Financial Sector (Collection of Data) (reporting standard) determination No. 6 of 2007 - MRS 140.0 - Investments - Direct Interest Rate Holdings
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This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.
Reporting Obligations
MDOs are required to report on a half-yearly basis (that is, six-monthly intervals), based on their financial year.
For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.
For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.
Audit Requirements
This form must be subject to audit review and testing on an annual basis or more frequently, if necessary, to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.
Definitions
Definitions for data reporting items required by this form have been provided, where possible, in the instructions under the section headed ‘Specific Instructions’.
Basis of Preparation
Unit of Measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
Assets
The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8 Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).
MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
MRF 140.3 Investments – Loans and Advances (MRF 140.3)
MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)
Investments reported in this form (and other forms listed above) must be measured at fair value. These investments must not be valued at cost. Fair value has the same meaning as defined in AASB 139 Financial Instruments: Recognition and Measurement (AASB 139),
Holding of units in unit trusts
Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:
Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
Holdings must be disclosed as unlisted or listed units.
Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing
Treatment is to be consistent with AASB 139.
Where the transferee of the security effectively receives a lender’s rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities are not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.
Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.
Securities transacted not settled (i.e. trade date accounting)
Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlement periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off-Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).
Related party/entity
Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124) .
Parent
Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).
Subsidiaries
Subsidiaries are to be interpreted in accordance with AASB 127.
Associates
Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).
Joint ventures
Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).
Specific Instructions
Deposits or placements
These primarily include deposits or placements that are of a money market type basis. These may be available on demand (11am accounts, money market or 24-hour money), and must be held as part of the MDO’s investments portfolio.
Do not include any deposits at call that are used by the MDO for daily liquidity/operations (i.e. funds that are not specifically included as investment funds). These are to be disclosed as deposits at call in MRF 300.0.
1.1 Authorised Deposit-taking Institutions (ADIs)
Includes funds lodged with banks, credit unions, building societies and other ADIs authorised under the Banking Act 1959.
1.2 Other
Include placements and money market accounts held with entities other than ADIs.
Short-term securities
‘Short-term’ refers to holdings of securities with an original term to maturity (as opposed to residual term to maturity), that is equal to or less than 1 year.
Bills of Exchange
2.1 Bank accepted bills
Report bills of exchange that are accepted by a bank authorised under the Banking Act 1959 with consent to use the word ‘bank’.
2.2 Other
Report all other bills of exchange other than bank accepted bills.
Commercial paper and promissory notes issued by:
Include certificates of deposit, other one name paper and securities lent or sold under repurchase agreements, as per the categories below.
2.3 ADIs
ADIs include banks, credit unions and buildings societies authorised under the Banking Act 1959.
2.4 General insurers
Includes institutions authorised under the Insurance Act 1973 that undertake general insurance business.
2.5 Securitisers
These are financial vehicles that issue short and/or long-term securities (called asset-backed securities) using specifically selected assets (e.g. mortgages, receivables). They provide backing (collateral) for the securities and generate the payment streams necessary to fulfil interest and principal requirements for investors. Include holdings of mortgage backed securities and other asset backed securities (other than mortgage backed).
2.6 Private trading corporations
Private trading corporations are those owned by the private sector. Include all Australian resident private corporate trading enterprises and non-profit institutions (exclude non-resident enterprises) and intra-group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 and parent companies with significant holdings of shares in private trading companies.
2.7 Registered Financial Corporations (RFCs)
Registered Financial Corporations refers to corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified as Categories D or Other. A list of corporations registered under the Financial Sector (Collection of Data) Act 2001 and their classification are available on the APRA website.
Include:
Money market corporations (D); and
Other (formerly categories E, F and G).
Exclude:
Intra group financiers and retailers registered under Financial Sector (Collection of Data) Act 2001.
Cash management trusts (Note cash management trusts are to be reported in MRF 140.4).
2.8 Australian Commonwealth Government Corporations
Trading enterprises owned by the Commonwealth are those businesses which are owned and controlled by the Australian Commonwealth Government.
Include all resident trading enterprises owned 50% or more by the Commonwealth Government or controlled by the Commonwealth Government through legislation, decree or regulation.
2.9 Australian Commonwealth Government
Include Treasury notes.
Exclude:
Treasury bonds (include these in long term securities);
Government trading enterprises (report as Australian Commonwealth Government Corporations);
Departments of the Australian Capital Territory and Northern Territory Governments (report as Other Australian Government (State, territory and local government); and
Reserve Bank of Australia and Commonwealth Government financial institutions (record as Australian Commonwealth Government Corporations).
2.10 Other Australian Government (State, Territory and local government)
Include securities issued by other Australian governments.
Other Australian governments include State, Territory and local governments that provide non-market goods and services principally financed by taxes to regulate economic activity, maintain law and order and to redistribute income and wealth by means of transfers. They provide non-market goods and services, free of charge or at nominal prices well below the cost of production.
2.11 National government of a foreign country
Include securities issued by a national government of foreign country.
2.12 Other
Include securities issued by counterparties other than those specifically listed above.
Long-term debt securities
‘Long-term’ refers to holdings of securities which have an original term to maturity (as opposed to residual term to maturity), that is greater than 1 year. These should be categorised in the same manner as short-term securities (refer 2.3-2.12 above).
Include commercial paper, other one name paper and securities lent or sold under repurchase agreements.
Total direct interest rate investments
The investments detailed above should also be reported in accordance with the applicable counterparty grade (refer items 4.1-4.5). These grades are detailed in Attachment 1.
The aggregate balance of the investments detailed above that are denominated in a currency other than the Australian currency should also be reported (refer item 4.6).
Total direct interest rate investments
Report deposits/placements with, or debt securities issued, in accordance with the categories detailed on the form.
ATTACHMENT 1: Counterparty Grades
Grade
Standard & Poor’s
Moody’s
AM Best
Fitch
1
AAA
Aaa
A++
AAA
2
AA+AAAA-
Aa1Aa2Aa3
A+
AA+AAAA-
3
A+AA-
A1A2A3
AA-
A+AA-
4
BBB+BBBBBB-
Baa1Baa2Baa3
B++B+
BBB+BBBBBB-
5
BB+ or below
Ba1 or below
B or below
BB+ or below
Unrated assets or exposures should be classified as Grade 4.
MDOs should, in general, use the same rating agency for determining counterparty gradings. Where the MDO has counterparties with multiple ratings from two or more of the rating agencies in the table above, the MDO should consistently choose the ratings of a single agency whenever possible. For example, the MDO may have a number of counterparties that are rated by Standard & Poor’s and AM Best. In this case, the MDO should choose a single agency that will be consistently used whenever the individual ratings conflict.