One of the challenges of operating a business in the building industry in Queensland is keeping up to date with compliance and reporting.
If your business income has changed over recent financial years or if you’re about to launch a new construction industry business, you may need to double-check if you are on the right track when it comes to meeting the QBCC’s financial reporting requirements.
Here’s a basic rundown to give you some background knowledge to help you remain compliant:
What is the QBCC?
The Queensland Building and Construction Commission (QBCC) is the statutory body tasked with regulating the building industry in Queensland. The QBCC states its purpose as providing peace of mind to all people who use builders in Queensland and to those who take part in the process of constructing them.
To ensure this peace of mind, the QBCC has minimal financial reporting (MFR) requirements so it can confirm that businesses in the building industry have financially viable businesses and maintain appropriate levels of working capital.
The point of this regulation is to reduce the number of insolvencies and financial failures in the building and construction sector. It’s a safeguard that is aimed at reducing the number of customers that are left with a half-built home from a construction company that has gone under.
QBCC reporting requirements
A QBCC licensed business must submit an annual financial report to the QBCC. Depending on the category of business you operate, you will have to share information including profit and loss statements, balance sheet, aged debtors and creditors, statement of cash flow.
Beyond this, certain circumstances may mean either an MFR report or declaration is required.
The QBCC lists the following as the main reasons that would trigger a company to submit a more detailed MFR report:
- When you apply for a new licence (licence Category 1 upwards, maximum revenue over $800,001)
- If your Net Tangible Asset position decreases by
- more than 20% for Category 4-7 licensees and
- more than 30% for all other licensees
- If you no longer meet the minimum Current Ratio of at least 1:1 (a current ratio shows the amount of current assets of a business in relation to its current liabilities)
- If your Maximum Revenue (MR) needs adjusting (MR must not be exceeded by more than 10% in each financial year)
- If the QBCC requests it
This applies to Cat 1-7 licensees.
In most circumstances, SC1 and SC2 licensees with annual turnover below $800,000 are required to submit a less complicated MFR declaration.
Depending on a few criteria, some licensees may be exempt from submitting an MFR report or declaration, but it is best to always obtain professional advice. As recently shared by Australian Property Investor, the QBCC takes action to strip licences of businesses that don’t meet reporting requirements.
Recent MFR changes
As of 1 July 2022, reporting requirements have changed for the submission of MFR reports.
Previously, the QBCC would accept Special Purpose Financial Statements (SPFS). Now, the QBCC requires the considerably more complicated General Purpose Financial Statements (GPFS).
Your GPFS will include a:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
- Notes and additional relevant information
GPFS captures more information than previously used SPFS. For example, GPFS will show employee leave provisions on the balance sheet, as well as assets and liabilities arising from a lease.
Are you meeting your QBCC reporting requirements?
Understanding the complexities and requirements of building and construction business reporting is a big undertaking. However, if you fail to meet requirements, you risk your licence being revoked.
Because of the latest updates and changes, working with an accountant who understands the revised QBCC reporting requirements is essential. In addition to this, as shared by the QBCC, a licensee must ensure an MFR report is prepared by a qualified accountant who is independent of the licensee.
The requirements may feel like a burden on you as a business owner and some accounting bodies are pushing for reporting requirements to be simplified. In the meantime, having a quality accountant who can help you prepare the right declarations, statements and reports will streamline the process and allow you to focus on other areas of your business.
Wondering how the QBCC revised reporting requirements will affect your building and construction industry business and if you are up to date with your obligations? Get in touch with Moore Lewis & Partners.
