Prudential Standard APS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk¶
| Regulator | APRA |
| Jurisdiction | AU |
| Status | live |
| Applicability | Platform |
APRA's most prescriptive model-risk prudential standard. Applies to any ADI accredited (or seeking accreditation) to use internal models for credit-risk regulatory capital under the internal-ratings-based approach.
Key requirements¶
Model register. ADIs must maintain a register recording, for each model: type, scope, IRB asset class, materiality (total exposure), model owner, implementation date, validation rating, and dates of the most recent and next scheduled validations.
Three-line accountability. Clear separation is mandatory between (1) the model owner, accountable for the model; (2) the validation function, which validates it independently; and (3) internal audit or an equally independent function, which reviews the overall rating system and governance at least annually.
Independent review. At least annually, internal audit (or equivalent) must assess whether development, implementation, validation, governance and control processes are effective and operating as designed — covering the credit-risk-control function, PD / LGD / EAD estimation, and adherence to all minimum requirements. Findings must be documented.
Regulatory approval. Initial use of internal models requires APRA approval. Material model changes require APRA notification or approval before the change goes live.
Relevance to the platform¶
APS 113 is the primary driver of the model register (MOD-173), independent-review obligations, and the change-control gateway in MOD-175. Any AU customer seeking IRB accreditation will require the platform's model documentation and validation evidence to satisfy APS 113 requirements; the evidence packs shipped with MOD-028 (credit scoring), MOD-030 (stage allocation), MOD-031 (ECL), and MOD-033 (RWA) are specifically designed to support APS 113 compliance.
Policies referencing this standard¶
Compiled 2026-05-22 from source/entities/regulations/au-aps-113.yaml