Document ID: chunk:federal_register_of_legislation:F2018L00379:body:0:p7
Version: federal_register_of_legislation:F2018L00379
Segment Type: other
Provision Reference: 
Character Range: 16879–19781

date of the movement.

    As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.

    Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.

    The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and

    4.             translation of financial reports of foreign operations.

    A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.

     * Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.

     * Translation of financial reports should otherwise follow the requirements in AASB 121.

Scope

ARF 220.3 Prescribed Provisioning (ARF 220.3) is to be completed by all ADIs applying the prescribed provisioning methodology outlined in Attachment C of APS 220.  In general, those ADIs using the standardised provisioning approach will be those where APRA accepts that a more sophisticated approach is not warranted or it judges an ADI's own provisioning practices to be inadequate in view of its credit risk profile and system capabilities.  Those ADIs currently adopting this approach are at liberty to discuss any plans they might have to adopt an alternative methodology with APRA.

ADIs applying the prescribed provisioning methodology are asked to categorise their activities giving rise to credit risk into four categories (refer to below).  Where an exposure maintained by an ADI does not fall into one of the four categories outlined and it is an impaired asset, the amount of specific provision to be held against this item shall be agreed with APRA.  The prescribed provision attaching to each category is calculated by reference to the relevant provision percentages, and represents the minimum specific provision that is to be raised.  Where the ADI believes that the prescribed provision raised does not adequately cover the expected loss outcome, further specific provisions should be raised.

Outstanding balances should be reported net of interest and other income not taken to profit, and net of any amounts written off.  For overdraft facilities and revolving lines of credit, the outstanding balance is to be reported as the total amount of the facility outstanding, and