Financial Accountability Regime: Accountability statement guidance and template
Under s31(2)(a) and 33 of the Financial Accountability Regime Act 2023 (FAR Act), accountable entities subject to the enhanced notification obligations under the FAR Act (enhanced accountable entities) are required to provide to APRA and ASIC (the Regulators) an accountability statement for each of their accountable persons describing the responsibilities of that person. Enhanced accountable entities must also take reasonable steps to ensure that their significant related entities (SREs) provide accountability statements of their accountable persons to the Regulators: see s31(2)(e) of the FAR Act.
The template on page 2 is a guide for enhanced accountable entities and SREs on the format and minimum content required for accountability statements. Core accountable entities (i.e. all other accountable entities, including foreign accountable entities) may use this template to document their accountability arrangements internally.
Individual statements must reflect accountability as it operates in practice and should align with the governance arrangements of the enhanced accountable entity or SRE. Accountability statements should be specific to both the enhanced accountable entity or SRE, and the individual accountable person. This will mean some degree of variation in accountability statements for similar roles between enhanced accountable entities and SREs, reflecting differences in responsibilities. Such variation is both acceptable and required where reflecting actual practice.
It is expected that, at a minimum, accountability statements will:
- clearly articulate what an accountable person is accountable for with respect to the relevant enhanced accountable entity or SRE and be sufficiently explicit and detailed in defining the accountable person’s responsibilities and establishing the outcome expected in relation to each responsibility;
- be comprehensive, covering all areas of responsibility of an accountable person. Where there is joint accountability, this should be explicitly identified and defined. Caveats to or limitations upon responsibilities are expected to be kept to a minimum. Where there are caveats to responsibilities, there should be clarity about where the ultimate responsibility resides;
- align with the actual practices and governance arrangements of the enhanced accountable entity or SRE. As such, the Regulators may query an enhanced accountable entity or SRE where its accountability statements do not appear to be consistent with its existing documentation - including, but not limited to, internal and external governance documents; and
- when considered collectively, articulate and delineate responsibilities across a relevant enhanced accountable entity and its SREs, with no gaps in responsibilities.
The below accountability statement template is accompanied by instructions and guidance on minimum content requirements to assist enhanced accountable entities and SREs in providing the required information: see Appendix 1.
Accountability statement template
This accountability statement is provided to APRA and ASIC in accordance with s31(2)(a) and 33 of the Financial Accountability Regime Act 2023 (the FAR Act).
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Section 1: Accountable person details
Name | ||
Institution | ||
Employer | ||
Role title | ||
Role start date | ||
Reports to | ||
Responsibilities under s10(1) and 10(6) of the FAR Act | ||
Responsibilities under s10(2) and 10(3) of the FAR Act as prescribed under the Minister rules |
Section 2: Detailed responsibilities of the accountable person
The part or aspect of the operations of the enhanced accountable entity or SRE which the accountable person has actual or effective responsibility for management or control (s33(a)(i) of the FAR Act): |
[Tailor the number of rows in the table as required.]
Area of responsibility | Description of responsibility(s33(a)(ii) of the FAR Act) | Joint (yes or no) |
| 1 | ||
| 2 | ||
| 3 | ||
| 4 | ||
| 5 | ||
| 6 |
Section 3: Limitations and exclusions of responsibility
[INSERT]
Section 4: Declaration
I, [INSERT NAME OF THE ACCOUNTABLE PERSON], declare that:
- the content of this accountability statement is accurate; and
- I understand my accountability obligations under s21 of the FAR Act.
Signature Date
______________________ _______________________
Appendix 1: Financial Accountability Regime—Guidance on completing the accountability statement template
The accountability statements of an enhanced accountable entity or SRE must outline the part or aspect of the operations of the enhanced accountable entity or SRE for which the relevant accountable person has actual or effective responsibility for management or control, and the responsibilities of the accountable person: see s33(a)(i) and 33(a)(ii) of the FAR Act.
In outlining relevant areas of responsibility, the Regulators expect accountability statements to describe the actions, decisions and outcomes for which the individual is accountable with respect to the relevant part(s) or aspect(s) of the operations of the enhanced accountable entity or SRE.
An individual’s accountability statement should be updated over time to reflect any material changes. Material changes must also be notified to the Regulators, as per s31(2)(b) of the FAR Act.
