and property controlled under “mortgagee in possession” rights.
Report holdings of OREO at net current market value. The assets should continue to be reported until the ADI has disposed of the holding.
Other assets acquired through security enforcement
This category covers other than real estate assets acquired by an ADI in full or partial settlement of a loan or similar facility through enforcement of security arrangements (e.g. debt-for-equity swaps). Report the value of other assets acquired through security enforcement at net current market value after taking into account any appropriate discount factor attributable to uncertain market liquidity conditions. This latter point reflects the likely lack of demand for the asset that has resulted in the ADI holding the asset as a consequence of its exposure recovery activity. Continue to report these assets until they have been sold or the entire exposure is written off.
New impaired assets
Report the value of exposures newly classified as impaired during the quarter.
Specific provisions
As noted above, report the amount of specific provisions held against the relevant categories for non‑accrual items, restructured items, OREO and other assets acquired through security enforcement.
Security held against non-accrual items
Report separately the total value of security held against non-accrual items depending upon whether specific provisions are held or not (items R00913 and R00914 respectively). Should any security held exceed the outstanding balance of an individual non-accrual item the excess should be excluded.
Security held against restructured items
Report separately the total value of security held against restructured items depending upon whether specific provisions are held or not (items R00915 and R00916 respectively). Should any security held exceed the outstanding balance of an individual restructured item the excess should be excluded.
Interest/income received
ADIs are asked to report interest, fees, etc. actually received during the quarter from borrowers/counterparties in relation to those exposures classified as impaired (non‑accrual, restructured and assets acquired through security enforcement).
In some cases, ADIs may deem to have received income if there has been a debit to some form of working account. However, in order for this income to be recognised for the purposes of this return, the working account must:
ADIs should calculate the effective interest rate being earned on restructured items by reference to the principal outstanding following restructuring (i.e. after taking into account write-offs, provisions that arise as part of the restructuring arrangement or repayments in the form of assets or equity). A restructured facility must be earning a rate of interest that is equal to or greater than the ADI’s average cost of funds at the date of the restructuring. If this is not the case, the facility should be classified as non-accrual.
Report the value of income brought to account during the quarter from assets acquired through security enforcement (including other real estate owned). Any income received should be reported net of identifiable expenses (apart from funding costs) incurred in generating such income. Where, in aggregate, expenses exceed income received, report a negative balance.
Interest/income forgone
For all categories of impaired assets, report all interest/income foregone during the quarter. Interest/income foregone is defined as the difference between what the ADI would have received had the exposure performed as contracted and that interest/income actually received. ADIs are asked to report the extent of interest/income foregone on non‑accrual and restructured items for the relevant quarter covered by the return.
Part 1B – Impaired assets
Part 1B classifies the total balance of impaired assets by sector.
Part 2A – Past due items
As items that are 90 days past due but well-secured[2] represent a higher degree of risk than facilities meeting contractual arrangements, APRA requires ADIs to separately report these items. A facility subject to a regular repayment schedule is regarded as “90 days past due” when: (a) at least 90 calendar days have elapsed since the due date of a contractual payment which has not been met in full; and (b) the total amount outside contractual arrangements is equivalent to at least 90 days worth of contractual payments. Such a facility is regarded as well-secured when the ADI judges that the net current market value of associated security is sufficient to ensure that the ADI will recover the entire amount owing. By way of example, and assuming monthly repayment installments, if a contractual payment was made on 30 March, the facility is past due when the payment on 30 April is not made. Assuming no further payments and monthly installments, the facility should be classified as 90 days past due on 30 July. ADIs will note that this represents 120 days since a payment was made but the equivalent of 90 days worth of contractual payments being past due.
An item ceases to be classified as past due when arrears have been reduced so that the exposure is no longer 90 days past due.
In the case of facilities that do not have a preset repayment schedule (e.g. overdrafts and revolving credit facilities), 90 days past due refers to the period where facilities have remained continuously outside approved arrangements but are well-secured.
The return asks ADIs to separately report those exposures that are individually managed and those that are managed on a portfolio basis.
Individually managed facilities
These are troublesome exposures that are managed on a transaction basis and typically subject to individual review. As discussed below, ADIs should separately report those facilities 90 days past due but well-secured in terms of different credit products common in the Australian financial system. That is, separately report these troublesome exposures as revolving credit, credit cards, housing loans, term loans, lease financing or other loans.
Portfolio managed facilities
Exposures managed on a portfolio basis are typically homogenous and often approved and managed using statistical management techniques. Portfolio managed exposures are often not subject to formal regular review other than in cases where payments are behind agreed repayment schedules or indebtedness is outside approved limits.
