Basis of preparationBasis of preparation

Basis of preparation

In completing these forms, unless specifically stated otherwise, institutions are to follow the basis that is used for the preparation of the annual financial statements in accordance with the Australian accounting standards, specifically in regard to the:

• interpretation/definition of specific revenue and expense items;
• appropriate measurement basis of items of revenue and expense; and
• netting of items of revenue and expense (profit and loss).

Actuarial valuations and calculations included in, or used in the preparation of, the form must be in accordance with prudential standards. APRA recognises that for some periods life insurance companies may not carry out full accounting, actuarial valuation and audit procedures or do so in sufficient time to report on the return (for quarterly returns). Where this applies, some estimation could be applied reasonably at the current quarter to determine an approximation to the results that would be obtained if full detailed valuations had been carried out.

APRA expects that all life companies will utilise their best endeavours to ensure that any estimations are a good and reasonable basis of approximation. The estimation process needs to be sufficiently rigorous in order to be acceptable and at a minimum should be of a standard that would be considered appropriate for use in reporting to management and the Board.

If additional clarification is required for specific revenue or expense items in these forms, reference should be made to the section “Instructions for specific items”, which is provided as a guide.

For the purposes of reporting under these forms, contracts are to be classified in accordance with Prudential Standard LPS 350 Contract Classification for the Purpose of Regulatory Reporting to APRA (LPS 350).