4 December 2018
The government, in seeking to tackle insolvencies and corporate collapses in the building and construction industry, has announced new reporting requirements for Minimum Financial Requirements (MFR). The changes will take place in a two-staged process.
Starting from 1 January 2019 licensees will need to provide financial information to the QBCC each year (as was the case prior to 2014).
While the full regulation has not yet been released some of the other features of the new approach have been announced. They include:
- Smaller companies (Categories SC1 and SC2) will continue to self-certify and will also need to report their Current Ratio of assets to liabilities. The revenue threshold for self-certification will be raised from $600,000 to $800,000. A new online reporting tool will be developed to help make it easy to comply.
- Mid-sized companies (Categories SC1 to Category 3) will continue be required to report decreases in Net Tangible Assets of 30% or more.
- Large companies (Categories 4 to 7) will need to report decreases in Net Tangible Assets greater than 20%. They will also be required to provide more detailed financial information in the form of a ‘balanced scorecard’. The details of which are not yet available.
- Personal recreational vehicles, such as dirt bikes and golf carts, can no longer be used to meet minimum asset thresholds.
- With Project Bank Accounts both head contractors and subcontractors will be able to include any amount in the general trust account they have a beneficial interest in as an asset. Subcontractors will also be able to include retention amounts and disputed funds that are related to them.
- The QBCC will be able to seek advice from a suitably qualified, independent accountant to substantiate information in an MFR report. Licensees who provide incorrect information may need to meet the costs of the independent assessment.
- Any ‘material changes’ made by an accountant to an MFR report will need to be clearly identified and supported by updated financial information.
- If a licensee is relying on a Deed of Covenant and Assurance, they will need to provide the QBCC with detailed financial information about the covenantor to show they can honour their agreement. Similar requirements will be introduced for related entity loans so the QBCC can assess whether these loans will be collectable when due for payment.
Further details are available from the Department of Housing and Public Works. Master Builders will also ensure members are advised as more information becomes available.
Accountant information sessions
The QBCC is also holding a series of information Sessions for accountants to help them better understand the MFR policy and reporting requirements. Individual accountants who would like to be involved are urged to contact the QBCC to arrange a presentation.
For more information please contact the QBCC on 139 333 or via email@example.com.