Any past due facilities managed on a portfolio basis can be excluded from the definition of impaired assets and remain on an accrual basis until the dollar value of contractual payments is up to 180 days past due (i.e. six months worth of repayments). The commencement of the 180 days is to take place from the date on which the contractual payment of principal and/or interest is not met. Once the dollar amount of past due amounts represent 180 days of contractual payments, an ADI should decide whether it is prepared to subject the accounts to individual review or to write them off. If the ADI chooses to conduct individual reviews, then the facilities can remain on an accrual basis if the ADI is satisfied that the facility is well-secured. Where the facility is not well-secured, the ADI should immediately create an appropriate specific provision and move the facility to a non-accrual basis.
ADIs managing facilities on a portfolio basis should report the total value of facilities 90 days past due but less than 180 days past due. As for individually managed facilities, ADIs should separately report in terms of loan type. For all category of loan product sought, distinguish between those exposures that are recorded on Australian or overseas books.
To provide APRA with a basis upon which to gauge the degree of delinquency in facilities managed on a portfolio basis, ADIs should separately report the total portfolio size in terms of the individual credit product type specified below. APRA also asks those ADIs managing facilities on a portfolio basis to indicate the extent of portfolio-related provisions that have been created with respect to those facilities that are less than 90 days past due.
Revolving credit
A revolving credit is a credit facility that is typically approved for a given period of time but does not have a fixed repayment schedule.
Report the total outstanding balance of loans of a revolving credit nature that fall within the definition of the relevant category of past due reporting. Exclude loans to Australian householders for the purpose of housing (e.g. equity lines of credit secured by residential property). Facilities of this nature should be reported under “Housing loans”.
Credit cards
Credit cards are a common consumer credit arrangement that allows the consumer the option of borrowing against a pre‑approved line of credit. They are typically unsecured.
Report the total outstanding balance of credit card facilities that are outside contractual arrangements for more than 90 consecutive days but are well-secured under the heading “Individually managed facilities”. Any credit card facility that is not well-secured but is outside contractual arrangements for more than 90 consecutive days should be classified as non‑accrual unless it is managed as part of a portfolio as described in paragraph 4 of Guidance Note AGN 220.1 Impaired Assets Definitions.
Report the total outstanding balance of credit card facilities that are managed on a portfolio basis but are more than 90 days past due and less than 180 days past due.
Housing loans
For the purpose of this return, housing loans are those facilities, both amortising and line of credit that are primarily secured by a registered mortgage over a residential property. They may be for any purpose including the construction, purchase of dwellings for owner occupation or investment or commercial ventures. ADIs should note that this definition differs from that used in the Statement of Financial Condition Reports (ARF 322.0 Exposures to Related Entities and ARF 323.0 Statement of Financial Position).
Report the total outstanding balance of housing loans that are past due in accordance with whether facilities are managed on an individual or portfolio basis.
Term loans
Report the total outstanding balance of loans that have a fixed term and are past due in terms of the above guidance. Exclude loans to householders for the purpose of housing.
Lease financing
Leasing finance is a method of financing the acquisition of an asset (e.g. motor vehicle or business equipment) by the user under which the ADI buys the asset from a third party and leases it to the user in return for lease rental payments. A component of the lease rental payment relates to interest and another component to the reduction of principal.
Report the total outstanding balance of lease financing that is outside contractual arrangements in line with the preceding guidance.
Other loans
Report the total outstanding balance of loans that satisfy the preceding criteria with respect to being 90 days past due or more that cannot be readily classified in the other credit product types.
Facilities for which a prescribed provision is raised
All facilities against which an ADI is required to raise a prescribed provision in terms of Guidance Note AGN 220.3 Prescribed Provisioning will need to be recognised as a non‑accrual item for the purposes of this return and in its financial accounts. ADIs applying the prescribed provisioning methodology should be particularly alert to those Category Four Facilities that are irregular for more than 14 days. Facilities in this category must be reported as non‑accrual from the date that the prescribed provision is struck (i.e. once the facility is irregular for more than 14 days).
Part 2B – Past due items
Part 2B classifies the total amount of past due items by sector.
Note on References to Accounting Standards
This Note is about references in these instructions to an accounting standard or accounting standards, e.g. where the instructions say that something must be done in accordance with a particular AASB or international accounting standard, or must be done in accordance with the accounting standards (however described) generally.
Where you see such a reference, you must read it as meaning the version of the accounting standard, or versions of the accounting standards, applying to reporting periods (within the meaning of the accounting standards) beginning immediately before 1 January 2005.
Accordingly, the new AASB standards for 2005 are not to be applied.
Similarly, a reference to principles or conventions (however described) governing an accounting procedure or treatment shall be taken to refer to principles or conventions applicable in relation to reporting periods (within the meaning of the accounting standards) that began immediately before 1 January 2005.
