MOU between
The Australian Prudential Regulation Authority
and
The Financial Report Council
1. Parties to Memorandum
1.1 This Memorandum records an understanding (MOU) reached between the Australian Prudential Regulation Authority (APRA) and the Financial Reporting Council (FRC) to facilitate liaison, co-operation, assistance and the exchange of information between the agencies in accordance with the relevant statutory provisions.
2. Purpose
2.1 The agencies recognise that co-operation between them is desirable to discharge their respective functions and maximise the effectiveness of their powers in relation to auditor independence.
2.2 The agencies agree to assist each other in exchange of information and notification of matters within the framework of this MOU and consistent with all relevant laws.
3. FRC
3.1 The FRC is an independent statutory body established by Part 12 of the Australian Securities and Investments Commission Act 2001.
3.2 The FRC is responsible for the broad oversight of the process for setting auditing and accounting standards, and the monitoring and assessing of auditor independence arrangements and audit related disclosure.
4. APRA
4.1 APRA was established by the Australian Prudential Regulation Authority Act 1998 (the APRA Act). It is responsible for the administration of the APRA Act and for exercising the functions and powers conferred on it by the APRA Act and other relevant Commonwealth legislation.
4.2 APRA is the prudential regulator of the financial services industry. It oversees Australia’s banks, credit unions, building societies, life and general insurance companies and reinsurance companies, friendly societies and most of the superannuation industry.
5. Information Sharing
5.1 APRA and the FRC will each, subject to any restrictions imposed by law, share information that they believe would be of assistance to the other in undertaking their respective responsibilities under the law.
5.2 APRA and the FRC recognise that each agency may from time to time request the other to provide it with information relevant to the requesting agency’s exercise of its powers under the law. If such a request is made, the agency receiving the request will use its best endeavours to provide the requested information in a timely manner, subject to any relevant legal and operational considerations and any conditions that the providing agency might place upon the use or disclosure of the information, including, but not limited to claims of legal professional privilege. The FRC has been specified in the regulations, for purposes of section 10A of the APRA Act, as an agency that APRA should, in performing and exercising its functions and powers, have regard to co-operating with.
5.3. APRA and the FRC also recognise that each agency will, in the course of exercising its powers, periodically come into possession of information which would, if provided to the other agency, be likely to assist that other agency in administering the laws for which it is responsible. APRA and the FRC agree, subject to the requirements of section 56 of the APRA Act and section 237 of the ASIC Act and the Information Privacy Principles in the Privacy Act, to use reasonable endeavours to notify the other agency on a timely basis of the existence of information which the agency holding it judges to be relevant to the regulation or enforcement of auditor independence requirements, notwithstanding that it may not have received a request from the other agency for such information.
6. Specific reports to be provided
6.1 The FRC will report to APRA any suspected breaches of the law relating to auditor independence by a financial institution subject to APRA’s supervisory jurisdiction that the FRC discovers in the course of carrying out its functions.
6.2 Reports from the FRC will be made in writing and provided to an Authorised Officer of APRA (Appendix A). APRA will consider each such report from the FRC in accordance with its standard assessment procedures.
6.3 APRA will provide reports to the FRC, identifying systemic issues noted by APRA arising from its prudential supervision activities in relation to auditor independence that may be relevant to FRC's assessment of auditor independence requirements and compliance with those requirements as part of APRA’s prudential supervision.
6.4 Reports from APRA will be made in writing and provided to an Authorised Officer of the FRC (Appendix A).
7. Confidentiality
7.1 Under paragraph 237(1) of the ASIC Act, the FRC must take all reasonable measures to protect from unauthorised use or disclosure information given to it in confidence. Under paragraph 237(2) of the ASIC Act, disclosure of such information is taken to be authorised if required or permitted by a law of the Commonwealth or a prescribed law of a State or Territory, or made to APRA for the purposes of its performance of its functions.
7.2 APRA is subject to secrecy obligations imposed by s.56 of the APRA Act. However, s.56(5)(a) provides that it is not an offence if the disclosure of protected information or the production of a protected document occurs when the person is satisfied that the disclosure of the information, or the production of the document, will assist a financial sector supervisory agency, or any other agency specified in the regulations, to perform its functions or exercise its powers and the disclosure or production is to that agency. The FRC has been prescribed in the regulations for the purposes of s.56(5)(5)(a) of the APRA Act.
