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Your annual financial reporting requirements are determined by your annual turnover and are classified into specific maximum revenue categories. The level of detail QBCC requires in your financial information corresponds to the level of risk associated with your turnover. This reporting process allows QBCC to assess the viability of licensees and ensure the protection of consumers and contractors.
To determine your reporting obligations, you will fall into one of the following maximum revenue categories:
You can exceed your maximum revenue by up to 10% without obtaining prior approval from QBCC, but if you anticipate you are going to exceed more than 10% you must first provide the QBCC with a new financial declaration or MFR report that supports your increase and lodge it with an application to increase your maximum revenue.
To prepare for QBCC annual financial reporting, you will need to gather all relevant financial records specific to your reporting category. This may include income statements, balance sheets, general ledger, bank statements, tax records, payroll information, and any other financial documentation related to your business activities.
Once you have gathered your financial records, it's important to perform a thorough review to ensure your records are accurate and identify any discrepancies. Take the time to reconcile your bank statements, accounts receivable, and accounts payable, ensuring that all transactions are recorded correctly and resolve any outstanding issues or discrepancies before proceeding with the reporting process. These statements should accurately reflect your company's financial position, revenue, expenses, assets, liabilities, and equity.
Engaging an accountant can provide valuable assistance in preparing these statements in the required format.
As part of the QBCC evaluation process, specific financial ratios are used to assess your company's financial health. One such metric is the current ratio, which showcases a business’s current assets in relation to its current liabilities. For QBCC licensees, maintaining an acceptable current ratio is essential to demonstrate financial viability.
QBCC requires licensees to maintain a minimum current ratio of 1:1, meaning that there should be at least $1 in current assets for each $1 of current liabilities. However, reporting obligations vary depending on revenue thresholds.
For businesses with revenue up to $800,000, providing the current ratio with the declaration is not mandatory. However, licensees must be able to demonstrate compliance with the current ratio if requested. In contrast, businesses with revenue exceeding $800,000 need an accepted independent accountant to calculate the current ratio as part of the Mandatory Financial Reporting (MFR) report. The report must confirm that the current ratio meets QBCC's requirements as of the end date of the reporting period.
It's important to note you must meet the minimum current ratio level at all times throughout the year. In addition, rounding up the ratio to meet the required threshold is not allowed and certain assets such as goodwill, intellectual property, and uncollectible debts or receivables, should be excluded from the calculation
The QBCC Limits the maximum revenue a licensee can earn based upon the value of their Net Tangible Assets (NTA). Licensees in financial categories SC1 and SC2 must maintain minimum NTA of $12,000 and $46,000. Respectively all other financial categories must calculate either their maximum revenue based on their known NTA or calculate the value of the minimum NTA required to cover their known revenue. An NTA/MR calculator is available on the QBCC website.
Net Tangible Assets (NTA) are the total assets of a business, less any intangible assets, liabilities and disallowed assets. Intangible assets include assets such as goodwill, patents, trademarks and borrowing costs. Disallowed assets include assets such as recreational vehicles, collectors’ items, cryptocurrency or barter programs, unlisted investments, and any related entity asset loans that do not meet the definition set out in the MFR regulation. A full list of disallowed assets can be found on the QBCC website.
QBCC has specific reporting deadlines based on different categories. For SC1 and SC2, the lodgment period starts from 1 November and ends on 31 March. For categories 1-7, the lodgment period begins on 1 August and concludes on 31 December. QBCC will provide you with written notice of your annual reporting day, which will confirm the exact due date for your submission.
The QBCC encourages its licensees to lodge their annual financial information early to avoid the last-minute rush and have the opportunity to seek clarification from QBCC if needed.
Engaging a qualified accountant specializing in QBCC reporting can be highly beneficial. QBCC reporting requirements can be complex and ever-changing, making it essential to have a professional who can guide you through the process, interpret QBCC guidelines, and provide expert advice tailored to your business needs.
By following this comprehensive guide, you can navigate the QBCC annual financial reporting process with confidence. Compliance with QBCC requirements strengthens your business's reputation and demonstrates your commitment to financial integrity within the building and construction industry.
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