Instruction Guide

This instruction guide is designed to assist in the completion of Reporting Form ARF 114.0 Standardised – Operational Risk (ARF 114.0). ARF 114.0 captures the calculation of the capital requirement for operational risk using the standardised approach. In completing ARF 114.0, authorised deposit-taking institutions (ADIs) should refer to Prudential Standard APS 114 Capital Adequacy: Standardised Approach to Operational Risk (APS 114).

General directions and notes

Reporting entity

ARF 114.0 is to be completed at Level 1 and Level 2[2] by each ADI that satisfies both of the following paragraphs:

(a) it is applying the standardised approach to operational risk to all or part of its business activities for capital adequacy purposes (refer to APS 114 or Prudential Standard APS 115 Advanced Measurement Approaches to Operational Risk, as appropriate); and

(b) it is included in one of the classes of ADI to which ARF 114.0 applies, as set out in the table below.

If an ADI is a subsidiary of an authorised non-operating holding company (NOHC), the report at Level 2 is to be provided by the ADI’s immediate parent NOHC.[4]

Securitisation deconsolidation principle

Except as otherwise specified in these instructions, the following applies:

1. Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that meets APRA’s operational requirements for regulatory capital relief under Prudential Standard APS 120 Securitisation (APS 120):

(a) special purpose vehicles (SPVs) holding securitised assets may be treated as non-consolidated independent third parties for regulatory reporting purposes, irrespective of whether the SPVs (or their assets) are consolidated for accounting purposes; and

(b) the assets, liabilities, revenues and expenses of the relevant SPVs may be excluded from the ADI’s reported amounts in APRA’s regulatory reporting returns.