Financial Sector (Collection of Data) determination No. 85 of 2005 - Reporting Standard ARS 320.4 (2005) - Bill Acceptances and Endorsements
Reconciliation with ARF 320.0 Statement Reconciliation with ARF 320.0 Statement of Financial Position (Domestic Books)
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The Bill Acceptances and Endorsements form is to be completed by all locally incorporated banks, Foreign ADIs and Special Service Providers on a Domestic Books basis.
The Domestic books of the locally incorporated banks, Foreign ADIs and Special Service Providers relates to the Australian books of the Australian ADI and has the following scope:
Is an unconsolidated report of the Australian licensed ADI's operations/transactions that are booked inside Australia.
Exclude offshore branches of the Australian licensed ADI from this reporting unit.
Exclude offshore banking units based overseas from this reporting unit.
Do not consolidate Australian and offshore controlled entities or associated entities that are not ADIs.
Include Australian based offshore banking units of the licensed ADI.
Include transactions with non-residents recorded on Australian books.
Reporting period
The form is to be completed as at the last day of the reporting month. Locally incorporated banks, Foreign ADIs and Special Service Providers should submit the completed form to APRA within 10 business days after the end of the relevant reporting month.
Unit of measurement
Banks are asked to complete the form in millions of Australian dollars rounded to one decimal place. Special Service Providers are asked to complete the form 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:
Foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date.
Other items outstanding at the reporting date must not be retranslated subsequent to initial recognition of the transaction.
Monetary items are defined to mean money held and assets and liabilities that are to be received or paid in fixed or determinable amounts of money.
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.
Timing
Report assets and liabilities as at the date change of ownership took place.
Part Reconciliation with ARF 320.0 Statement - Financial Sector (Collection of Data) determination No. 85 of 2005 - Reporting Standard ARS 320.4 (2005) - Bill Acceptances and Endorsements - Reconciliation with ARF 320.0 Statement of Financial Position (Domestic Books) | Zoe
Netting
Unless otherwise specifically stated, institutions are to comply with the prerequisite for netting outlined in Australian accounting standards AASB 1014 ‘Set-off and Extinguishment of Debt’ and AASB 1033 ‘Presentation and Disclosure of Financial Instruments’.
Term to maturity
References to term to maturity in this form are references to original term to maturity
Valuation and currency conversion
Closing balances should be reported at market price effective at the reference date. Where denominated in foreign currency, market values in foreign currency should be converted to AUD at the spot rate effective as at the reference date.
Basis of preparation
Unless otherwise specifically stated, institutions are to comply with Australian accounting standards regarding the measurement of asset, liability and equity items.
Definitions
A bill of exchange is an unconditional order drawn (issued) by one party, sent to another party (usually a bank) for acceptance and made out to, or to the order of, a third party, or to bearer. It is a negotiable instrument with an original term to maturity of 180 days or less.
Accepted bills of exchange have been signed by a bank as the drawee which "accepts" liability to pay out the funds on the due date.
Endorsement of a bill of exchange creates a contingent liability by the endorser to pay out the funds conditional on the bearer/holder demanding payment.
Specific instructions
Bill acceptances and endorsements by drawer
Report the amount of bills of exchange that have been accepted or accepted and endorsed by this ADI at market value by counterparty of drawer. Only endorsed bills where the bank is the first endorser of a non-ADI or Registered Financial Corporation accepted bill should be included.
Include:
holdings of own acceptances or endorsed bills.
Exclude:
bills of exchange neither accepted nor endorsed;
endorsed bills drawn by the general government; and
bills of exchange held by this ADI, but accepted by another party.
Reconciliation with ARF 320.0 Statement of Financial Position (Domestic Books)
Total acceptances of customers
The sum of:
Total non-financial counterparties - Accepted (ARF 320.4 Bill Acceptances and Endorsements);
Total financial corporations - Accepted (ARF 320.4 Bill Acceptances and Endorsements); and
Less holdings of own acceptances.
Equals
Acceptances of Customers (ARF 320.0 Statement of Financial Position (Domestic Books)).
Example - Treatment of own holdings of own acceptances
Suppose that a company (called the drawer or borrower) draws a bill of exchange payable in 180 days. The ADI then accepts these bills, and therefore accepts liability to pay to the person presenting the bill (called the holder) the face value of the bill on maturity. The ADI, as acceptor of the bill, will on maturity of the bill require the drawer (borrower) to pay the face value of the bill to the ADI.
This bill acceptance is reported on ARF 320.4 Bill Acceptances and Endorsements by the ADI accepting the bill at market value, which at inception is equal to the face value of the bill minus the discount, whether or not the bill is held within the ADI’s portfolio.
If this bill is accepted and not held within the ADI's portfolio, then this acceptance is reported on ARF 320.0 Statement of Financial Position (Domestic Books) as a liability item "Acceptances", which represents the liability arising from the acceptance of the bill of exchange. A corresponding contra asset is reported as "Acceptances of customers", which represents the drawers' commitment to repay the face value of the bill to the ADI at maturity.
Holdings of own bill acceptances
If this bill is accepted and held within the ADI's own portfolio it should be included as an asset on ARF 320.0 Statement of Financial Position (Domestic Books) and classified to either trading or investment securities. This type of bill acceptance is excluded from the liability item "Acceptances" on the ARF 320.0 Statement of Financial Position (Domestic Books), since the ADI is also the holder of the bills. It is also excluded from the contra asset item "Acceptances of customers", since this claim on the drawer is classified as a security holding.
Holdings of own bill acceptances should also be reported to Bills of Exchange (Bank accepted) on ARF 320.1 Debt Securities Held. Bills purchased by the bank, which are accepted by other ADIs, will also be classified to trading or investment securities, and reported to Bills of Exchange (Bank accepted) on ARF 320.1 Debt Securities Held.
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.