With Australia’s construction sector bursting at the seams with near-record new home approvals, are you across all the QBCC reporting requirements you need to keep your business building?
The Queensland Building and Construction Commission (QBCC) renewed the Minimum Financial Requirements policy (MFR) on 1 January 2019 to help restore effectiveness of the MFR for licensing.
This saw significant changes to the policy which impact the financial responsibilities of licensees going forward.
Here are some key points for Queensland builders to remember to make sure you meet all your financial obligations.
1. Annual Reporting
Licensees with a turnover in excess of $800,000 must provide QBCC with financial reports annually. These reports will vary depending on your category, which is based on your turnover. QBCC checks 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.
QBCC closely regulates and reviews licences.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
You are also required to 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.
Make sure you discuss this risk with your accountant when next preparing your financial statements.
QBCC is very active in its compliance of these regulations, with a number of licenses suspended. It uses 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 QBCC requirements? The team at Bentleys have expertise working with Queensland building and constructions businesses. Contact your Bentleys advisor today to discuss your requirements.