There are significant changes coming from the QBCC
Changes to QBBC’s minimum reporting requirements are already underway as of the 1st of January of this year (2019) and there are more on their way – in affect as of the 1st of April. The changes come after some high-profile collapses and insolvencies in the construction industry. These changes are focused on strengthening reporting requirements, providing clarity about what can be included when calculating a licensee’s revenue and assets; and improving data quality and availability for QBCC.
The changes will impact all licensees in different ways. So, what exactly does mean for you? Let’s break it down:
Stronger reporting requirements
Licensees will now be required to:
- – provide financial information to the QBCC annually.
- – report decreases in net tangible assets (20% for categories 4-7; 30% for other licensees).
- – provide additional and more detailed financial information (higher revenue licensees).
In addition, the upper revenue limit for self-certifying licensees will be increased from $600,000 to $800,000. Self-certifying licensees will also need to report Current Ratio of assets to liabilities. The QBCC is releasing an online tool to help but you can always contact your Accountant at Marsh Tincknell to assist with this calculation.
If you fall under categories 4-7 you will be required to report earlier on changes in financial position – if you are deemed a ‘high-risk licensee’ by the QBBC. Contact us to find out what this means for you, and what you can do about it.
Inclusions for calculating a licensee’s assets and revenue
There are now changes to what can be included when calculating assets and revenue. This unfortunately, means that recreational and unregistered vehicles (e.g. golf carts and dirt bikes) can no longer be utilised to meet minimum asset thresholds.
There will be additional clarification about when money in project bank accounts can be classed as an asset or revenue:
- – Head Contractor and Subcontractors will have the ability to include amounts in the general trust account they have a beneficial interest in, as an asset
- – Subcontractors will have the ability to include retention amounts and any possible disputed funds that relate to them as assets
Improved data quality and availability for the QBCC
The QBCC will now be able to get independent verification for an MFR report and recover costs.
If material changes to an MFR report are made by an accountant, they need to clearly identify and support them with updated financial information.
If a licensee relies on a deed of covenant and assurance the QBCC must be given comprehensive financial information about the covenanter to demonstrate they can honour their agreement.
In order for the QBCC to assess whether these loans are collectable, similar requirements will be introduced for related entity loans.
The enforcement framework has seen some improvements made, inclusive of new penalties and offences for failure to comply with the requirements. Existing penalties are still applicable.
The QBCC has authority to place conditions on a license or suspend or cancel the license.
If false or misleading information or if there is a refusal to supply financial information at the request of the QBCC, penalties are also applicable.
Phase 2 will further strengthen enforcement provisions, inclusive of executive officer liability and escalation of penalties, in order to motivate all parties to comply with the new conditions and changes.
Contact your advisor at Marsh Tincknell today, to ensure your confidence in the implemented and upcoming changes.