Part Netting - Financial Sector (Collection of Data) (reporting standard) determination No. 84 of 2006 - Reporting Standard GRS 310.3 (2007) Investment and Operating Income and Expense - Netting | Zoe
Financial Sector (Collection of Data) (reporting standard) determination No. 84 of 2006 - Reporting Standard GRS 310.3 (2007) Investment and Operating Income and Expense
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Turn the raw legal text into a practical explanation grounded in Financial Sector (Collection of Data) (reporting standard) determination No. 84 of 2006 - Reporting Standard GRS 310.3 (2007) Investment and Operating Income and Expense.
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 AASB7 ‘Financial Instruments: Disclosures’, AASB 139 ‘Financial Instruments: Recognition and Measurement’ and AASB 132 ‘Financial Instruments: Presentation’.
Related party disclosure
Amounts due from, loans to, debentures of, shares in, or units in a trust or body corporate that is related to the insurer are to be disclosed for items of assets and liabilities where indicated in the form.
For the purposes of this form, related bodies corporate are to be interpreted consistently with the meaning as in AASB 124 ‘Related Party Disclosures’.
In accordance with AASB 124, related party means a party that directly or indirectly through one or more intermediaries:
(a) controls, is controlled by or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);
(b) has significant influence over the entity or has joint control over the entity; or
(c) is an associate (as defined in AASB 128 ‘Investments in Associates’) of the entity; or
(d) is a joint venture in which the entity is a venturer (see AASB 131 ‘Interests in Joint Ventures’); or
(e) is a member of the key management personnel of the entity or its parent; or
(f) is a close member of the family of any individual referred to in (a), (b) or (e); or
(g) is an entity that its controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (e) or in (f); or
(h) is a post-employment benefit plan for the benefit of the employees of the entity, or of any entity that is a related party of the entity.
Specific Instructions
For the purposes of this form, income and expenses are to be disclosed into the following categories:
(i) Parent/controlled entities
Report the income received or receivable and expenses paid or payable to:
the parent (direct or ultimate parent of the group) of the licensed insurer; and
entities controlled by the reporting insurer; or
entities controlled by the foreign parent insurer for branches.
(ii) Other related parties
Report the income received or receivable and expenses paid or payable to all other related entities (other than disclosed in the category Parent/Controlled entities). Refer to the definition of related parties provided earlier in the instruction guide.
(iii) Other
Report income received or receivable and expenses paid or payable to all other sources (excluding Parent/controlled entities and other related parties).
Investment Income
Interest
Interest is the income normally receivable on assets such as deposits, loans, bonds, and accounts receivable. Interest must be recognised and measured in accordance with the Australian accounting standards. This will mean that interest income is recognised on an accrual basis, unless the asset is considered to be impaired/non-performing in which interest is to be recognised on a cash basis. Include:
Coupon payments from fixed interest securities (i.e. Commonwealth Government Bonds);
Earnings on discounted securities (i.e. bank accepted bills);
Interest from deposits with banks and non-bank financial intermediaries;
Interest from loans and advances (to related and unrelated entities); and
Interest on finance leases.
Derivatives
Report the interest received/receivable in relation to derivative positions e.g. from swap contracts. If interest income from derivative contracts is with the parent/controlled entities or other related entities, report interest income under the appropriate headings above, do not duplicate reporting under this heading.
Total interest income
This is automatically calculated by the form and represents the total interest income from all sources.
Dividends
Dividend is the income receivable on assets such as shares, units and trusts. For the purposes of this form, dividend income is to be disclosed into the following categories:
Total dividend income
This is automatically calculated by the form and represents the total dividend from all sources.
Rental income
Rent is the income receivable on assets such as land and property.
Total rental income
This is automatically calculated by the form and represents the total rental income from all sources.
Trust distributions
This refers to the distributions received or receivable in relation to investments in trust vehicles.
Total trust distributions
This is automatically calculated by the form and represents the total trust distributions from all sources.
Other distributions
Specify the nature of other forms of distributions not specifically reported in the form under the above categories.
