The Australian Prudential Regulation Authority (APRA) updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities. APRA also published the finalized reporting standard on ABS/RBA loans and finance leases (ARS 720.1), along with a response letter on the submissions received on proposed updates to ARS 720.1. APRA, the Australian Bureau of Statistics (ABS), and the Reserve Bank of Australia (RBA) have updated ARS 720.1 to correctly align it with the final version of APS 220, the prudential standard on credit risk management, which was released in December 2019.
The consultation on ARS 720.1 was launched in August 2021 and was open for one month. APRA received two submissions: one from an industry body and one from an authorized deposit-taking institution. Submissions were supportive of the changes and the decision to delay implementation of the new ARS 720.1 to align with the start of reporting of the interim credit risk reporting standard ARS 220.0 (Credit Quality). Both submissions also requested APRA move the commencement from January 2022 to March 2022, the first reporting period of the new ARS 220.0. To allow authorized deposit-taking institutions to align their reporting with the updated credit risk framework, APRA will delay implementation of the updates to ARS 720.1. The updated ARS 720.1 will now apply to reporting periods ending on or after March 31, 2022. APRA is of the view that delaying the commencement will provide a clean basis for authorized deposit-taking institutions to change their reporting to the new credit risk framework and provide them with more time to make this transition.
ARS 720.1 contains the reporting forms ARF 720.1A and ARF 720.1B, which collect information for use by ABS and RBA for various purposes, including the compilation of Australia’s National Accounts and the calculation of the credit aggregates. This information may also be used by APRA for prudential and publication purposes. This reporting standard is an Economic and Financial Statistics (EFS) Reporting Standard, which applies to certain authorized deposit-taking institutions and registered financial corporations.
- Updated Validation Rules (XLSX)
- Updated Derivation Rules (XLSX)
- Overview of Validation and Derivation Rules
- News Release on ARS 720.1
- APRA Letter and Revised Standard
Keywords: Asia Pacific, Australia, Banking, ARS 720.1, RBA, Credit Risk, APS 220, EFS, Loans and Finance Leases, Reporting, APRA
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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