7.3 Where either agency receives notification of the existence of confidential information under clause 5.3 above, and determines that it requires access to that information, it will make a request in accordance with the principles and procedures set out below. The request will be considered and determined by the other agency in accordance with those principles and procedures.
8. Requests for confidential information
8.1 APRA and the FRC will each use their best endeavours to provide relevant information in a timely manner in response to requests for confidential information, subject to any relevant legal and operational considerations and any conditions that the provider of the information might place upon the use or disclosure of the information, including but not limited to claims of legal professional privilege.
8.2 APRA and the FRC acknowledge that in general, the agency that receives the request for confidential information is obliged to comply with the rules of procedural fairness.
8.3 Requests by the FRC to APRA for confidential information will be made in writing by an Authorised Officer of FRC (as designated in Appendix A) to an Authorised Officer of APRA (as designated in Appendix A).
8.4 Requests by APRA to the FRC for confidential information will be made in writing by an Authorised Officer of APRA (as designated in Appendix A) to an Authorised Officer of the FRC (as designated in Appendix A).
9. Use of confidential information
9.1 When either agency receives information from the other in accordance with this MOU, the receiving agency will take all reasonable steps to ensure that such information is used or disclosed only for the purpose for which it was obtained, or as otherwise authorised by the agency providing the information.
9.2 On occasion an agency providing information to the other under this MOU may require that the information be disclosed only to individuals holding designated offices within the receiving agency.
9.3 Where either APRA or the FRC has been served with a compulsory notice which would require the disclosure to some third party of information obtained under this MOU, the agency served with the notice will, prior to disclosure, notify the agency which provided the information in writing so as to enable the other agency to determine what action, if any, it should take.
9.4 Without limiting the generality of clause 9.1 of this MOU, the agencies will comply with the Information Privacy Principles set out in the Privacy Act.
10. Consultation Policy
10.1 To promote effective and well-coordinated development of regulatory policy, APRA and the FRC will inform each other when determining substantive issues of policy with respect to the regulation of auditor independence issues which may have an impact on the regulatory responsibilities of the other agency. Each will provide the other with the opportunity for consultation on the proposed policy.
11. Liaison between agencies
11.1 To promote co-operation between APRA and the FRC, regular liaison meetings will be held between the agencies about operational and policy matters. These liaison meetings should occur at least every 6 months, or as the agencies otherwise from time to time agree.
11.2 The agencies will establish procedures to facilitate regular contact between officers of the agencies on routine operational matters.
11.3 In order to ensure effective liaison, the agencies may exchange lists of contact officers.
12. Disputes
12.1 Where there is disagreement over any matter related to issues in this MOU, the agencies will seek to resolve the issue by negotiation at operational level. If these negotiations fail, the matters will be referred to the Chairman of APRA and the Chairman of the FRC.
13. Review of this MOU
13.1 The agencies will keep the operation of this MOU under periodic review and will consult each other with a view to improving its operation and resolving any matters which may arise during the course of its operation.
14. Amendments
14.1 This MOU may be modified or amended by written agreement between the parties. If it becomes apparent that it is necessary or desirable to amend or add to this MOU, APRA and the FRC will each use their best endeavours to agree upon appropriate amendments or alterations as soon as possible thereafter.
15. Termination
15.1 APRA or the FRC must give written notice to the other of its intention to terminate this agreement. The agreement will terminate 30 days after the date upon which the notice was given.
16. Execution
Signed for and on behalf of APR
_________________________ Dr. John Laker |
Signed for and on behalf of the FRC
__________________________ Mr Charles Macek |
APPENDIX A
Authorised Officers for the Purpose of Requesting and Providing Access to Information
Requests for confidential APRA information should be addressed to:
Mr Robert Sharma
Requests for confidential FRC information should be addressed to:
The FRC Secretary
Persons occupying these positions in APRA and FRC are authorised to give information to an authorised officer of the other agency