As a result of recent changes to QBCC reporting requirements, any licensee required to submit an MFR Report must provide an accurate Work In Progress (WIP) figure.
Previously a relaxed view around WIP was taken for MFR Reports. Recent changes to the Australian Accounting Standards, the detailed set of standards that MFR Reports must comply with, now clearly state that WIP is not only a compulsory inclusion, but it must also be calculated according to the Accounting Standard’s methodology.
Many builders and tradies (and their accountants!) will know that producing an accurate WIP figure is no easy thing – it’s no surprise that many businesses don’t even try, or they calculate it “on the back of a beer coaster”.
Whilst this new requirement does impose a higher degree of compliance, Head of CFO Advisory at Xact Accounting, Dan Wilkinson says that WIP is actually a critical accounting entry for any business owner wanting to see their true profit position.
Without WIP your numbers are going to look like a roller coaster, leaving you guessing as to the true nature of your profit from one month to the next.
Businesses wanting to learn more about why WIP is important, or how to calculate an accurate WIP figure, can watch the replay of our recent workshop – which includes access to our free WIP Calculator.
Alternatively, you can book a free one-on-one session with our CFO Advisory team.
