Gone are the days of extensive reporting for small business entities.
The QBCC (formerly known as BSA) have finally relaxed their red tape and allowed business owners in the building & construction industry some relief from the annual Independent reports that we had to prepare every year.
However, do not let that make you complaisant about their requirements.
They still expect you to retain a current ratio of greater than 1:1. Therefore, current assets always need to be more than current liabilities.
They also still expect you to advise them if your income increases by 10% more than your maximum revenue from what your last report issued to them was, or your net tangible assets decrease by 30%.
In addition… Yes they are able to access Income Tax returns. So, if you thought you could get away with it well if they see you were not compliant do you think they are going to help you in a claim situation?
To meet the Minimum Financial Requirements (MFR) Policy requirements, you must keep internal management accounts at quarterly intervals in each financial year. You must also provide them with documented financial information:
• On an application for a new licence.
• If your Net Tangible Asset position decreases by more than 30%.
• If you no longer meet the minimum Current Ratio of at least 1:1.
• If you Maximum Revenue (MR) needs adjusting (you must not exceed your MR by more than 10% in each financial year).
• Or, if they request it.
There is always a need to stay on top of your requirements. As part of our service at BAS time, we will always look at your ratios and take a copy of your management reports. Before the end of the financial year, we will ensure that everything is in order before 30 June. Any fluctuations that need to be advised to QBCC are advised as and when it occurs so you are always doing the right thing.