Total Other distributions
This is automatically calculated by the form and represents the total other distributions from all sources.
Foreign exchange gains/losses relating to Investments (realised and unrealised)
(i) Investments (other than derivatives)
Report realised and unrealised currency exchange gains/losses relating to the translation/conversion into Australian currency of investments (e.g. every investment other than derivative positions) denominated in a currency other than the Australian currency. Do not report the gains and losses attributable to the movement in the fair value of the underlying investments that are denominated in a foreign currency, these are reported below under “Change in fair value of investments”. Only report the gain/loss that is attributable to movements in the currency value the investments are denominated in, respective to the Australian currency.
(ii) Derivatives
Report exchange gains/losses relating to the currency translation/conversion in the Australian currency of derivative contracts held in relation to the underlying investment portfolios (e.g. as hedges of the interest rate or equity investment portfolios or as outright position taking - altering the asset allocation strategy). Do not report the gains and losses attributable to the movement in the fair value of the derivative position that are denominated in a foreign currency, these are reported below under “Change in fair value of investments”. Only report the gain/loss that is attributable to movements in the currency value that the derivative contract is denominated in, respective to the Australian dollar.
Total foreign exchange gains/losses
This is automatically calculated by the form and represents the total foreign exchange gains/losses relating to investments and derivatives.
Change in fair value of Investments
(a) Unrealised gains/losses
Change in net fair value is the increase or decrease in the fair value of each asset compared to the value of that asset at the beginning of the reporting period. These assets are still owned by the insurer at the end of the period, they have not been sold as a result the gains or losses on the assets are termed unrealised. If the assets are sold during the reporting period, then the gains or losses are realised and are to be disclosed separately under part (b) “Realised gains/losses”.
Only include the movement in the fair value of the asset. Do not include the movement in the value of the currency comparative to the Australian dollar if the asset is denominated in a currency other than the Australian dollar. Movements in value attributable to the movements in the currency exchange rates are to be separately disclosed under the heading “Foreign exchange gains/losses (realised and unrealised)”.
For the purposes of this return unrealised gains/losses must be disclosed into the following categories:
Direct Investments:
This relates to investments where the reporting insurer holds direct title/ownership of the underlying asset (i.e. holding of debt securities, listed equity securities, freehold property).
Interest rate investments
Disclose any unrealised gain/loss on the interest rate investments portfolio. Do not include unrealised gains/losses on interest rate related derivative contracts. These are to be disclosed separately under the heading “Derivatives”.
Equity investments
Disclose any unrealised gain/loss on the equity investments portfolio. Do not include unrealised gains/losses on equity related derivative contracts. These are to be disclosed separately under the heading Unrealised gains/losses - “Derivatives”.
Property investments
Disclose any unrealised gain/loss on the property portfolio.
Loans and advances
Disclose any unrealised gain/loss on the loans and advances portfolio. This is only applicable where the reporting insurer revalues the loans and advances portfolio to fair value.
Derivatives (other than foreign exchange)
Disclose unrealised gains/losses in the fair value of the derivative exposure. Do not include unrealised or realised movements in foreign currency derivative contracts, as these are to be separately disclosed under the heading “Foreign exchange gains/losses (realised and unrealised)”.
Indirect Investments:
This relates to investments where the reporting insurer does not hold direct title/ownership of underlying assets (i.e. holding of units in listed or unlisted unit trusts).
Units in trusts/managed investment vehicles
Disclose the change in fair value (unrealised gain/loss) of holdings of units in trusts or other management investment vehicles.
Total unrealised gains/losses
This is automatically calculated by the form and represents the total unrealised gains and losses.
(b) Realised gains/losses
Change in fair value is the increase or decrease in the fair value of each asset at the date of its disposal, compared to the value of that asset at the beginning of the reporting period or when last revaluation was recognised. These assets have been sold and as a result the gains or losses on the assets are termed realised. If the assets have not been sold during the reporting period, then the gains or losses are unrealised and are to be disclosed separately under part (a) “Unrealised gains/losses”.
