In recent times there has been significant changes to the obligations on Licensees under the Queensland Building and Construction Commission (QBCC) due to the introduction of the Building Industry Fairness (BIF) Act.
The two biggest impacts are:
- Changes to the Financial Reporting requirements; and
- Changes to the payment claim process compared to the previous BCIPA regime.
Here we will focus on the changes to the Financial Reporting requirements.
What has changed
In many respects we have gone back to the system of old …. Gone are the days of reporting your financial information once, to have your approved Maximum Revenue (MR) granted and then only re-reporting to QBCC if you no longer meet the Net Tangible Asset (NTA) requirements of your approved Maximum Revenue or require an increase. This system of self-monitoring was doomed to be abused (and it was by some).
As such, the new (old) system requires Licensee to report their financial information to QBCC at least annually to ensure they still meet the NTA requirements for their approved Maximum Revenue.
The reporting requirements depend on your Financial Category which are listed below
- Category 1 – Maximum Revenue $800,001 – $3,000,000
- Category 2 – Maximum Revenue $3,000,001 – $12,000,000
- Category 3 – Maximum Revenue $12,000,001 – $30,000,000
- Category 4 – Maximum Revenue $30,000,001 – $60,000,000
- Category 5 – Maximum Revenue $60,000,001 – $120,000,000
- Category 6 – Maximum Revenue $120,000,001 – $240,000,000
- Category 7 – Maximum Revenue >$240m NTA x 16.67
Those with annual Maximum Revenue of less than $800,000 can self-assess and report directly to QBCC by the QBCC portal.
Are required to provide a:
- Balance Sheet,
- Profit & Loss,
- Aged Debtor & Creditor report and
- Statement of Cash Flow.
These financial reports are, technically, not required to be prepared by an accountant. However, the accompanying MFR Report will be required to be signed-off by an accountant.
Are required to provide signed Financial Statements inclusive of:
- Balance Sheet,
- Profit & Loss,
- Aged Debtor & Creditor report
- Statement of Cash Flow,
- Notes to Financial Statements,
- Written Declaration, and
- Basis of Accounting Policies
These financial reports along with the accompanying MFR Report will be required to be complied and signed-off by an accountant.
When is financial information to be reported
In addition to your annual reporting requirements, Licensees are required to report continued compliance with the MFR Regulation 2018 or financial information at certain times which include:
- On initial license application;
- Where adjustment is required for the Maximum Revenue;
- There has been a decrease of the Net Tangible Asset position of more than 30% for licensees in Cats SC1, SC2 and Cats 1-3 or
- the Net Tangible Asset position has decreased by more than 20% for licensees in Cats 4-7.
- Pursuant to approved audit program;
- Expiration of Professional Indemnity Insurance Policy of the Licensee;
- By request of the Licensee;
- Change of Officeholders ownership;
- Partnership restructure;
- Withdrawal or change of Covenantors; or
- At the Commission’s discretion.
Who can provide reports
A qualified accountant must prepare the MFR report for the licensee. A person is a qualified accountant if they are an accountant who is approved by the Commission, and is independent of the licensee. A person is NOT deemed independent of licensee if that person is:
- A licensee employee;
- An investor, shareholder, or executive officer of the licensee;
- A partner in partnership with the licensee; or
- An entity related of the licensee.
Ultimately, as Licensee, you are responsible for the information provided to support your license. As such, ensure you take advice from an accountant that specialises in the construction industry and understands the QBCC MFR reporting process and requirements.
At Solve Accountants we specialise in accounting for the construction and property industries. Please contact us with any questions regarding your QBCC Financial Reporting requirements.
In our next construction blog we will discuss the second major change under the BIF Act – payment claims!