Document ID: chunk:federal_register_of_legislation:F2024L00940:body:0:p4
Version: federal_register_of_legislation:F2024L00940
Segment Type: other
Provision Reference: 
Character Range: 8708–11804

for the prudent management of reserves must demonstrate the need for, and purpose of, each reserve in the RSE licensee's business operations.[8] An RSE licensee's reserving strategy must include:
       (a)          how each reserve is managed in the context of its purpose; and
       (b)          an appropriate target amount or range for each reserve, including how and over what period the reserve is to be established and replenished in an equitable manner, with reference to different cohorts of beneficiaries, and intergenerational issues.
19.         An RSE licensee's regular review of each reserve must ensure:
       (a)          the reserve remains appropriate to the RSE's circumstances; and
       (b)          there are adequate controls and procedures to ensure the reserve is used for the intended purpose.

Management of other financial resources
20.         An RSE licensee must have controls to ensure prudent management of financial resources held at the trustee company level and to ensure it is in a sound financial position. Such controls include, at a minimum, a capital management plan to govern the permitted use of financial resources held at the trustee company level.[9]

Expenditure management[10]
    21.         An RSE licensee must ensure that its expenditure decisions are for the purposes of the sound and prudent management of its business operations and are consistent with all legal duties and obligations of the RSE licensee, including the duty to act in the best financial interests of beneficiaries and the sole purpose test.
    22.         When making expenditure decisions relating to its business operations, an RSE licensee must positively demonstrate, at a minimum:

       (a)          the purpose of the expenditure, including how the expenditure will contribute to the RSE licensee meeting its strategic objectives and outcomes sought for beneficiaries, together with consideration of any previous assessment by the RSE licensee of whether the expenditure or type of expenditure has achieved its intended purpose;
       (b)          where the expenditure has been incurred for a proper purpose and may also result in incidental benefits to beneficiaries or others, why, in such circumstances, the expenditure remains consistent with all legal duties and obligations of the RSE licensee;
       (c)          how the expenditure will be funded; and
       (d)          how the expenditure will be monitored, including the metrics used to determine delivery of expected outcomes, the circumstances that would trigger a review of the decision and timely action.

Monitoring
    23.         An RSE licensee must monitor progress against its strategic objectives and the business plan to prompt remedial action or transfer planning where expected outcomes sought for beneficiaries are not being, or are unlikely to be, achieved, using key performance indicators and triggers determined for this purpose.
    24.         An RSE licensee must set triggers that identify to an RSE licensee the need to commence taking action to improve outcomes expected