Part Instruction Guide - Financial Sector (Collection of Data) (reporting standard) determination No. 27 of 2006 - Reporting Standard ARS 322.0 - Statement of Financial Position (Consolidated) - Instruction Guide | Zoe
Financial Sector (Collection of Data) (reporting standard) determination No. 27 of 2006 - Reporting Standard ARS 322.0 - Statement of Financial Position (Consolidated)
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Turn the raw legal text into a practical explanation grounded in Financial Sector (Collection of Data) (reporting standard) determination No. 27 of 2006 - Reporting Standard ARS 322.0 - Statement of Financial Position (Consolidated).
This is to be completed by all locally incorporated authorised deposit-taking institutions (ADIs) (including Specialist Credit Card Institutions (SCCIs)) on a consolidated group basis (where applicable).
The basis of consolidation required in this form is in accordance with the accounting consolidated group. The accounting consolidated group is to be determined in accordance with the requirements of the Australian accounting standards, notably AASB 127 Consolidated and Separate Financial Statements (AASB 127) and AASB 3 Business Combinations (AASB 3).
Locally incorporated ADIs (including SCCIs) that do not have any controlled entities are not required to submit forms for this reporting entity.
Foreign ADIs[1] and SCCIs operating through branches in Australia are not required to complete this form.
Consolidated ADI group
This refers to the global operations of the ADI and all its controlled entities (where relevant), consolidated in accordance with Australian accounting standards (AASB 127 and AASB 3).
‘Controlled entity’, ‘parent entity’. These terms are defined in accordance with AASB 127 and AASB 3.
Exclude from the accounting consolidated group special purpose vehicles (SPVs) whose assets have satisfied the clean sale requirements set down in AGN 120.3 Purchase and Supply of Assets (including Securities issued by Special Purpose Vehicles (SPVs) (AGN 120.3), (refer Securitisation Deconsolidation Principle below).
Securitisation deconsolidation principle
Except where stated otherwise on this form, reporting entities must treat any securitisation program special purpose vehicles in which the ADI (or a member of its consolidated group) participates in accordance with APRA’s clean sale and separation requirements as non-consolidated independent third parties. As a result, for reporting purposes all assets, liabilities, revenues and expenses of these SPVs must be excluded from the ADI’s reported amounts. Where relevant, report on this form any exposure to or other transaction between the ADI and any such SPV as if such transaction was conducted with an independent third party, regardless of whether the SPV or its assets is consolidated for accounting purposes.
APRA's clean sale and separation requirements are set out in APS 120 Funds Management and Securitisation and related Guidance Notes AGN 120.3 Purchase and Supply of Assets (including Securities Issued by SPVs) and AGN 120.1 Disclosure and Separation. Whenever the clean sale and separation requirements are not met, all the assets, liabilities, revenues and expenses of the SPV are to be consolidated with the ADI’s reported amounts.
Note: ADIs should consult APRA in case of doubt as to whether a subsidiary or controlled entity that engaged in non-financial operations should be consolidated at Level 2 for capital adequacy purposes.
Reporting period
The form is to be completed as at the last day of the stated reporting quarter (i.e. September, December, March and June). Locally incorporated banks and Special Service Providers (SSPs) must submit the completed form to APRA within 25 business days after the end of the relevant reporting quarter. Credit Unions, Penny Bank, Building Societies and SCCIs must 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. SSPs, Building Societies, Credit Unions, SCCIs and Penny Bank 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 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
The general requirements of AASB 121 for translation are:
foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;[2]
foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;[3]
foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139), AASB 7 Financial Instruments: Disclosure (AASB 7) and AASB 132 Financial Instruments: Disclosure and Presentation. However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and
translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
Translation of financial reports should otherwise follow the requirements in AASB 121.
Netting
Unless otherwise specifically stated, institutions are allowed to take advantage of netting agreements in relation to disclosure of data items in this form. Institutions are to comply with the prerequisite for netting outlined in Australian accounting standards AASB 139, AASB 7, and AASB 132 Financial Instruments: Disclosure and Presentation and any relevant prudential standards.
Term to maturity
Any references to ‘term to maturity’ in ARF 322.0 refer to residual term to maturity.
Basis of preparation
The nature of the disclosure and format of this form may not be strictly consistent with the annual financial statements prepared by the institution. Notwithstanding this, in completing this form (unless otherwise specifically stated for individual items of assets, liabilities or equity), institutions are requested to follow the basis that is used for the preparation of its annual financial statements in accordance with the Australian accounting standards, specifically in regard to the:
interpretation/definition of specific asset, liability and equity items;
appropriate measurement basis for asset, liability and equity items; and
netting of financial assets and financial liabilities.
If additional clarification is required for specific asset, liability or equity items in ARF 322.0, reference should be made to the instructions provided for ARF 320.0 Statement of Financial Position (Domestic Books), ARF 321.0 Statement of Financial Position (Offshore Operations) and ARF 323.0 Statement of Financial Position (Licensed ADI) as appropriate.
Specific instructions
Section D: Additional information required by APRA
1. to 5.
Provide a summary of financial assets and liabilities balances categorised in accordance with AASB 139.
In item 1, financial assets available-for-sale include as part of loans and advances those “tainted” held-to-maturity investments that can no longer be classified as held-to-maturity investments.
Reconciliation of loan loss provisions
This section reconciles the amounts disclosed as loan loss provisions under International Financial Reporting Standards with APRA reporting on a gross basis. Parts of the Specific Provisions and General Reserve for Credit Losses (as defined by Prudential Standard APS 220 Credit Quality) may have come only from collective provisions or may have been created only for prudential purposes.