More financial reporting obligations for registrable superannuation entities from 1 July 2023

In August 2021, the Commonwealth Treasury issued an Exposure Draft of changes to the Corporations Act 2001, which proposed that certain registrable superannuation entities (RSEs) have the same financial reporting and audit obligations as listed companies. Our previous article provides a summary of the initial proposals, which included additional obligations such as:

  • RSEs having to prepare half-year financial reports, have them reviewed, and lodge them with the Australian Securities and Investments Commission (ASIC) within 75 days of their interim reporting date
  • RSEs having to present additional information in their annual report, including an audited remuneration report, and unaudited information about the extent of non-audit services provided by the auditor
  • Each sub-fund having to prepare, have audited (or reviewed, as appropriate) and lodge half-year and annual financial statements with ASIC.

After considering feedback, the Government pared back some of these proposals in a Bill debated in Parliament in November 2022, which was referred to the Economics Legislation Committee (Committee) for inquiry. The Committee reported back on its findings on 3 March 2023, and agreed with the proposals in the Bill. The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 containing the final amendments received Royal Assent on 23 June 2023.

The final requirements do not require half-year reporting by RSEs, nor do they require reporting by sub-funds.

What is an RSE?

For the purposes of Chapter 2M of the Corporations Act 2001, RSEs include:

  • Regulated superannuation funds
  • Approved deposit funds
  • Pooled superannuation trusts.

Self-managed superannuation funds, exempt public sector superannuation schemes, excluded approved deposit funds and small APRA funds are not RSEs for Chapter 2M reporting purposes. Therefore, the new, more onerous reporting obligations will not apply to them.

What are the additional obligations for RSEs under Chapter 2M?

From 1 July 2023, RSEs will have financial reporting obligations consistent with those that currently apply to listed companies under Chapter 2M of the Corporations Act 2001. These obligations are in addition to their existing obligations to submit quarterly returns to APRA, prepare annual financial statements, have them audited, and lodge them with APRA within three months of the reporting date (i.e. 30 September for the vast majority of the population).

From 1 July 2023, RSEs will have to:

  • Keep relevant records for the preparation of correct financial reports for at least seven years (five years under section 35A(2) of the Superannuation Industry (Supervision) Act 1993 (SIS Act))
  • Prepare a financial report for each financial year, as well as a remuneration report and directors’ report
  • Have the annual financial report and remuneration report audited and obtain a copy of the auditor’s report
  • Lodge the financial report, the directors’ report and the auditor’s report for each financial year with ASIC
  • Make all financial reports, directors’ reports and auditor’s reports for each financial year publicly available on the RSE’s website
  • Include details of how to access an RSE’s financial report, directors’ report and auditor’s report for a financial year with a notice to the annual members’ meeting, and
  • Provide the financial report, directors’ report and auditor’s reports for a financial year to members upon request.

To support these new requirements, the Australian Accounting Standards Board will reissue AASB 1056 Superannuation Entities as a legislative instrument under section 334 of the Corporations Act 2001.

What is to be included in the financial report?

In addition to the financial statements (prepared in accordance with the applicable Australian Accounting Standards), notes, and the directors’ declaration, the financial report must also include a directors’ report and a remuneration report (which must be audited).

Contents of the directors’ report

The directors’ report must include all the general information required by section 299 of the Corporations Act 2001, including:

  • A review of the entity’s operations for the year reported and the results of those operations
  • Significant changes in the state of affairs of the entity during the year
  • Any matter or circumstances that has arisen since the end of the year that has significantly affected, or may significantly affect, the entity’s future operations in future financial periods, and
  • Likely developments in the entity’s operations in future financial years and the expected results of those operations.

None of the specific information required under section 300 of the Corporations Act 2001 is required, except for:

  • Details of any payments made to the auditor for non-audit services, and
  • Any approval that has been granted by the directors of a RSE or a declaration has been made by ASIC for an extension of the auditor rotation requirements.

Remuneration report

A remuneration report that details the renumeration of each member of the key management personnel (KMP) of the RSE for the reporting period must also be included in the directors’ report. The prescribed details that must be disclosed about each Key Management Personnel’s (KMP’s) remuneration are set out in new Regulation 2M.3.04. This remuneration report must be audited.

Auditor’s independence declaration

A copy of the signed auditor’s independence declaration required under section 307C of the Corporations Act 2001 is also required as part of the annual financial report of an RSE.

Need help?

Please contact our IFRS & Corporate Reporting team if you require assistance with your new RSE financial reporting obligations.