The first (and probably most fundamental) question that
any business owner ought to be able to answer is: How is my
The provisions of the Queensland Building and Construction
Commission's Minimum Financial Requirements Policy (Policy)
require licensees to ask that question in a deliberate way.
In this E-Alert, we will discuss the financial monitoring
requirements of the Policy, the practical benefits of compliance
with those requirements and the legal and practical difficulties of
Put simply, the Policy requires a licensee to prepare and
maintain 'internal management accounts' on a quarterly
basis. The Policy defines these as:
A statement of financial performance (also known as a trading
and profit and loss statement);
A statement of financial position (also known as a balance
An aged listings of trade debtors and creditors; and
A statement of cash flows.
These are minimum requirements. Sound management practice
suggests these should usually be completed monthly. This regularity
will strengthen your opportunity to respond to changing
circumstances and ensure there is little impact on your financial
There are a number of benefits (apart from compliance with the
Policy) that flow from having your 'internal management
accounts' reviewed by your accountant on a quarterly basis.
Most importantly (from a practical viewpoint), you have a clear
understanding of the financial position of your business. With the
benefit of cloud based tools this process does not need to be a
time consuming and costly exercise provided you have appropriate
systems and tools in place. Such systems and tools are available to
all scale enterprises from small sole traders through to the large
scale construction contractors.
From a legal standpoint, having a clear picture of the financial
position of your business means that you are less likely to:
Breach your Maximum Revenue (which can result in suspension and
cancellation of your licence);
Breach the requirements of the Policy with respect to your Net
Tangible Asset position (remember that you have to report a 30%
reduction in Net Tangible Assets) which, again, can result in
suspension and cancellation of your licence; and
Have your business go into administration or liquidation (with
the automatic loss of licence which now follows) as you will be
able to take proactive action in the event that your business
suffers financial difficulties.
You are also more likely to be able to comply with a snap audit
by the Commission.
Those who are unable to respond promptly to an audit, may (in
addition to facing a penalty and/or disciplinary action), set off
further alarm bells at the Commission. This could result in the
Commission taking a more active interest in your business than you
may wish them to take. Naturally, the ability to respond promptly
will depend on the state of your record keeping. Responding with
unreconciled or incomplete records will create a perception of poor
Maintaining accurate and up to date records will provide great
benefits to you, not just for the benefit of the Commission.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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