Only include the movement in the fair value of the asset. Do not include the movement in the value of the currency comparative to the Australian dollar if the asset is denominated in a currency other than the Australian dollar. Movements in value attributable to the movements in the currency exchange rates are to be separately disclosed under the heading “Foreign exchange gains/losses (realised and unrealised)”.
For the purposes of this return realised gains/losses must be disclosed into the following categories:
Direct Investments:
This relates to investments where the reporting insurer holds direct title/ownership of the underlying asset (i.e. holding of debt securities, listed equity securities, freehold property).
Interest rate investments
Disclose any realised gain/loss on the interest rate investments portfolio. Do not include realised gains/losses on interest rate related derivative contracts. These are to be disclosed separately under the heading “Derivatives”.
Equity investments
Disclose any realised gain/loss on the equity investments portfolio. Do not include realised gains/losses on equity related derivative contracts. These are to be disclosed separately under the heading realised gains/losses - “Derivatives”.
Property investments
Disclose any realised gain/loss on the property portfolio.
Loans and advances
Disclose any realised gain/loss on the loans and advances portfolio. This is only applicable where the reporting insurer revalues the loans and advances portfolio to fair value.
Derivatives (other than foreign exchange)
Disclose realised gains/losses. Do not include realised gains and losses on movements in foreign currency derivative contracts, as these are to be separately disclosed under the heading “Foreign exchange gains/losses (realised and unrealised)”.
Indirect Investments:
This relates to investments where the reporting insurer does not hold direct title/ownership of underlying assets (i.e. holding of units in listed or unlisted unit trusts).
Units in trusts/managed investment vehicles
Disclose the realised gain or loss arising on disposal of holdings of units in trusts or other management investment vehicles.
Total realised gains/losses
This is automatically calculated by the form and represents the total realised gains and losses.
Other investment income
Report investment income from sources not specifically reported elsewhere in the form.
Provide a brief description in the space provided in the form, of the nature of the income.
Total investment income
This is automatically calculated by the form and represents the sum of interest income, dividends, rental income, foreign exchange gains/losses (realised and unrealised), change in fair value of investments (realised and unrealised).
Total investment income, which is attributable to shareholders funds.
Disclose that value of total investment income that is associated or attributable to the investment of shareholders funds only.
Other operating income
Include income earned which does not constitute investment income and is reported under the section titled “Investment Income” i.e. income or expense that does not relate to the investment portfolio of the general insurer. Some of these items will not be applicable for branch operations.
Realised gains/losses on disposal of:
Insurance portfolios
Disclose any realised gain or loss recorded on the sale or transfer of insurance portfolios.
Investments in controlled entities (this is not applicable for branch operations)
Disclose any realised gain or loss recorded on the disposal (partial and full disposal) of the investment in controlled entities. This should be done in compliance with AASB 127 ‘Consolidated and Separate Financial Statements’.
Investments in associates/joint ventures
Disclose any realised gain or loss recorded on the disposal (partial and full disposal) of the investment in associated entities or joint venture entities/operations. Joint ventures are to be interpreted as defined in AASB 131 ‘Interests in Joint Ventures’ and Associates is to be interpreted as defined in AASB 128 ‘Investments in Associates’.
Other assets
Disclose any realised gain or loss recorded on the disposal of other assets not specifically disclosed above or under “Investment income” section.
Total realised gains/losses
This is automatically calculated by the form and represents the total realised gains and losses.
Foreign exchange gains/losses (realised and unrealised)
Borrowings
Report realised and unrealised currency exchange gains/losses relating to the translation/conversion into Australian currency of the value of borrowings that are denominated in a currency other than the Australian Dollar.
Record the exchange gains losses relating to borrowings that are denominated in a currency other than Australian currency into the following:
(i) Underlying exposure
This is the exchange gains/losses relating to the conversion of the underlying/physical borrowing.
(ii) Derivatives (hedging borrowing exposure)
This is the exchange gains/losses relating to the conversion of any derivative exposure taken by the insurer to hedge the currency risk associated with the underlying/physical borrowing.
