Your financial responsibilities under QBCC’s Minimum Financial Requirements Regulations 2018

The Queensland Building and Construction Commission (QBCC) renewed the Minimum Financial Requirements policy (MFR) from 1 January 2019. The regulation has been implemented with the aim to restore effectiveness of the MFR for licensing.

While there are a number of transitional provisions that apply until 31 December 2019, there are significant changes to the policy which impact the financial responsibilities of licensees going forward.

The changes to the MFR are listed below.

  1. Annual Reporting

Licensees with a turnover in excess of $800,000 now need to provide the QBCC with financial reports annually. These reports will vary depending on your category, which is based on your turnover. The QBCC will be checking that you meet three main financial requirements around Net Tangible Assets, Current Ratios and Maximum Revenue – see the details here.

If you are a licensee with a turnover of less than $800,000 you don’t have to provide financial statements, however you are required to provide a declaration and some basic financial information. 

The QBCC has been closely regulating and reviewing licences since introducing the new regulations. It’s important that all requirements are complied with and information provided is accurate.

2. Maintain Internal Management Accounts

You are required to prepare quarterly management reports and provide these to QBCC within 14 days if requested. This includes:

  • profit and loss
  • balance sheet
  • aged debtors and creditors
  • statement of cash flows

3. Notify QBCC of Significant Change to Business

If there is a change to the owners of your business, including the executive officer (for companies), the trust deed or trustee (for trusts) QBCC must be notified as soon as practical.

4. Notify QBCC of decrease in Net Tangible Assets (NTA)

If you have a decrease in your accepted NTA of more than 30% (or for category 4 and above, 20%) QBCC must be notified within 30 days.

5. Apply to QBCC for an increase in Maximum Revenue

If your actual turnover is likely to exceed the allowed MR by more than 10%, you are required to have a new MFR Report prepared and sent to QBCC before the turnover exceeds the 110% threshold.

6. Pay Debts

It is also a requirement that you pay all debts owing to a contracted party, supplier of goods or services, on or before the date the debt becomes due.

What should you do next?

Preparation of financial statements

It is critical that your figures are analysed regularly (usually during the preparation of your financial statements) to confirm that you continue to meet your NTA and Current Ratio tests. (Note the QBCC requires that you check you meet these tests at least quarterly).

As QBCC’s NTA and Current Ratio tests require the application of a number of accounting standards, licence holders may be exposed to risk of non-compliance due to discrepancies between their financial reports and the QBCC requirements.

The deadline for reporting  your 2019 financial information to QBCC is 31 December 2019. Make sure you discuss this risk with your accountant when next preparing your financial statements.

QBCC Compliance

The QBCC has been very active in their compliance since the introduction of these new regulations, with a number of licenses suspended in recent months.  They have been using data matching technology to obtain information that brings to their attention licensees that may be in breach and then selecting these licensees for review.

There are limited timeframes for providing information to the QBCC once a review commences, so it is vital that you are continuing to comply with the requirements.

Want help navigating the changes? The team at Bentleys have expertise working with Queensland building and constructions businesses. Contact your Bentleys advisor today to discuss your requirements.

 

Find out more on the QBCC website