The Australian Prudential Regulation Authority’s  (APRA) levy-setting methodology should be reconsidered because it is increasingly collecting levies on behalf of other agencies, according to the Australian National Audit Office.

A report from the audit office notes that at June last year APRA regulated 4265 financial institutions with more than $4.2 trillion in assets.

APRA is funded through the Federal Government but its costs are recovered by levies on the institutions it regulates.

However, it also administers levies to cover costs incurred by other government agencies.

The total value of levies collected last financial year was $266.4 million. About 46% resulted from the SuperStream reforms to make the super scheme easier to use.

In 2006/07, 83% of total levy funding was related to APRA’s responsibilities. But by last financial year the proportion had dropped to 42%.

The report says APRA’s method of calculating levies, which is based on the activities of its own staff, is generally effective, but the increase in levies for other agencies has “introduced additional complexities”.

“It has also brought into question whether the methodology for setting the APRA levies is an appropriate approach for calculating these other levies.”

The audit office recommends Treasury and APRA consider the levy methodology further under their current review. It says both bodies should consider improving consultation with stakeholders on the methodology and its application.