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APRA and XBRL:

Renewed interest after seven yearsDr Steve Davies

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Overview

• APRA’s role• APRA Statistics improvement program• Use of XBRL• Outcome• Red tape review posed risks and opportunities• APRA and SBR• How to promote XBRL?

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APRA’s 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

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… supervising a diverse range of institutions…

APRA-regulated entities at 31 December 2008

Number

Assets ($ billion)

Authorised deposit-taking institutions (ADIs) 200 2,755.8

Banks 59 2,649.4 Building societies 11 21.0 Credit unions 122 45.4 Other ADIs, including SCCIs 8 10.0

General insurers 131 93.4 Life insurers 32 210.4 Friendly societies 23 6.2 Superannuation funds 5,097 595.0

… and collecting data from a range of non-regulated institutions

• Discretionary mutual funds

• Medical defence organisations

• Insurance intermediaries

• Registered financial corporations

• Wholesale funders

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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 Australia’s 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

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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

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• 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

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2000-2001 Developed infrastructure

• New legislative framework

• New IT systems

2001-now Introduced modern data collections and

kept them up to date, eg IFRS, Basel II

2004-now Focus on data quality and use of the data

Statistics improvement program

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• Financial Sector (Collection of Data) Act 2001

- 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

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• Secrecy provisions of APRA Act 1998

- 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

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• 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) …

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• Prudential data

- Financial accounts

- Capital adequacy

- Risk data

• Statistical data

- Monetary aggregates

- National accounts

- Market share

Data collections now contain

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• 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

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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

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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

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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

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Future for APRA data collection under SBR

• D2A stays

• Need to upgrade D2A to XBRL version 2.1

• Harmonise APRA’s 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.

• APRA’s 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?

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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?

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Our IT infrastructure gives us the platform

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Example forms in D2A

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Example: daily feed to RBA in XBRL