QBCC MFR Audit
June 15, 2020
All Queensland contractor licences are subject to meeting the Queensland Building and Construction Commission (QBCC) Minimum Financial Requirements (MFR) at all times. The most efficient way for contractors to lose their licence, and with it their livelihood, is a failure to meet the requirements of the MFR. In the 2018-2019 financial year QBCC undertook 630 financial audits of licensees.
Here is what can happen.
Step 1: A licensee comes to the attention of the QBCC. This may be through a monies-owed complaint from a supplier or via the annual financial reports licensees are now required to lodge.
Step 2: QBCC will request certain financial information which must be certified by an accountant (such as MFR reports). They generally provide a 21 day timeframe for the licensee to supply this information.
Step 3: QBCC assess the information provided. If they believe the information provided does not meet the MFR they will issue a ‘show cause’ notice as to why the licence should not be suspended giving the licensee 21 days to demonstrate compliance with the MFR. QBCC will provide reasons why they believe the licensee fails to meet the MFR.
Step 4: If the QBCC are not satisfied with the information provided the relevant licence will be suspended and a further ‘show cause’ notice will be issued as to why the licence should not be cancelled. Appeal processes can be difficult and costly; particularly for small businesses.
Step 5: The licensee can no longer do building work. This may result in clients terminating their building contracts. If the work is residential construction work once the contract is terminated clients may then lodge a ‘non-completion insurance claim’ with QBCC. The claim form warns the client to make no further payments. This could be an issue if the builder was half way through a progress stage.
MFR audits must be completed by a qualified accountant. They can cost anywhere between a couple of grand to over $50,000.
The MFR contains over 50 pages of complex financial requirements referring to many accounting standards. Many contractors, from ASX-listed companies to small business, may fail to meet the MFR at some point either on a genuine basis or a technicality. QBCC may not provide an opportunity to ‘talk-it-through’ before decisions are made (depending on the situation).
Knowing what step 5 involves whilst you are at step 1 can assist. If you ever receive a notice from the QBCC regarding your financial information you should contact a HIA Workplace Advisor on firstname.lastname@example.org to discuss your options and how to mitigate your risk, or call HIA on 1300 650 620.
To find out more HIA has CSQ-funded courses one of which explores the MFR in more detail and how to survive a MFR Audit by the QBCC. You can sign up for such courses here: HIA/CSQ-Small business program