Commonwealth Numbered Regulations - Explanatory Statements

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AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY AMENDMENT REGULATIONS 2004 (NO. 1) 2004 NO. 277

The Australian Prudential Regulation Authority Act 1998 (the Act) establishes the Australian Prudential Regulation Authority (APRA).

Section 60 of the Act provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act

Subsection 56(5) of the Act enables a person (including a member or staff member of APRA) to disclose protected information or produce a protected document to assist a financial sector supervisory agency (as defined in the Act), or another agency specified in the Regulations, to perform its functions or exercise its powers.

The purpose of the proposed amendment to Regulation 5 of the Australian Prudential Regulation Authority Regulations 1998 (the Principal Regulations) is to add the Financial Reporting Council (FRC) to the list of agencies with which APRA is able to share information.

The FRC is a statutory body that was established under section 225(1) of the Australian Securities and Investments Commission Act 1989 and continued in existence by section 261 of the Australian Securities and Investments Commission Act 2001. Its functions were amended by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP 9). The FRC is responsible for providing broad oversight of the process for setting accounting and auditing standards as well as monitoring the effectiveness of auditor independence requirements in Australia and giving the Minister reports and advice on these matters.

The FRC is not a financial sector supervisory agency for the purpose of the Act and therefore must be specified in the Principal Regulations.

The proposed amendment to Regulation 5 of the Principal Regulations will allow information exchange between APRA and the FRC without breaching the secrecy provisions of section 56 of the Act.

Section l 0A of the Act indicates that APRA should, in performing and exercising its functions and powers, have regard to the desirability of cooperating with other financial sector supervisory agencies, and with other agencies specified in Regulations for the purposes of that section.

The purpose of the proposed regulatory amendment under section 10AA is to add the FRC to the list of agencies prescribed in the context of APRA's cooperation with other agencies. Regulation 6 of the Principal Regulations would be omitted and replaced by a new Regulation 3A such that the provisions of the Principal Regulations appear in the same order as the related sections in the Act.

This information exchange is desirable in order to facilitate adequate monitoring and assessment of auditor independence and other related activities performed by the FRC and APRA.

The Regulations commence on the date of their notification in the Gazette.