1 APRA and XBRL: Renewed interest after seven years Dr Steve Davies

2 Overview APRAs role APRA Statistics improvement program Use of XBRL Outcome Red tape review posed risks and opportunities APRA and SBR How to promote XBRL?

3 APRAs role is to promote prudent behaviour of financial institutions to enhance public confidence. APRA must balance financial safety with efficiency, competition, contestability and competitive neutrality. APRA is the integrated prudential regulator

4 … supervising a diverse range of institutions… APRA-regulatedentities at 31 December 2008 Number Assets ($ billion) Authorised deposit -taking institutions (ADIs) 200 2,755.8 Banks 59 2,649.4 Building societies Credit unions Other ADIs, including SCCIs General insurers Life insurers Friendly societies Superannuation funds 5,

… and collecting data from a range of non-regulated institutions Discretionary mutual funds Medical defence organisations Insurance intermediaries Registered financial corporations Wholesale funders

6 Our vision is of a prudentially well-managed, stable, efficient and competitive finance sector brought about through well-informed decision making. Our mission is to provide essential information and analysis on Australias financial sector that is deservedly trusted and used by APRA, other regulators, policymakers, researchers, industry and the public. APRA has become a national financial sector statistics agency

7 We provide supervisors with: Timely access to accurate returns from entities Time-series and peer-group reports for analysis The capability to create own reports Information on compliance of entities Responses from entities to queries … primarily supporting supervision

8 We provide the RBA and ABS with daily data feeds We publish statistics on each regulated industry to inform policymakers, the industry, researchers, analysts & public We provide senior management of regulated entities with supervisory reports for them to track their performance We provide customised statistics on request … and other key decision makers

Developed infrastructure New legislative framework New IT systems 2001-nowIntroduced modern data collections and kept them up to date, eg IFRS, Basel II 2004-nowFocus on data quality and use of the data Statistics improvement program

10 Financial Sector (Collection of Data) Act APRA can determine reporting requirements - Reporting entities must lodge on time - APRA can ask questions - APRA can require amendments - Non-compliance is an offence - APRA can impose penalties Our legislative framework gives us the authority

11 Secrecy provisions of APRA Act APRA must treat data as strictly confidential - APRA can pass data onto RBA and ABS - APRA can pass onto others with permission - APRA can determine data to be non-confidential after due consultation … and the responsibility

12 Provides secure encryption Uses digital certificates for authentication and authorisation Only downloads relevant forms Allows import of data from host systems Validates data prior to submission Allows retrieval of previously submitted data Direct to APRA (D2A) …

13 Prudential data - Financial accounts - Capital adequacy -Risk data Statistical data -Monetary aggregates -National accounts -Market share Data collections now contain

14 Internal APRA consultation - for relevance to supervision Tripartite Data Committee - to integrate requirements of RBA and ABS Consultation with industry - to ensure data are collectable in practice Consultation ensures useful data collections

15 Why XBRL? Needed format to import data and transfer data Microsoft Excel problematic XBRL emerging standard Nothing to lose by adopting XBRL Also Little effort to update the taxonomy with systems/processes Little effort to reliably change data feeds Institutions required less support from APRA

16 Outcome All but two institutions submit electronically using D2A Over 95% lodge on time and remainder within days A lot of effort ensures data quality Many banks use Excel to produce XBRL for D2A, although bulk lodgers are the main beneficiaries XBRL taxonomy requires little maintenance within APRA and RBA/ABS

Rethinking regulation review In 2006, the Government review into regulatory burden made recommendations to: –develop a business reporting standard –eliminate overlaps in information provided to regulators –establish an integrated data collection portal Standard Business Reporting was born

18 Standard Business Reporting Over $200m multi-agency programme to: harmonise financial reporting from business-to-government into a single national taxonomy provide core IT services (routing, not sharing data) provide single authentication credential Primarily aimed at small/medium businesses through software vendors and intermediaries Expected $800m per year saving to the economy

19 Future for APRA data collection under SBR D2A stays Need to upgrade D2A to XBRL version 2.1 Harmonise APRAs 40,000 items into SBR taxonomy Replace authentication in D2A with SBR authentication Stay harmonised

SBR AU taxonomy harmonisation Over 9,000 items from around 90 forms across twelve federal and state agencies in scope. This reduced to less than 3,000 items. APRAs component reduced from 3,300 to 1,200 items. Most reduction came from dimensions, contexts and within- agency harmonisation. Less from across-agency harmonisation.

How much to promote XBRL? Potential benefits for institutions: Opportunity for financial institutions to use SBR for customer data Taxonomy discipline will reduce unnecessary duplication in reporting – use it or lose it Lower costs in aggregation/common software Guarantee? Competitors data available in XBRL feed? Help? Case studies?

22 Summary APRA is integrated prudential regulator and national financial sector statistics agency Implemented integrated suite of systems, legislation & reporting requirements Used XBRL because no downside and low maintenance All institutions voluntarily use D2A, some use XBRL Red tape review posed risks and opportunities APRA now harmonising with SBR How should best promote uptake by financial institutions?

23 This white area represents the recommended maximum area for graphics (tables, graphs, diagrams, photos) Our IT infrastructure gives us the platform

24 Recommended maximum area for graphics (tables, graphs, diagrams, photos) Example forms in D2A

25 Example: daily feed to RBA in XBRL