Annual Reporting Versus Minimum Financial Reporting
At present we see that there is increasing confusion in the building industry as to what, who and lodgement timeframes of the QBCC reporting. Do you find yourself asking what needs to be reported? Who needs to report and when does this need to be completed by? If you hold a QBCC licence this is one of the crucial area’s in your business you want to get right as we continue to see this causing the greatest stress to licence holders.
We acknowledge that the rules are complex, and they are different from preparing a standard set of financial statements and tax returns. It is our recommendation that you confirm with your accountant that they are specialised in this area. If the QBCC reporting documents are lodged incorrectly on your behalf, we have seen this can be substantially significant in the results received back from the QBCC reporting officers and from our experience results in major stress to the licensee. In most cases, this can be avoided if you have a specialist QBCC Accountant working for you from the start.
As a QBCC Licence holder there are two (2) types of financial reporting that you need to be aware of. Whilst it is crucial that you are ensuring your business meets the financial requirements on a regular basis these are the times you are required to provide this information to the QBCC.
The goal of all financial reporting with the QBCC is to ensure that participants in the industry have strong businesses and sufficient working capital.
The first QBCC requirement is Annual reporting. This was introduced as a requirement in 2019 with many in the industry missing the reporting deadline or incorrectly reporting. For the 2019 year the QBCC did give some licence categories leniency to get their financial affairs in order if they did not meet the Financial requirements initially at that date.
Whilst there has been rumours that due to COVID the QBCC may look at reviewing the annual reporting requirements for the 2020 year, nothing yet has been legislated. Therefore, as a licence holder it is important that you act now, especially if your business has been affected by COVID.
Annual reporting is completed on the QBCC website (the QBCC has advised that licensees are able to complete themselves), the requirements are different depending on your licence category.
In preparing your information to report, it is important that you review your information and ensure that you meet the requirements prior to reporting.
These requirements are:
i. Current Ratio- at least 1:1
ii. Net Tangible Assets- at a level sufficient for your turnover
iii. You have not exceeded your allowable annual turnover by more than 10% (If yes you need to contact your accountant for an MFR as well)
If you do not meet the requirements based on your 30th June financials you are able to use a time in the future (prior to the 31st December) where you do meet. This is the first step to ensuring you avoid an audit as the QBCC website will not advise that you have not met the requirements at the time of lodging.
It is our recommendation that if you are in the construction industry you ensure that you are in contact with your accountant BEFORE the 30th September 2020 to start reviewing your June 2020 results and ensuring your business is still compliant.
If you have reviewed your situation by the 30th September this will provide you and your accountant 3 months to correct any unprecedented issues with your figures.
SC1 to SC2 Licence Categories
For this category you will need to enter your revenue, expenses, assets, and liabilities. You do not need to provide any supporting documentation to what you have lodged.
Remember: If you are a sole trader you need to include all income you have except for Salary and Wages i.e. Rental income, interest on bank accounts, dividends etc.
Cat 1 to Cat 3 Licence Categories
If your Turnover falls between $800k to $30M you need to lodge the following documents with the QBCC;
• Profit and Loss Statement
• Balance Sheet
• Accounts Receivable and Accounts Payable listing
• Statement of Cashflow
With this category of reporting we also suggest if the business is relying on a Deed of Covenant that you ensure you make note of the directors assets in the submission that they have been review to confirm that the deed is still relevant.
You also need to ensure that if the nominee to the company holds a licence that they also have met the requirements of the Annual Reporting. If they only hold a nominee licence, then no reporting is required.
Minimum Financial Reporting (MFR)
Minimum Financial Reporting with the QBCC Is generally only completed when there is a change in the financial situation of the business that needs to be reported to the QBCC.
This reporting needs to be completed by your accountant; the information used can only be 4 months old. If you are required to report, we recommend that we use your 30th June results to save you extra costs, it is also important that this is completed sooner rather than later.
You are required to report in the following situations:
a. Change of Trustee for a Trust (all category levels)
b. New Licence- Categories 1 and above
c. Change of Directors
d. Maximum Revenue exceeds 10% (remember this is all revenue of the business not just QBCC licenced work)
e. If your NTA position decreases by more than 20% for Categories 4-7 licensees and 30% (for all other licensees)
If you are required to lodge an MFR due to the one of the above, please contact us and we can talk through the process.
Our Final Message
As a final reminder to keep the QBCC away you should always focus on the following QBCC rules:
Don’t go over your maximum revenue amount by more than 10% without informing the QBCC
Keep your ratio of current assets to current liabilities to at least 1:1
Ensure you meet your Net Tangible Assets requirements
Ensure you continue paying your subcontractors and suppliers.
Our goal at MJJ Accounting and Business solutions is to work with our clients to ensure that their business is in a position that the reporting is seamless and effortless for the directors so that you can concentrate on what you do well in business.
Contact our team of QBCC Specialists in Maroochydore now on 07 5451 1118. We can guide you through the QBCC financial reporting process.