AU: APS 220 Credit Quality¶


Regulator	APRA
Jurisdiction	AU
Status	live
Applicability	Platform

APRA Prudential Standard APS 220 Credit Quality governs credit risk management and the recognition of impaired assets and provisioning for ADIs. It prescribes requirements for credit risk management frameworks, loan classifications (performing, past due ≥ 90 days, impaired, restructured), and the assessment and provisioning of credit losses under the Expected Credit Loss (ECL) model mandated by AASB 9. It also covers concentration risk policy and non-accrual obligations.

APS 220 was substantially rewritten effective 1 January 2022, aligning the provisioning framework with AASB 9 / IFRS 9 ECL principles and replacing the prior provisioning approach.

Compliance register¶

This register maps every material obligation under APS 220 to the platform control or institutional process that satisfies it. It is the static traceability layer for the Totara compliance report — dynamic data (module build status, test evidence, control test dates) is overlaid at runtime.

Scope legend¶

Symbol	Meaning
🤖 Automated	Platform enforces or performs the obligation. Primary control mode is GATE, AUTO, CALC, or ALERT. Human action is not required in the normal case.
📊 Evidenced	Platform captures the evidence trail automatically. Human compliance decision sits on top. Primary control mode is LOG.
🏛 Institutional	Obligation is met by a process entirely outside the platform — credit policy, board, finance. Platform may generate evidence inputs but does not own the process.
N/A	Obligation does not apply to this deployment configuration.

Build legend¶

Symbol	Meaning
✅	Module built and deployed
🔨	Module planned — not yet built (`build_status: Not started`)
❌	Uncontrolled gap — no module attributed

Part 2 — Credit risk management framework¶

Ref	Obligation	Scope	Policy	Platform controls	Build
Para 12	Board-approved credit risk management framework: origination standards, monitoring, classification, provisioning, and credit risk appetite	🏛 Institutional	CRE-001	MOD-150 provides the risk management platform underpinning the framework; board approval and periodic review of the framework document are governance acts	—
Para 14	Credit origination — documented lending standards applied at origination including minimum serviceability buffers and LVR limits	🤖 Automated	CRE-003, CRE-004	MOD-115 (GATE) — loan cannot settle without a registered security instrument and LVR calculated within policy limits; credit decisioning rules enforced at application stage	🔨

Part 3 — Asset classification and provisioning (AASB 9 / IFRS 9)¶

Ref	Obligation	Scope	Policy	Platform controls	Build
Para 20	Asset classification — classify exposures as performing (Stage 1), significant credit deterioration (Stage 2), or credit-impaired (Stage 3)	🤖 Automated	CRE-001, DT-005	MOD-150 (LOG) — model inventory auto-maintained; ECL stage assigned by the credit risk and ECL engine; stage transitions logged as system decision log entries	🔨
Para 22	Stage 1 provisioning — 12-month ECL for performing exposures	🤖 Automated	CRE-001	MOD-115 (CALC) — LVR band and collateral value are inputs to the ECL stage calculation for secured mortgage exposures	🔨
Para 24	Stage 2 provisioning — lifetime ECL for exposures with significant increase in credit risk (SICR)	🤖 Automated	CRE-001	MOD-115 (CALC) — current LVR deterioration is a SICR trigger; stage classification computed continuously, not at period end	🔨
Para 26	Stage 3 provisioning — lifetime ECL for credit-impaired exposures; non-accrual treatment	🤖 Automated	CRE-001	MOD-115 (CALC) — LVR band distribution reported in prudential returns (APS 220) at each stage; interest ceases to accrue automatically on Stage 3 classification	🔨
Para 30	Past-due identification — expose and report assets past-due ≥ 90 days	🤖 Automated	CRE-001	Days-past-due calculated from the core ledger; 90-day past-due classification applied automatically and reported in ARS 220	❌

Part 4 — Concentration risk¶

Ref	Obligation	Scope	Policy	Platform controls	Build
Para 40	Concentration risk policy — documented limits on single obligor, industry sector, and geographic concentration	🤖 Automated	CRE-005	MOD-115 (CALC) — current LVR calculated daily and contributes to concentration risk reporting at portfolio level; MOD-147 (ALERT) — related party concentrations included in concentration risk monitoring dashboard alongside other large-exposure alerts	🔨
Para 44	Monitor and report concentration risk metrics on a periodic basis	🤖 Automated	CRE-005	MOD-147 (CALC) — related party credit exposures calculated continuously as a percentage of Tier 1 capital; concentration reports fed to MOD-150 RAF dashboard	🔨

Part 5 — Reporting¶

Ref	Obligation	Scope	Policy	Platform controls	Build
Para 50	Quarterly ARS 220 return submitted to APRA covering asset quality, stage classifications, and provisioning	🤖 Automated	REP-002	MOD-036 (AUTO) — prudential return builder produces ARS 220 return from credit risk data on schedule; MOD-115 (CALC) — LVR band distribution is a key ARS 220 data point	🔨

Institutional obligations (not platform scope)¶

Obligation	Owner	Platform evidence input
Board approval and annual review of the credit risk management framework	Board / Head of Credit Risk	MOD-150 provides risk dashboard and trend data; framework document approval is a board act
Internal credit review function (second-line oversight of credit portfolio)	Chief Risk Officer	MOD-150 and MOD-147 provide the data backbone; independent credit review function is institutional
Model validation of ECL models	Head of Model Risk	MOD-150 logs model inventory and validation schedules; validation execution is institutional per the model risk management framework
Provisioning committee sign-off on ECL overlay adjustments (management overlays)	CFO / CRO	Platform computes the modelled ECL; any management overlay is applied through a documented governance process outside the platform

Coverage summary¶

Area	Total obligations	Platform automated 🤖	Platform evidenced 📊	Institutional 🏛	N/A
Credit risk framework	2	1	0	1	0
Asset classification and provisioning	5	4	0	0	1 (past-due — gap)
Concentration risk	2	2	0	0	0
Reporting	1	1	0	0	0
Total	10	8 (80%)	0 (0%)	1 (10%)	1

Gap note: Past-due ≥ 90 days automatic classification (Para 30) has no attributed module. The core ledger (MOD-001) tracks payment events; a dedicated days-past-due classification module is required to satisfy this obligation systematically.

All attributed modules are currently build_status: Not started. The compliance position will update as modules are built and deployed.

Policy	Title
CRE-001	Credit Risk Management Policy
CRE-003	Credit Decisioning & Scorecard Policy
CRE-004	Loan Origination Standards
CRE-005	Concentration Risk Policy
DT-005	Model Risk Management Policy
REP-002	Prudential Reporting Policy

Official documentation¶

Policies referencing this standard¶

CRE-001 — Credit Risk Management Policy
CRE-003 — Credit Decisioning & Scorecard Policy
CRE-004 — Loan Origination Standards
CRE-005 — Concentration Risk Policy
DT-005 — Model Risk Management Policy

Compiled 2026-05-22 from source/entities/regulations/au-aps-220.yaml