The Australian Prudential Regulation Authority (APRA) is replacing its data collection solution. D2A (Direct to APRA) will be replaced by APRA Connect, a web-based portal. All entities that report to APRA will be required to submit their reporting through APRA Connect over time.
APRA Connect will go live in September 2021 and the first regulatory data collections to be introduced in APRA Connect at the September 2021 go live will be the Private Health Insurance (PHI) Reform (HRS 605.0) and Superannuation Data Transformation collections. However, all entities will need to maintain their entity information, such as contact details, responsible persons and related parties (including Banking Executive Accountability Regime (BEAR) reporting for Authorised Deposit-taking Institutions (ADIs)) on APRA Connect.
In an earlier article (link), we have covered the key changes entities should be aware off about this new APRA reporting platform.
In this article, we will outline some of the key drivers for the business case for entities to automate their reporting process through APRA reporting software that is compatible with both APRA Connect and D2A.
Responding to APRA's heightened focus on accountability and transparency
In recent years, APRA has undertaken a number of initiatives to drive a culture of accountability and transparency across the various industries under its supervision; including Banking, Insurance and Superannuation entities. APRA requires senior executives and boards to embed the appropriate levels of governance and controls to manage risk within appetite and to ensure consumer and prudential outcomes are achieved.
As part of this mandate, APRA has been consistently increasing the breadth and depth of regulatory disclosures and has heightened expectations around the quality of the data submissions. APRA has increased its data analytics and insight capabilities (Project Athena) to monitor the strength and health of the Australian financial system as a whole and of the individual organisations across all sectors. The upgrade from the legacy return collection software (D2A) towards a modern data collection software (APRA Connect) will further strengthen APRA's capability to collect more granular data sets. The regulator has already announced significant reporting changes in key sectors that will see entities submit much more granular information to the regulator.
Another aspect of APRA's transparency policy is the publication of entity level data in the public domain. Where the regulator traditionally published industry level statistics, APRA has moved to individual entity level disclosures about performance and financial strength. Poor data quality in the regulatory submissions will be reflected in APRA's publications which are heavily used by analysts, researchers and journalists.
It is imperative for reporting entities to get their APRA submissions "first time right".
Reduce Cost
Preparing and submitting APRA reports is a time-consuming and costly process for organisations of any size. Larger organisations have dedicated APRA reporting teams tasked with the submission of dozens of returns on a monthly or quarterly basis. Smaller organisations often have Finance and Risk functions absorb the APRA reporting obligations next to their traditional financial accounting or risk reporting "day-job". In organisations of all sizes, the benefit of more automated reporting submissions are tangible and there is an immediate return on the investment through time-savings alone.
Reduce Risk
The process of manually loading data into D2A and APRA Connect is inherently risky. In fact, APRA Connect will not support copy-paste of data on sections of the return (only cell-by-cell), which will significantly increase the number of manual touchpoints. The high number of manual interactions with these reporting systems introduces unacceptable levels of operational risk. Automated submissions through XBRL or XML files are the only sustainable way to reduce the risk related to reporting errors due to manual report submissions.
Improve Compliance
Non-compliance with the requirements set out in any APRA reporting standards made under the Financial Sector (Collection of Data) Act 2001 constitutes an offence. APRA has formalised its enforcement approach for APRA reporting in 2019, and has issued infringement notices for late submissions and for poor quality submissions. Through increased controls and validation, and automated submission, entities can be confident that their control environment is fit-for-purpose.
APRA are encouraging entities to move away from manual data entry and to partner with RegTechs to move towards automated file upload.
How we can help
RegCentric provides APRA reporting solutions across the end-to-end APRA reporting process. Whether you are looking for a validation and submission tool that fits in with your current process and only automates the submission to APRA Connect and D2A, or a full end-to-end automation solution that takes the data from source system all the way through to the submission, our APRA reporting experts are ready to support your team to cost-effectively implement a fit-for-purpose solution to your needs.