MRF 140.4: Investments Assets Indirectly Held

Transcription

1 Instruction Guide Introduction This form requires Medical Defence Organisations (MDOs) to report information about their investment profile. Reporting Obligations MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year. For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO. For half-yearly reporting (that is, the half-year that does not correspond with the MDO s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period. udit Requirements This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to PR on an annual basis. The scope and nature of audit testing required is outlined in the applicable udit Guidance Statement issued by the uditing and ssurance Board of the ustralian ccounting Research Foundation. Definitions Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed Specific Instructions. In addition, the Glossary of Terms also contains a list of definitions of common data reporting items. Basis of Preparation Unit of Measurement This form is to be prepared in thousands of ustralian dollars (UD). mounts denominated in a currency other than ustralian currency are to be converted to UD in accordance with SB 1012 Foreign Currency Translation. ssets The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8

2 Investments (relates to the MRF 140 series of forms) of MRF Statement of Financial Position. MRF Investments Direct Interest Rate Holdings MRF Investments Direct Equity Holdings MRF Investments Direct Property Holdings MRF Investments Loans and dvances MRF Investments ssets Indirectly Held Market value of assets Investments should be reported at market value. Market value or fair value has the same meaning as defined in the ustralian ccounting Standards. Market value is defined for accounting purposes as a subset of fair value, where fair value means the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction, and is determined as follows: 1. the quoted market price in an active and liquid market (i.e. market value); or 2. when there is infrequent activity in a market, the market is not well established, small volumes are traded relative to the asset or liability to be valued, or a quoted market price is not available an estimate of a price for the asset or liability in an active and liquid market. Derivative instruments that are used to hedge investments that are included in the above forms are not to be reported in these forms, they are to be reported in MRF Derivative ctivity. For investments reported in this form, changes in the values at which such investments are measured must be recognised as revenues (or losses) in MRF Statement of Financial Performance and MRF Investment and Operating Income and Expense in the reporting period in which the changes occur. SB 1021 Depreciation and SB 1010 Recoverable mount of Non-Current ssets do not apply to such investments. Holding of units in unit trusts Where the entity s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required: Units are to be reported in MRF Investments ssets Indirectly Held. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation. Holdings must be disclosed as unlisted or listed units. 2

3 Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing Where the transferee of the security effectively receives a lenders rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities. Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements. Securities transacted not settled (i.e. trade date accounting) Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlements periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF Off Balance Sheet Business Direct Credit Substitutes Provided. Related party/entity Related parties/entities are to be interpreted in accordance with SB 1017 Related Party Disclosures. Parent Parent entity is to be interpreted in accordance with SB 1024 Consolidated ccounts. Subsidiaries Subsidiaries are to be interpreted in accordance with SB 1024 Consolidated ccounts. ssociates ssociates are to be interpreted in accordance with SB 1016 ccounting for Investments in ssociates. Joint ventures Joint ventures are to be interpreted in accordance with SB 1006 ccounting for Interests in Joint Ventures. Specific Instructions Table 1. Individual holdings of indirect investment vehicles List all investments of the MDO in investment vehicles, which will include holdings in the following: individually managed mandates; units in wholesale trusts; units in retail/public offer unit trusts; managed investment schemes; and 3

4 cash management trusts. Include holdings in listed and unlisted trusts and related entities of the MDO. Name and BN Report the full name of the investment vehicle as identified in the investment deed. lso report the BN (ustralian Business Number). Where there is no identifier associated with the investment vehicle leave this field blank. Related Party Report yes or no if the investment vehicle is a related party of the MDO. Closing Value Report the value of the holdings as at the end of the reporting date for each investment vehicle. Table 2. ggregate holdings in indirect investment vehicles classified into the following: Where the MDO has reported investments in Table 1, the aggregate holdings must be reported in the following categories also. 1. Listed trusts Report the aggregate value of the holding that constitutes listed units. Note: do not include holdings of cash management trusts. These are to be disclosed at items 3 to 6 (see below). 2. Unlisted trusts Report the aggregate value of the holding that constitutes unlisted units. Note: do not include holdings of cash management trusts. These are to be disclosed at item Cash Management Trusts Report the aggregate value of holdings in investment vehicles, which constitute cash management trusts according to the applicable rating grade. The grades are detailed in ttachment ggregate holdings representing exposure to the following asset classes: This is separate from amounts reported under items 1 6. The aggregate value of the holdings reported in Table 1 must also be reported in accordance to the nature of the market exposure of the underlying assets as detailed on the form (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation. 4

5 TTCHMENT 1: Counterparty Grades Grade Standard & Poor s Moody s M Best Fitch 1 aa BBB+ BBB BBB- a1 a2 a Baa1 Baa2 Baa B BBB+ BBB BBB- 5 BB+ or below Ba1 or below B+ or below BB+ or below Unrated assets or exposures should be classified as Grade 4. MDOs should, in general, use the same rating agency for determining counterparty gradings. Where the MDO has counterparties with multiple ratings from two or more of the rating agencies in the table above, the MDO should consistently choose the ratings of a single agency whenever possible. For example, the MDO may have a number of counterparties that are rated by Standard & Poor s and M Best. In this case, the MDO should choose a single agency that will be consistently used whenever the individual ratings conflict. 5