Note: For guidance on what constitutes a material change, see section 4.2.3 of the Regulators’ information paper, Financial Accountability Regime: Information for accountable entities.
Enhanced accountable entities and their SREs should establish internal processes to keep accountability statements current and to ensure that the Regulators are notified within 30 days of any material changes to the same, as required under s31(6)(a) of the FAR Act.
The accountability statement template includes a field to provide the date upon which the statement was last updated. Where appropriate, the effective date for each version of the relevant accountability statement should be consistent with other relevant documentation such as any accompanying registration or notifiable events forms, and accountability map.
Section 1 guidance: Accountable person details
In section 1 of the accountability statement template, provide key details about the relevant accountable person. Indicate whether the individual is an accountable person under s10(1), 10(2), 10(3) and/or 10(6) of the FAR Act and, in the case of the s10(2) and/or 10(3), the responsibilities or positions held as prescribed by the Financial Accountability Regime (Minister) Rules 2024 (Minister rules).
Section 2 guidance: Detailed responsibilities of the accountable person
In section 2 of the accountability statement template, provide a comprehensive statement of the part(s) or aspect(s) of the operations of the relevant enhanced accountable entity or SRE for which the accountable person has actual or effective responsibility for management or control (s10(1) or 10(6) of the FAR Act) or the prescribed responsibility or position held by the accountable person (s10(2) or 10(3) of the FAR Act). Financial Accountability Regime (Minister) Rules 2024
For each area of responsibility of an accountable person, clearly articulate the accountable person’s responsibilities, including the outcome expected in relation to each responsibility. Where an area of responsibility is held jointly by multiple accountable persons, this should be clearly set out as a joint responsibility in the accountability statement of each relevant accountable person: see s21(2) of the FAR Act.
In compiling an accountability statement, the Regulators expect particular attention to be given to the allocation of key functions and primary areas of focus (PAFs) of prudential and conduct significance, including responsibility for the management of prudential and conduct risks with respect to those responsibilities.
Key functions
The Regulators expect the content of the accountability statement of an accountable person would align with the accountable person’s allocated key function(s), if any. However, key functions and the allocations thereof are not expected to drive the structure of an accountability statement. It is the Regulators’ expectation that statements of areas of responsibility will describe and reflect the key functions allocated to the accountable person. Any changes to the accountable person’s allocated key functions or nature of responsibilities should be reflected in the accountability statement for alignment.
More than one accountable person may hold the same key function if this reflects the allocation of responsibilities in relation to that function. These functions are deemed by the Regulators to be of particular importance and the Regulators consider that the inclusion of this information in statements of areas of responsibility (where applicable) will assist to provide the Regulators with visibility over, and clarity in relation to, accountability for the functions listed.
Primary areas of focus
In addition to key functions, the Regulators have developed a list of PAFs for enhanced accountable entities and their SREs to consider when developing accountability statements as set out below in Appendix 2. This is a non-exhaustive list serving as a prompt for consideration when developing accountability statements, and should be used by entities as guidance only.
While PAFs are listed by prescribed and general responsibility, accountability statements should reflect actual practice and understanding of where responsibility rests within the enhanced accountable entity or SRE. Therefore, a PAF may be more appropriate under a different accountable person or prescribed responsibility than as listed in Appendix 2. For example, for a particular accountable entity, the senior executive who has the responsibility for overall risk controls and risk management of the accountable entity may be responsible for stress testing, rather than the senior executive who has the responsibility for the management of financial resources of the accountable entity, as suggested in Appendix 2.
Accountable entities that are registrable superannuation entity (RSE) licensees should consider the relevancy of each of the PAFs in relation to their own operations as well as the operations they carry out on behalf of each of the RSEs under their trusteeship.
Non-operating holding companies (NOHCs) should also consider the list of PAFs beyond those listed under their specific prescribed responsibilities to the extent that they are relevant for their business.
A number of PAFs can, and in many cases should, appear on multiple statements in relation to a different action or expected outcome for which an individual is accountable as a result of the individual’s role. For example, in relation to risk appetite:
- the board of an accountable entity approves the risk appetite statement;
- the Chief Executive Officer may be accountable for ensuring that the accountable entity as a whole operates within the board-approved risk appetite;
- the Chief Risk Officer may be accountable for monitoring of, and reporting on, actual risk profiles against the board-approved risk appetite; and
- the head of internal audit may be accountable for conducting independent review on the controls put in place by business to ensure alignment with the board-approved risk appetite.
