In a welcome response to feedback from industry and the accounting profession, the Queensland Building and Construction Commission (QBCC) no longer requires entities in Category 3 or Self-Certifying Categories 1 and 2, to provide General Purpose Financial Statements (GPFS).
Commencing Friday 16 February 2024, the change applies to financial information in MFR Reports for the quarter ending 31 December 2023 onwards.
Following on from our earlier article, the QBCC has amended the Minimum Financial Requirements (MFR) Regulation so that Category 3 or Self-Certifying Categories 1 and 2 licensees are able to use Special Purpose Financial Statements (SPFS) to support MFR reports (required when either applying for or modifying the turnover class of a licensee). Notwithstanding the relaxation, the QBCC still requires that the following accounting standards be applied when preparing any SPFS for the QBCC:
- AASB 101 – Presentation of Financial Statements
- AASB 107 – Statement of Cashflows
- AASB 108 – Changes in Accounting Policies, Estimates and Errors
- AASB 1048 – Interpretation of Accounting Standards
The amendments also specify that “if another Australian Accounting Standard applies in relation to the licensee’s financial position – the recognition and measurement requirements under the other Standard”. This suggests that while the disclosure requirements for licensees no longer subject to General Purpose Financial Reporting may have been relaxed, the obligation to apply Australian Accounting Standards for the purposes of recognition and measurement persists. In this respect, we expect that the recognition and measurement requirements of the following accounting standards, among others, are likely to continue to apply to almost all builders:
- AASB15 – Revenue from Contracts with Customers
- AASB16 – Leases
- AASB102 – Inventories
- AASB112 – Income Taxes
- AASB116 – Property, Plant and Equipment
- AABB137 – Provisions, Contingent Liabilities and Contingent Assets
While on face value the announcement is encouraging, preparation of financial statements compliant with the requirements of the Minimum Financial Requirements (MFR) Regulation will likely continue to represent a significant burden and risk to external accounts tasked with delivering MFR reports for SME clients.
The change does not affect licensees in financial categories 4-7, which are still required to provide General Purpose Financial Statements both for annual reporting requirements, and when lodging an MFR.
Grant Thornton has a dedicated team to assist advisors and businesses deal with the technical considerations when preparing financial statements.
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