The Australian Prudential Regulation Authority (APRA) today released an overview paper on the ‘Adoption of International Financial Reporting Standards - prudential implications’ that will assist APRA-regulated institutions in their preparations for IFRS, which come into effect from the first reporting period on or after 1 January 2005. The paper is available at: http://www.apra.gov.au/adi/Other-Information-for-ADIs.cfm, http://www.apra.gov.au/General/Other-Information-for-GIs.cfm, http://www.apra.gov.au/Superannuation/Other-Information-for-Superannuation.cfm, http://www.apra.gov.au/Life/Other-Information-for-Life-Insurance.cfm, http://www.apra.gov.au/Friendly/Other-Information-for-Friendly-Societies.cfm

APRA’s Chairman, Dr John Laker, said the paper would aid key decision-makers in APRA-regulated institutions to identify and assess the prudential impact and any associated risks for their entity as a result of implementing IFRS. It will be followed by a series of more detailed discussion papers dealing with key issues.

The paper also provides a qualitative overview of APRA’s approach to IFRS; interim prudential and statistical reporting arrangements; key issues arising from adoption of IFRS and accounting and prudential implications for each key issue; and industry-specific concerns arising from IFRS.

“APRA continues to take a measured approach in its response to the implementation of IFRS and will not be making any IFRS-related changes to prudential and reporting standards before 1 July 2005 at the earliest,” Dr Laker said.

From 1 January 2005, authorised deposit‑taking institutions should apply Australian accounting standards current as at 31 December 2004 to the clean sale requirements of Prudential Standard APS 120 and Guidance Note AGN 120.3 in relation to securitisation transactions. This approach will apply until further notice from APRA and also pertain to any extension of these requirements to general insurers as envisaged in APRA’s discussion paper ‘Prudential Supervision of General Insurance - Stage 2 Reforms (November 2003)’.

The treatment of Tier 1 capital covered in APRA’s letter of 5 April 2004, ‘Treatment of Tier 1 Capital Instruments’, is applicable until further notice from APRA: http://www.apra.gov.au/ADI/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=6963
In addition, APRA will use Australian accounting standards current as at 31 December 2004 for assessing Tier 1 instruments until further notice.


The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry.APRA is funded largely by the industries that it supervises. It was established on 1 July 1998.APRA currently supervises institutions holding approximately $2 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.