Major changes to QBCC financial reporting requirements
Starting from 1 July 2022, QBCC licence holders will be required to include General Purpose Financial Statements (“GPFS”), as part of submitting a Minimum Financial Requirements Report (“MFR report”).
Why General Purpose Financial Statements?
Due to the comparable simplicity, QBCC licence holders have previously commonly submitted Special Purpose Financial Statements (“SPFS”) as part of their MFR report.
The QBCC MFR legislation requires all prescribed Australian Accounting Standards to be applied in the preparation of the financial statements that accompany an MFR report.
Effective from 1 July 2022, the Australian Accounting Standards Board (AASB) have removed the ability for SPFS to be used, and as such, this change has had a knock-on effect on those financial statements prepared for QBCC as well.
Given that GPFS require a more complex preparation process, this change will result in an increase in the costs associated with submitting an MFR report.
Common inclusions in GPFS include:
- Recording of Leave Liabilities
- Recording of Work in Progress
- Capitalisation of Leases (including office space)
When is a Minimum Financial Requirements Report required?
The common scenarios requiring submission of an MFR report include:
- new licence application
- maximum revenue adjustment
- change of licence type (i.e. nominee supervisor to contractor)
- change of ownership of office holders
- revoking a deed of covenant and assurance
- Net Tangible Assets (“NTA”) decrease by more than 30% (categories 1–3) or 20% (categories 4-7)
An MFR report is NOT required to meet a licence holder’s annual reporting obligations.
They are also generally NOT required for Self-Certifying 1 or Self-Certifying 2 licence categories, except under particular circumstances.
Who can prepare an MFR Report?
An MFR report must be prepared by a qualified accountant. A qualified accountant is someone who:
- meets the requirements of a qualified accountant outlined in the ASIC Corporations (Qualified Accountant) Instrument 2016/786, or
- is a Registered Company Auditor, or
- holds a current public practising certificate from the Association of Taxation and Management Accountants or National Tax and Accountants Association.
The qualified accountant must be independent of the licensee.
If you currently hold or are looking to obtain a QBCC licence, and are concerned or curious about how these new QBCC financial reporting changes may impact your business, please feel free to reach out to Link Advisors, and we can have a chat to see what these implications may be.