Claims liability
Report any realised and unrealised currency exchange gains/losses relating to the translation/conversion into Australian currency of the value of outstanding claims liabilities that are to be paid/settled in a currency other than the Australian Dollar.
Record the exchange gains losses relating to claims liability into the following:
(i) Underlying exposure
This is the exchange gains/losses relating to the conversion of the underlying claim liability.
(ii) Derivatives (hedging claims exposure)
This is the exchange gains/losses relating to the conversion of any derivative exposure taken by the insurer to hedge the currency risk associated with the settlement of the underlying claim liability.
Other
Report any realised and unrealised currency exchange gains/losses relating to the translation/conversion into Australian currency of other liabilities not specifically required above. Include the currency exchange gains/losses on any derivative contracts taken to hedge movements in borrowings and outstanding claims liabilities that are denominated in a currency other than the Australian Dollar.
Total foreign exchange gains/losses
This is automatically calculated by the form and represents the total foreign exchange gains/losses relating to borrowings, claims liability and Other items.
Net increment/decrement (or write down) from the revaluation of:
Investments in controlled entities (not applicable for branch operations)
Disclose the value of any increment or write down in recoverable value of investment in controlled entities that is taken directly to the Statement of Financial Performance. Do not include revaluation increment or decrement that are taken to an Asset Revaluation Reserve in accordance with AASB 140 ‘Investment Property’.
Investments in associates/joint ventures
Disclose the value of any increment or write down in recoverable value of investment in associates or joint ventures that is taken directly to the Statement of Financial Performance. Do not record revaluation increment or decrement that are taken to an Asset Revaluation Reserve in accordance with AASB 140 ‘Investment Property’.
Note:
This is not applicable where the reporting insurer accounts for these interests by the use of the equity method of accounting.[7]
Other assets
Disclose the value of any increment or write down in recoverable value of other assets (except investments) not separately disclosed above, that are taken to the Statement of Financial Performance. Note do not record any values attributable to assets recorded as investments, these must be disclosed in the appropriate section under the heading “Investment Income”. Do not record revaluation increment or decrement that are taken to an Asset Revaluation Reserve.
Total Net increment/decrement (or write down) from revaluation
This is automatically calculated by the form and represents the total net increment/decrement (or write down) from revaluation.
Share of net profits (losses) of associates and joint ventures accounted for using the equity method of accounting
This represents income/loss recognised by the reporting insurer where the equity method is adopted to account for the investment in the associate or joint venture as required by AASB 128 ‘Investments in Associates’ and AASB 131 ‘Interests in Joint Ventures’.7
Fees and commissions
Disclose the value of all fees and commissions income earned into the appropriate categories required in the form. Do not include commission revenue that is associated with underwriting activities and is disclosed as commission revenue in the calculation of underwriting expenses in GRF 310.0 Statement of Financial Performance.
Life Insurance
Disclose the value of income recognised from life insurance activities/business. Income earned is to be recognised in accordance with AASB 1038 ‘Life Insurance Contracts’.
Other operating income
Disclose the value of any other operating income not separately disclosed above. Provide a brief description of the nature of this income in the space provided in the form.
Total other operating income
This is automatically calculated by the form and represents the totals for the following “Other operating income” categories:
Realised gains/losses on disposal;
Foreign exchange gains/losses (realised and unrealised);
Net increment/decrement (or write down) from the revaluation;
Share of net profits (losses) of associates and joint ventures accounted for using the equity method;
Fees and Commissions;
Life insurance; and
Other operating income.
Operating expenses
Include expenses incurred (i.e. paid or payable) and recognised which are not ordinarily directly associated with the generation of Investment Income (i.e. expense that are not directly related to the investment portfolio of the general insurer). They do not include underwriting expenses reported on GRF 310.0 Statement of Financial Performance.
Interest expense
Borrowings
Report the interest expense recognised with funds classified as borrowings in the Statement of Financial Position.
Loan capital
Report the interest expense recognised with funds classified as Loan capital in the Statement of Financial Position.
Other interest bearing liabilities
Report the interest expense associated with other interest bearing liabilities not separately disclosed above.
