Class Notes (808,481)
Australia (1,838)
Accountancy (147)
AYB240 (15)
All (15)
Lecture 5

Week 5

8 Pages
Unlock Document

Queensland University of Technology

1 AYB240 – SUPERANNUATION REGULATION AND PRACTICE LECTURE 5: GOVERNANCE OF SUPER FUNDS -DISCLOSURE Disclosure as a Governance (Management) Mechanism Stewardship  Trustee owes duty to members to safeguard fund assets and properly manage the fund’s affairs  Periodic reporting to members discharges trustees’ responsibility to be accountable to fund members in relation to stewardship of fund assets o E.g. financial reports (AAS 25, para.6) Consumer Protection  One of the objectives of disclosure requirements under the Financial Services Reform Act 2001 and the Corporations Act 2001 o Promote fairness, honesty and professionalism by those who provide financial services Statutory Disclosure Requirements (Corporations Act 2001 Part 7.9 and Corporations Regulations)  Key disclosure requirements under the legislation o Product Disclosure Statements (PDS) o Periodic member statements o Period fund information (annual reports) o Information on request o Audited Financial Statements Product Disclosure Statements (PDS)  “Due Diligence” approach o All information reasonably required by members and their advisers to make an informed assessment of  Rights and liabilities of super product  Financial position, performance and prospects of the fund offering super product  “Key Features Statement” approach o List of specific items to be disclosed  Corporations Act Pt 7.9 incorporates both approaches at present Objective of PDS  Help consumers compare and make informed choices about financial products  To meet these objectives o Information in PDS must be worded and presented in clear, concise and effective manner 2 RG168.4 Good Disclosure Principles  Disclosure should 1. Be timely 2. Be relevant and complete • Relevant to decision being made • Complete = all information available to make an informed decision 3. Promote product understanding – ensure understanding of the product 4. Promote product comparison • What happens when figures are reported as pre and post tax values? 5. Highlight important information 6. Have regard to consumers’ needs When is PDS given?  To new fund members before joining • Given by employer When should it be updated?  Supplementary PDS to be is to be given (s 1014A – 1014F)  Separate Document o To correct misleading or deceptive statements o Correct omission o Update or add to the information  NO date is specified in the ACT – usually updated yearly Content of PDS  Fund name and contact details  Nature of member benefits  Risks associated with the product  Costs and fees charged o Specific disclosure requirements  Taxation implications  Significant features of the fund  Dispute resolution procedures  Extent to which environmental, social and ethical matters considered in investing activities Fees Disclosure  Has been subject to significant debate  Resulted in, standardised disclosure of fees and costs o Facilitates understandability o Enables comparisons between funds 3 Reforming PDS  Financial Services Working Group established February 2008, comprising senior officials o Department of Treasury o ASIC o Department of Finance and Deregulation  Role: to develop short, standardised and easy to understand superannuation product disclosure documents  June 2010 o Government issued new regulations prescribing short-form PDSs for superannuation funds Short-Form PDS Implementation (Corporations Amendment Regulations 2010)  Comes into effect 22 June 2011  Transitional provisions: o Applies to new superannuation products or updated PDSs from 22 June 2011 o Applies to all other superannuation products from 22 June 2012  RG168 no longer applies to short form PDS  Should result in increased comparability – possibly less transparency Short-Form PDS and Content (Section 10D)  No more than 8 A4 pages  Prescribed section headings and content “to ensure that consumers are provided with key information they need to make an investment decision” 1. About [name of super fund] 2. How super works 3. Benefits of investing with [name of super fund] 4. Risks of super 5. How we invest your money 6. Fees and costs 7. How super is taxed 8. Insurance in your super 9. How to open an account  Detailed requirements for information to be disclosed in each section  Allows information to be “incorporated by reference” o East to access and publically available information – eg posted on wbeiste Periodic Reporting  Ongoing disclosures for existing members o Annual fund information o Annual member statements o Audited financial reports 4 Fund Annual Reports – General Disclosure Requirements (reg 7.9.35)  Fund required to provide members with information relating to the management, financial condition and investment performance of the fund  Information given for the purpose of o Understanding the management and financial condition of the fund o Understanding the financial performance of the fund  Fund may provide prescribed information on the fund’s website (reg7.9.75BA) Fund Periodic Reports – Specific Disclosure Requirements  Reg 7.9.36 o Fund’s contact details o Trustee’s investment strategy (as per sis s 52(2)(f)) o The investment objectives  Reg 7.9.37(1) o Names of investment managers o Name of the corporate trustee and names of trustee board directors and how/by whom appointed  Employer or member representatives  Whether trustee has indemnity insurance  Either – within 4 months (October) o Audited fund financial report and auditor’s report OR o Abridged financial information and information about when the audited report will be available to members on request  Derived from fund’s accounts and five a reasonable summary of financial position at end of period and changes during period.  Statement of assets at end of current and previous reporting period o To understand asset allocation at those times  Details of each investment (single or combined) >5% of total fund assets  Policy on using derivatives o and derivatives charge ratio if > 5%  (If held) reserves policy and movements in reserves  Method of allocating net earnings to members’ accounts  Details of any penalties imposed on trustee  Prior to 1 July 2009 required to di
More Less

Related notes for AYB240

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.