Include
Exclude
Other financial institutions
Include
Exclude
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires all authorised deposit-taking institutions (ADIs), including foreign ADIs operating in Australia through branch operations, but excluding specialist credit card institutions that do not engage in issuing activities, to report to APRA, generally on a quarterly basis, in relation to their impaired assets.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with:
Information required
An ADI (other than a specialist credit card institution that does not engage in issuing activities) must provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Licensed ADI’ for each reporting period.
An ADI (other than a specialist credit card institution that does not engage in issuing activities) that is a highest parent entity in relation to a consolidated ADI group must also provide APRA with the information required by the version of Form ARF 220.0 designated for a ‘Consolidated Group’ for each reporting period.
(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.
Subject to paragraph 7, an ADI must provide the information required by this reporting standard for each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the ADI.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular ADI, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a) the particular circumstances of the ADI;
(b) the extent to which the information is required for the purposes of the prudential supervision of the ADI; and
(c) the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics.
(a) in the case of information required by paragraphs 3 and 4 from a locally-incorporated bank, locally-incorporated special service provider or foreign ADI (other than a specialist credit card institution) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of information required by paragraphs 3 and 4 from a locally-incorporated credit union, locally-incorporated building society, specialist credit card institution (whether locally-incorporated or not) that engages in issuing activities or Cairns Penny Savings & Loans Limited – 15 business days after the end of the reporting period to which the information relates.
The information provided by an ADI under this reporting standard (except for the information required under paragraph 4) must be the product of processes and controls that have been reviewed and tested by the external auditor of the ADI. AGS 1008 ‘Audit Implications of Prudential Reporting Requirements for Authorised Deposit-taking Institutions’, issued by the Auditing and Assurances Standards Board of the Australian Accounting Research Foundation, provides guidance on the scope and nature of the review and testing required from external auditors. This review and testing must be done on an annual basis or more frequently if necessary to enable the external auditor to form an opinion on the accuracy and reliability of the data.
All information provided by an ADI under this reporting standard must be subject to processes and controls developed by the ADI for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the ADI to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
If an ADI submits information under this reporting standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the ADI 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 ADI who have authority from the ADI to transmit the data to APRA.
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 ADI; or
(b) the Chief Financial Officer of the ADI (whatever his or her official title may be).
(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.
Transitional
16.17.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.
ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959.
ADI list means the attached ADI list.
building society means an ADI whose name appears under the heading ‘Building Societies’ in the ADI list.
consolidated ADI group means a group comprising:
(a) an ADI that is a highest parent entity; and
(b) each subsidiary (within the meaning of Accounting Standard AASB 1024) of that ADI, whether the subsidiary is locally-incorporated or not, other than a subsidiary that is excluded by the instructions attached to this standard.
credit union means an ADI whose name appears under the heading ‘Credit Unions’ in the ADI list.
foreign ADI means an ADI that is not locally-incorporated.
highest parent entity means an ADI that satisfies all of the following conditions:
(a) it is locally-incorporated;
(b) it has at least one subsidiary (within the meaning of Accounting Standard AASB 1024); and
(c) it is not itself a subsidiary (within the meaning of Accounting Standard AASB 1024) of an ADI that is locally-incorporated.
locally-incorporated means incorporated in Australia.
locally-incorporated bank means an ADI whose name appears under the heading ‘Australian-owned Banks’ or ‘Foreign Subsidiary Banks’ in the ADI list.
special service provider means an ADI whose name appears under the heading ‘Other ADIs’ in the ADI list (other than Cairns Penny Savings & Loans Limited).
specialist credit card institution means an ADI whose name appears under the heading ‘Specialist Credit Card Institutions (SCCIs) in the ADI list.
17.18.If an ADI is not in the ADI list, then:
(a) if the ADI assumes or uses the word ‘bank’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated bank for the purposes of this standard;
(b) if the ADI assumes or uses the expression ‘building society’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated building society for the purposes of this reporting standard;
(c) if the ADI assumes or uses the expression ‘credit union’, ‘credit society’ or ‘credit co-operative’ in relation to its financial business, and is locally-incorporated, it is taken to be a locally-incorporated credit union for the purposes of this reporting standard; and
(d) engages in credit card issuing or credit card acquiring, or both, and does not otherwise carry on banking business within the meaning of section 5 of the Banking Act 1959, it is taken to be a specialist credit card institution for the purposes of this reporting standard.
18.19.APRA may in writing determine that an ADI is taken to be a locally-incorporated bank, locally-incorporated building society, locally-incorporated credit union, specialist credit card institution, or locally-incorporated special service provider for the purposes of this standard (even if, under paragraph 17 or 18, it comes within a different classification).
Interpretation – other definitions
19.20.In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays.
Principal Executive Officer means the principal executive officer of the ADI for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a period under paragraph 6 or, if applicable, paragraph 7.
The ADI list
This is an opening excerpt, not the complete document.