APRA has outlined the approach it will be taking during the implementation of International Financial Reporting Standards (IFRS) in Australia. This follows confirmation of the Australian equivalents to these Standards by the Australian Accounting Standards Board earlier this month. All Australian reporting entities must adopt the Standards for reporting periods beginning on or after 1 January 2005.
The adoption of IFRS will require APRA to revise its prudential standards and statistical requirements for authorised deposit-taking institutions, life and general insurance companies.
Starting over the next few months, APRA will be releasing a series of discussion papers on the main implications of IFRS for the prudential framework in Australia. APRA will identify the potential changes to prudential standards and statistical requirements, categorised into four groups:
· changes expected to be implemented in 2005
(though no earlier than 1 July);
· changes expected to be implemented in 2005, but
harmonised with the approaches of prudential regulators in other countries;
· possible changes to be effective after 2005, once APRA has had the opportunity of monitoring the prudential impact of IFRS; and
· areas where no change is expected.
APRA will not make any IFRS-related changes to the existing prudential framework until it has completed relevant consultations, and not before 1 July 2005 at the earliest. In the interim, APRA regulated institutions will need to continue to comply with, and report in terms of, current prudential standards.