An enhanced accountable entity or SRE is encouraged to carefully consider the wording of the role’s key accountabilities in relation to any PAFs, avoiding non-specific language while expanding upon generic terms such as ‘manage’ or ‘oversee’ in sufficient detail to properly describe the accountabilities. An expected outcome may be usefully described by specific action-oriented terms including, but not limited to:
- delivering;
- monitoring;
- approving;
- reviewing;
- recommending;
- challenging; or
- escalating.
The level of detail expected to explain the responsibility in relation to any particular PAF will depend on the complexity of the organisation, in terms of size, risk profile, business lines or organisational structure. Additional detail may be required to provide clarity on any points of handover between accountable persons. For less complex institutions with simpler structures, this may mean fewer handover points requiring detailed explanation as a single accountable person may be accountable for a PAF on an end-to-end basis.
Section 3 guidance: Limitations and exclusions of responsibility
In section 3 of the accountability statement template, detail any limitations upon and exclusions of responsibility. As noted above, caveats to or limitations upon responsibilities are expected to be kept to a minimum. If there are limitations or exclusions to accountabilities, identify the owner of any residual responsibility.
When considered collectively, accountability statements should articulate and delineate responsibility across an enhanced accountable entity or its relevant group, with no gaps in responsibility.
Section 4 guidance: Declaration
In section 4 of the accountability statement template, the Regulators expect individuals nominated as accountable persons to be closely involved in the development of their own accountability statement and to have read, understood and accepted the areas of responsibility as drafted, as well as the accountability obligations of an accountable person under the FAR Act. Individual accountable persons must sign their accountability statement with a declaration that this has occurred: see s33(b) of the FAR Act. The Regulators’ suggested wording of this declaration has been provided in the template.
Appendix 2: Primary areas of focus
The following three tables outline:
- primary areas of focus for all sectors;
- additional primary areas of focus for insurance; and
- additional primary areas of focus for RSE licensees.
Note: In these tables, references to sections (s) are to the Minister Rules, unless otherwise specified.
(a) Primary areas of focus for all sectors
Note: These are primary areas of focus for prescribed responsibilities and positions, and general responsibilities that are common for all sectors. That is, it does not necessarily mean that each of these primary areas of focus are relevant to all sectors.
Member of the board of an accountable entity—s6(2) and 11(2) |
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Business activities of an accountable entity’s relevant group—s5(2)(a) and 10(2)(a) |
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Financial resources of an accountable entity—s5(2)(b)(i) and s10(2)(b) |
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Overall risk controls and risk management of an accountable entity—s5(2)(c) and 10(2)(c) |
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Operations of an accountable entity other than a licensed NOHC—s5(2)(b)(ii) |
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Information management, including information technology (IT) systems, of an accountable entity other than a licensed NOHC—s5(2)(d) |
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Internal audit function of an accountable entity—s5(2)(e)(i) and 10(2)(d) |
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Compliance function of an accountable entity other than a licensed NOHC—s5(2)(e)(ii) |
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Human resources function of an accountable entity other than a licensed NOHC—s5(2)(e)(iii) |
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Anti-money laundering (AML) function of an accountable entity other than a licensed NOHC, if the accountable entity is a reporting entity for the purposes of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006—s5(2)(h) |
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Dispute resolution function of an accountable entity other than a licensed NOHC—s5(2)(e)(iv) |
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Client or member remediation programs of an accountable entity other than a licensed NOHC—s5(2)(f) |
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Breach reporting of an accountable entity other than a licensed NOHC—s5(2)(g) |
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General responsibilities—s10(1)(b) and 10(6)(b) of the FAR Act |
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(b) Additional primary areas of focus for insurance
Actuarial function of an accountable entity that is an insurer—s7(2)(a) |
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Claims handling function of an accountable entity that is an insurer—s7(2)(b) |
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(c) Additional primary areas of focus for RSE licensees
Member administration operations of an accountable entity that is an RSE licensee —s8(2)(a) |
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Investment function of an accountable entity that is an RSE licensee—s8(2)(b) |
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Investment function of an accountable entity that is an RSE licensee—s8(2)(b) (continued) |
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Financial advice service of an accountable entity that is an RSE licensee—s8(2)(c) |
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Insurance offerings of an accountable entity that is an RSE licensee—s8(2)(d) |
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