QBCC No longer Require General Purpose Financial Statements (Updated 2024)

The MFR Regulation Amendment [Updated 2024]

On 16th February 2024, an amendment to the MFR Regulation was announced, marking a significant shift in the SPFS vs. GPFS requirements for financial reporting. This amendment, effective immediately, brings forth good news for entities falling under financial category SC1, SC2, and categories 1 to 3. The Queensland Building and Construction Commission (QBCC) has revised its stance, no longer require General Purpose Financial Statements (GPFS) for MFR Report preparation.

This change is specifically applicable to financial information in MFR Reports for the quarter ending 31 December 2023 and onwards. It represents a substantial relief for many businesses and their financial advisors, streamlining the reporting process and reducing the compliance burden for selected categories.

It’s important to note that while this amendment eases the requirements for quarterly MFR Reports, the annual reporting requirements for SC1 and SC2 categories remain unchanged. Entities in these categories are still required to submit a 3-page form without the need for supporting documents. Similarly, for categories 1-3, the requirement to provide an annual reporting form along with internal management accounts persists.

For contractor licensees in financial categories 4 to 7, there is no change. These entities must continue to provide General Purpose Financial Statements (GPFS) for both MFR Reports and annual reporting purposes. This consistency ensures that all parties are adequately informed and compliant with the regulatory standards set forth.

To view the amendment in detail, visit the Queensland legislation website.

In a considerable change to QBCC’s financial reporting regime, as of the 1st July 2022, licence holders are now required to provide General Purpose Financial Statements (GPFS) as part of submitting a Minimum Financial Requirements Report (MFR Report).

A knock-on impact from recent changes to the Australian Accounting Standards, this change will result in an increase in both the complexity and costs associated with submitting an MFR Report.

What are General Purpose Financial Statements?

In short, General Purpose Financial Statements (GPFS) are financial reports that businesses like large public companies are required to submit as part of their responsibilities to shareholders and other governing bodies.

Unlike the Special Purpose Financial Statements that QBCC licence holders have previously used until now, GPFS involve a more complex preparation process, often requiring an auditor in addition to a qualified accountant.

Who will be affected by these changes?

These changes will affect any licensee that needs to submit an MFR Report. This includes licensees upgrading to a new licence category (e.g. upgrading from SC2 to Cat 1), or licensees trading in a trust.

How will these changes impact QBCC licensees?

The increase in complexity and time required to prepare GPFS will drive up the cost of producing an MFR Report – particularly the involvement of an auditor.

Another impact for licensees will be whether their current accountant has the in-house capability to produce GPFS – something many small business accountants won’t have either the capability to, or interest in getting up to speed on.

What should licensees do?

There are two things licence holders should do ASAP to prepare for these changes:

1. Have an upfront conversation with their current accountant. If they aren’t specialists in the industry, they may not be aware of the changes or have the in-house capability to prepare GPFS.
2. Consider applying for a licence upgrade in advance (i.e. if you think your revenue growth will result in needing a higher licence category and Maximum Allowable Turnover). There is a brief window where General Purpose Financial Statements (GPFS) from June 30, 2022, can be used for licence upgrades.

As Qld’s leading building and construction accountants, Xact Accounting is ready to help with these changes. Because we specialise in this sector, we have been able to streamline our processes, keeping costs to a minimum without compromising quality.

Call today for a free 30-minute consultation to discuss how your business will be impacted by these changes.

*Note: The QBCC Minimum Financial Requirements (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 General Purpose Financial Statements (GPFS) to be used in particular reporting settings, as such this change occurred within accounting standards, not QBCC.