Derivatives
Report the interest expense associated with derivative contracts (i.e. swap contracts).
Total interest expense
This is automatically calculated by the form and represents the total interest expense.
Personnel expenses
Wages & salaries
Report the total expenses relating to the payment of employees that represent wages and salaries. Wages and salaries expense in relation to employee expenses are to be recognised in accordance with AASB 119 ‘Employee Benefits’.
Other employee related costs
Report all other costs associated with the employment of employees other than direct salary and wages expense as disclosed above.
Share-based payment expenses
Report total share-based payment expenses in accordance with AASB2 ‘Share-based Payment’.
Total personnel expense
This is automatically calculated by the form and represents the total personnel expense.
Occupancy and Equipment expenses
Depreciation/impairment of:
(i) Plant and equipment
Record the amount of depreciation/impairment recognised for plant and equipment. Depreciation expense is to be calculated in accordance with the requirements of AASB 116 ‘Property, Plant and Equipment’.
(ii) Other
Record the amount of depreciation/impairment recognised for other depreciable assets not included above (e.g. motor vehicles). Depreciation expense is to be calculated in accordance with the requirements of AASB 116 “Property, Plant and Equipment”.
Operating lease rentals
Record the amount of operating lease rentals paid/payable on leased assets (e.g. motor vehicles).
Other
Record amounts of all other types of occupancy and equipment expense not separately disclosed above.
Total Occupancy and Equipment expenses
This is automatically calculated by the form and represents the total occupancy and equipment expenses.
Other operating expenses
Report the operating expenses of the business in accordance with AASB 1023 and other applicable accounting standards.
Impairment of:
Goodwill
Disclose the impairment losses of goodwill for the reporting period. Goodwill is to be tested for impairment whenever there is indication that goodwill may be impaired in accordance with AASB 138 ‘Intangible Assets’.
Intangible assets with an infinite life
Report the impairment losses of intangible assets with infinite lives.
Other assets
Report the amortisation charge against other assets not specifically noted above or under Occupancy and Equipment expense in accordance with. AASB 136 ‘Impairment of Assets’.
Amortisation of:
Intangible assets with a finite life
Report the amortisation charge against intangible assets with a finite life.
Investment management fees
Record the amount of fees paid/payable that relate to the management/investment of the insurers investment portfolio. Include fees paid to independent third parties as well as related entities of the insurer/insurance group.
Other management fees
Record the amount of management fees paid/payable other than that disclosed as fees paid for the management/investment of the insurers investment portfolio. Include fees paid to independent third parties as well as related entities of the insurer/insurance group.
Fees for:
Audit related services
Record the fees paid/payable that relate to the provision of audit related services to the insurer/insurance group by the appointed external audit firm.
Non-audit related services provided by audit firm
Record the fees paid/payable, that relate to the provision of non-audit related services by the appointed external audit firm.
Consulting fees
Record the amount of all other fees paid/payable by the insurer/insurance group other than that already specifically disclosed elsewhere in the form that relate to other professional services. Include fees paid to independent third parties as well as related entities of the insurer/insurance group.
Actuarial fees
Record the fees paid/payable that relate to the payment of actuarial services.
Directors fees
Record the fees paid/payable that relate to the payment of directors fees for the discharge of their service.
Bad & doubtful debts
This includes the amount representing increments to a provision for doubtful debts/impairment as well as bad debts written off directly against the profit and loss (i.e. where no provision has been created). This can be recorded in relation to receivables and loans and advances.
Other operating expenses
Record all other operating expenses not specifically disclosed above.
Total Other Operating Expenses
This is automatically calculated by the form and represents the sum of the following categories:
Impairment of Goodwill;
Impairment of Intangible Assets with an infinite life;
Impairment of Other assets;
Amortisation of Intangible Assets with a finite life;
Investment management fees;
Other management fees;
Fees for audit and non-audit related services provided by the audit firm;
Consulting fees;
Actuarial fees;
Directors fees;
Bad & doubtful debts; and
Other operating expenses.
Total Operating Expenses
This is automatically calculated by the form and represents the sum of: