Minimum Financial Requirements - Queensland Building … · 1. Financial Requirements ... To...

Minimum Financial Requirements

0 | P a g e


Effective 9 October 2015

MFRv2 09102015


9 October 2015 1 | P a g e

Contents 1. Financial Requirements ............................................................................................................................ 4

1.1 Financial Requirements .................................................................................................................... 4

1.2 Objectives ........................................................................................................................................... 4

1.3 Application of this policy ................................................................................................................ 4

1.4 Applicants and Licensees must comply with this policy ........................................................ 4

1.5 Information provided by an Applicant or Licensee ................................................................ 4

1.6 Parts 2 - 7 not applicable in certain circumstances ............................................................... 5

1.7 Forms .................................................................................................................................................. 6

2. Net Tangible Assets .................................................................................................................................. 7

2.1 Financial Requirement - Net Tangible Assets ........................................................................... 8

2.2 Demonstrating Sufficient Net Tangible Assets ......................................................................... 8

2.3 Decreases in Net Tangible Assets ............................................................................................. 8

2.4 Negative Net Tangible Assets ...................................................................................................... 8

2.5 Asset Valuations ............................................................................................................................... 9

2.6 Related Entity Loans and Investments Assets ......................................................................... 9

2.7 Deed Of Covenant And Assurance ............................................................................................ 9

3. Maximum Revenue ................................................................................................................................. 10

3.1 Financial Requirement – Maximum Revenue ........................................................................... 11

3.2 Calculating Maximum Revenue .................................................................................................. 11

3.3 Exceeding Maximum Revenue ................................................................................................... 11

4. Current Ratio ............................................................................................................................................ 12

4.1 Financial Requirement – Current Ratio ..................................................................................... 13

4.2 Calculating the Current Ratio ...................................................................................................... 13

4.3 Determining Current Assets and Current Liabilities based on Licensee Structure ............... 13

4.4 Current Ratio for declaration categories (SC1 & SC2) ........................................................ 14

5. Financial Monitoring ................................................................................................................................ 14

5.1 Financial Requirement – Financial Monitoring ......................................................................... 14

5.2 Provision of ASIC or ASX Reports to Commission ............................................................ 14

5.3 Provision of Internal Management Accounts to the Commission ............................................ 14

6. Accepted Independent Accountants ................................................................................................... 145

6.1 Qualifications for Accepted Independent Accountants ............................................................ 15

6.2 Another Responsible Person....................................................................................................... 16



6.3 Notice to Accepted Independent Accountants for MFR Reports ............................................. 16

6.4 Warning to Accepted Independent Accountants ...................................................................... 16

6.5 Reporting Requirements for Accepted Independent Accountants ....................................... 17

6.6 Determining Collectability of Related Entity Loans or Investment Assets ...................... 17

6.7 Implied Warranty by Accepted Independent Accountant ....................................................... 17

7. Submission of Financial Information to the Commission .................................................................. 18

7.1 Applicants for a Licence .............................................................................................................. 18

7.2 Existing Licensees Applying for a New Licence .................................................................. 18

7.3 Self-Certification Categories (SC1 & SC2)................................................................................ 18

7.4 Financial information for Categories 1-7 ..................................................................................... 18

7.5 Applicants and Licensees subject to ASIC Audit Requirements ...................................... 19

7.6 Applicant and Licensees not previously audited who become subject to ASIC Audit Requirements ............................................................................................................................................... 19

7.7 Applicants and Licensees in Categories 3-7 Not Required by ASIC to be Audited .............. 20

7.8 Overseas Companies in Categories 3-7 ................................................................................. 20

7.9 Compliance Audit ........................................................................................................................... 20

7.10 Power to Require Production of Documents ......................................................................... 21

7.11 Licensee’s financial circumstances must at all times satisfy Minimum Financial Requirements ............................................................................................................................................... 21

7.12 Documents that may be provided to satisfy Commission ......................................................... 21

7.13 Restructure of Licensee ............................................................................................................... 21

8. Assessment of Financial Information by the Commission ................................................................ 22

8.1 Assessment of financial information ......................................................................................... 22

8.2 Failure to meet minimum financial requirements .................................................................. 22

9. Payment of Debts .................................................................................................................................... 23

9.1 Financial requirement – payment of debts ............................................................................... 23

9.2 Financial requirement does not apply in certain circumstances ...................................... 23

9.3 Documents and evidence to be provided to the Commission ......................................... 24

10. Professional Indemnity Insurance ..................................................................................................... 24

10.1 Financial Requirement - Professional Indemnity Insurance .................................................. 24

10.2 Terms and Conditions of Insurance Policy ............................................................................ 25

10.3 Insurance requirements for Fire detection, alarm and warning systems – Certify licence .. 26

10.4 Evidence of Cover ......................................................................................................................... 26

10.5 Implied warranty by insurance companies and insurance brokers .................................. 26



10.6 Circumstances when insurance is not required .................................................................... 26

10.7 Commission may impose licence conditions .......................................................................... 27

11. Incorrect Information ........................................................................................................................... 27

12. Confidentiality ...................................................................................................................................... 28

13. Transitional Provisions ....................................................................................................................... 28

13.1 Repeal of financial requirements policies existing prior to the Commencement Date ......... 28

13.2 Transitional provisions .................................................................................................................... 28

13.3 Continuing classes of fire protection licence ............................................................................... 29

14. Definitions ............................................................................................................................................. 29

Tables Table 1 - Possible Assurers – Deeds of Covenant and Assurance 10

Table 2 - Ratio – Structure 13

Table 3 - Accepted Independent Accountant Categories 15

Table 4 - Licence Classes Requiring Professional Indemnity Insurance 24

Table A - Minimum Financial Requirements 56

Attachments Attachment 1 - MFR Report 35

Attachment 2 - Declaration – Maximum Revenue up to $200,000 38

Attachment 3 - Declaration – Maximum Revenue up to $600,000 39

Attachment 4 - Declaration – Professional Indemnity Insurance 40

Attachment 5 - Statement of Financial Position – Covenantors 42

Attachment 6 - Review Control Sheet 43

Attachment 7 – Production of Documents – MFR Report – Non Reporting Entities up to and

including Licence Category 4 46

Attachment 8 – Production of Documents - MFR Report – Category 5 to 7 or Reporting Entities -

any Licence Category 51



1. Financial Requirements

1.1 Financial Requirements

The Queensland Building and Construction Board Policy which constitutes the financial requirements for the Queensland Building and Construction Commission Act 1991 (“Act”) consists of:

• Maximum Revenue; • Net Tangible Assets; • Current Ratio; • Payment of Debts; • Financial Monitoring; and • Professional indemnity insurance.

1.2 Objectives

This policy is made by the Queensland Building and Construction Board and states the Minimum Financial Requirements for licensing under the Queensland Building and Construction Commission Act 1991.

The objectives of the Minimum Financial Requirements in this policy are to promote financially viable businesses and foster professional business practices in the Queensland building industry.

To achieve these objectives and minimise the incidence of financial failure in the building industry, this policy requires all Applicants and Licensees to comply with the Minimum Financial Requirements.

1.3 Application of this policy This policy applies to all applicants for, and holders of, a licence under the Queensland Building and Construction Commission Act 1991 (the Act) except applicants for, or holders of, a nominee supervisor’s licence, site supervisor’s licence or any occupational licence.

All relevant current Australian Accounting Standards must be applied to the financial information of the Licensee. The Minimum Financial Requirements are additional requirements that are to be applied after all relevant Australian Accounting Standards have been applied.

Where the policy mentions Australian Accounting Standards its meaning is to be taken as a reference to the standard currently in force.

1.4 Applicants and Licensees must comply with this policy

Under the Act, the Commission cannot lawfully issue a licence to an Applicant unless it is satisfied that the Applicant satisfies the Minimum Financial Requirements stated in this policy, as well as other requirements stated in the Act.

It is also a statutory condition of holding a licence that the Licensee’s financial circumstances must at all times continue to satisfy the relevant Minimum Financial Requirements stated in this policy. If a Licensee breaches a condition on their licence, their licence may be suspended or cancelled under section 48 of the Act.

1.5 Information provided by an Applicant or Licensee

To allow the Commission to make a determination as to the Applicant or Licensee’s compliance with this policy, the Applicant or Licensee is required to provide the specified financial report and other



relevant evidence to support their application for a licence, or for an increase in their Maximum Revenue.

If the Commission has concerns about the adequacy or accuracy of the information provided, the Commission may require further information. The Act allows the Commission to require further information from the Applicant, Licensee or the Accepted Independent Accountant who provided information on behalf of the Applicant or Licensee.

Under the Act, an Applicant or Licensee may also be required by the Commission to provide further information or evidence that the Commission requires to determine whether the Applicant is, or the Licensee continues to be, eligible to hold the licence. This may include information or evidence about their continued compliance with the financial requirements in this policy. If an Applicant or a Licensee fails to comply with a notice requesting this information, their licence may be refused, suspended or cancelled.

A person who provides false or misleading documents or information to the Commission about an Applicant or Licensee’s compliance with this policy may be liable for prosecution for an offence under the Act.

1.6 Parts 2 - 7 not applicable in certain circumstances

All Parts in this policy apply to an Applicant or Licensee unless expressly excluded under this section or another provision of this policy.

Applicants or Licensees who may rely on an exemption from Parts 2-7 of this policy will need to provide the following information at the time of application and or any other time as required by the Commission:

a) A certificate of currency for professional indemnity insurance which complies with this document, for the class of licence; and

b) An Estimated Maximum Revenue Declaration based on the Applicant or Licensee’s Maximum Revenue, as defined in this document, for the financial year.

1.6.1 Special Purpose Vehicles

Parts 2 - 8 of this policy do not apply to an Applicant or Licensee applying for, or holding, a licence if the Applicant or Licensee is a special purpose vehicle. For the purposes of this policy a special purpose vehicle is an entity established for the sole purpose of carrying out building work under a public private partnership arrangement.

To remove doubt, the exemption in this section does not apply to an Applicant or Licensee who intends to carry out, or carries out, both building work under a public private partnership arrangement and other building work independent of the arrangement. In these circumstances, the Applicant or Licensee must comply with all Parts of this policy, including Parts 2 - 8.

1.6.2 Builder – Project Management Services Licence

This section applies to an Applicant for, or a Licensee holding, a licence in the class of “Builder – Project Management Services”.

An Applicant or Licensee to which this section applies is not required to comply with Parts 2 - 7 of this policy if all of the following apply:



a) the Applicant or Licensee holds professional indemnity insurance for the services specified in the scope of work for the licence; and

b) the policy terms and conditions for the professional indemnity insurance referred to in paragraph

(i) provide for a minimum limit of indemnity for any one claim and the sum of all claims during any one period of insurance of not less than $1,000,000; and

(ii) are otherwise equivalent to those stated in section 10.2(1) to (7) of this policy.

(iii) The Applicant or Licensee is not applying for, and does not hold, a licence in another class which requires the Applicant or Licensee to comply with Parts 2 - 7 of this policy.

1.6.3 Part 10 Licences

This section applies to an Applicant for, or a Licensee holding, a licence in one or more of the following licence classes:

(a) Building design – low rise; (b) Building design – medium rise; (c) Building design - open; (d) Hydraulic services design; (e) Hydraulic services design excluding design of on-site domestic waste water management; (f) Site classifier; (g) Site classifier excluding on-site domestic waste management.

An Applicant or Licensee is not required to comply with Parts 2 - 7 of this policy if all of the following apply:

a) The Applicant or Licensee has complied with the requirements specified in Section 10 of this policy without relying upon section 10.6 to satisfy the insurance requirements in that Part; and

b) The Applicant or Licensee is not applying for, and does not hold a licence in another class which requires the Applicant to comply with Parts 2 - 7 of this policy.

1.7 Forms

The forms required to be submitted to the Commission in order to demonstrate an Applicant or Licensee’s compliance with this policy are attached to this document and may be reissued by the Commission from time to time. These forms can be downloaded for appropriate use from the Commission’s website at www.qbcc.qld.gov.au.

Forms submitted with alterations, other than the completion of the spaces provided, may be refused by the Commission.

If the requirements of this policy are not applied as prescribed the information submitted in the forms will not be accepted by the Commission. In the case of an Applicant for a licence, the application will be deferred until such time as the correct information is provided or the application is rejected. In the case of a Licensee, the licence may be suspended or cancelled if the requirements are not met.

http://www.qbcc.qld.gov.au/



2. Net Tangible Assets Definitions for Section 2:

In this section:

Assets – means assets owned both legally and beneficially by the entity (that is, it does not include assets which are held on trust for another person or corporation) and includes but is not limited to the following:

(a) Cash; (b) Construction Contract Work in Progress; (c) Debtors (if collectible); (d) Inventory; (e) Investments (if collectible); (f) Investments valued using equity accounting methodology only where included in general

purpose financial statements; (g) Motor vehicles; (h) Plant and equipment at written down value; (i) Real estate; (j) Related Entity loans and investments (only if assessed as collectible); (k) Shares in publicly listed companies; (l) Tools of trade.

Assets do not include the following:

(a) Intangible assets; (b) Assets not assessed as collectible; (c) Boats, ships, jet skis, planes, helicopters, race horses and racing cars; (d) Collectors’ items (e.g. paintings, stamps, coins); (e) Contingent assets; (f) Furniture (personal); (g) Investments or shares in companies that are not publicly listed companies; (h) Investments valued using equity accounting methodology where included in special

purpose financial statements; (i) Trade or barter dollars and any equivalent scheme; (j) Trust assets; and (k) Units in trusts that are not publicly listed; (l) Unvested superannuation benefits; (m) Life or income protection insurance policy benefits.

For clarity and calculation purposes, excluded assets at (b) to (m) above are Disallowed Assets.

Liabilities – means all debts or obligations which are owed by an Applicant, or Licensee, which are payable on demand, legally enforceable or a statutory requirement.

Liabilities include all amounts owed by the Licensee to any Related Entities, and any deficiency in trusts for which the Licensee is Trustee.

Where a Licensee has received notification of a breach of banking or loan covenants the full amount of the loan or finance facility is classified as a current liability until such time as the lender has waived their rights in relation to the breach.



Net Tangible Assets – is calculated using the following formula:

NTA = Assets - Liabilities - Intangible Assets – Disallowed Assets

2.1 Financial Requirement - Net Tangible Assets It is a financial requirement that Applicants and Licensees must have sufficient Net Tangible Assets (NTA) in their own right sufficient for the higher of the level of Maximum Revenue or the actual Revenue being generated as stated in Table A. The Net Tangible Assets of an Applicant or Licensee must be at least $0.

Applicants and Licensees may rely upon a Deed of Covenant and Assurance in order to meet this financial requirement (refer section 2.7)

2.2 Demonstrating Sufficient Net Tangible Assets

NTA may be evidenced, either through a Declaration completed by the Applicant or Licensee, or a MFR Report or other report completed by the Accepted Independent Accountant depending on the entity’s level of Revenue.

In determining the entity’s NTA position, the person completing the Declaration or Report must consider the entity’s entire financial position, including Related Entities and those entities providing Deeds of Covenant and Assurance in order for the entity to meet the Minimum Financial Requirements.

Only the net realisable amount of the entity’s assets should be brought to account. All liabilities, intangible assets and disallowed assets of the entity must be deducted in calculating NTA in accordance with this policy.

2.3 Decreases in Net Tangible Assets All licences are subject to a condition that the Licensee’s NTA position is not to decrease by more than 30% from its last advised and Commission accepted NTA position unless the Licensee provides a new Declaration or MFR Report within 30 days of the decrease occurring. The Declaration or MFR Report must substantiate the Licensee’s adjusted NTA position. This includes a decrease in the Net Real Unencumbered Assets which have been assured to the Licensee by Deed of Covenant and Assurance.

In the event a Licensee has a decrease in NTA by more than 30% from its last advised and Commission accepted NTA position, and does not provide the relevant financial information within 30 days of the decrease occurring, the Licensee will have breached a condition of licence. This may result in the suspension or cancellation of the licence. Licensees may also be subject to disciplinary proceedings pursuant to the Act.

For clarification, the 30 days to notify the Commission commences when the Licensee realises or ought reasonably have realised that they have breached the 30% reduction in NTA. Refer section 5 which provides that internal management accounts be prepared at least quarterly.

2.4 Negative Net Tangible Assets

Licensees and Applicants must have an NTA position in their own right of not less than $0. Entities which have a negative (deficit) NTA position do not meet the Minimum Financial Requirements and are not permitted to rely upon a Deed of Covenant and Assurance to cover the deficiency.



2.5 Asset Valuations Licensees and Applicants are permitted to value assets that are to be relied upon in support of Net Tangible Assets, provided those values can be substantiated and the revalued assets are non-current assets. Any assets valued at sale price may not be included as current assets.

Where required by the Commission, such valuations are to be substantiated by way of a valuation by an accredited, registered or recognised valuer.

2.6 Related Entity Loans and Investments Assets

Related Entity Loans and Investments recorded as an asset in the entity’s accounts must not be included or relied upon in determining the entity’s NTA, unless the Accepted Independent Accountant preparing the MFR Report or other report has independently verified that the related entity loan or investment asset is collectible. It is not sufficient for the Accepted Independent Accountant to accept the Directors advice without performing reasonable checks or tests.

The Accepted Independent Accountant preparing the Report is required to specify in the Report that they have independently verified the collectability of the Related Entity Loan or Investment asset. When required by the Commission, the Accepted Independent Accountant must provide evidence of the verification of collectability of the Related Entity Loan or Investment asset.

2.7 Deed Of Covenant And Assurance Where an eligible Licensee or Applicant does not have sufficient NTA in its own right for the level of Maximum Revenue required or the actual Revenue being generated it may, dependent on the entity’s structure, rely upon a Deed of Covenant and Assurance based on the Net Real Unencumbered Assets from a Covenantor as permitted under this policy, in order to meet the NTA requirement.

The Covenantor must have and continuously maintain sufficient Net Real Unencumbered Assets in their own right to meet the value of the Defined Amount stated in the MFR Report.

The Net Real Unencumbered Assets of the Covenantor may not include any Related Entity Loans or Investments owed to the Covenantor by the Licensee. All liability amounts owing by the Covenantor to the Applicant or Licensee must be brought to account. Assets held in trust (by any entity) cannot be assured to the Applicant or Licensee by way of Deed of Covenant and Assurance.

Licensees and Applicants providing a Declaration must have sufficient assets in their own right, and cannot rely on a Deed of Covenant and Assurance in order to meet the NTA requirements for SC1 or SC2.

Entities relying upon a Deed of Covenant and Assurance must provide a MFR Report, and must meet Category 1 requirements in accordance with Table A, at a minimum.

The original Deed of Covenant and Assurance is required to be submitted to the Commission together with the MFR Report and is retained by the Commission unless a Liquidator or Trustee in bankruptcy is appointed to the Licensee, in which case the original will be provided to the Liquidator or Trustee in bankruptcy.

The Accepted Independent Accountant completing a MFR Report or other report which relies on a Deed of Covenant and Assurance will be required to:

a) state in the Report the full name and the relationship of each Covenantor to the Applicant or Licensee,

b) state within the Report the defined amount that is secured by the Deed, or if more than one - each Deed; and



c) provide a Statement of Financial Position (Attachment 5) and any other appropriate documentation detailing each Covenantor’s financial position at the time the Report was signed, and be based on accounts no earlier than the year end date on which the Report has been based.

The Covenantor’s Statement of Financial Position is required to be completed by the same Accepted Independent Accountant completing the Report signifying all reasonable checks have been made with regard to each Covenantor’s entire financial position, to ensure the existence, collectability and unencumbered value of assets being assured to the entity.

A Licensee who no longer wishes to rely on amounts assured by way of a Deed of Covenant and Assurance is required to provide an updated MFR Report demonstrating sufficient Net Tangible Assets held in their own right.

Covenantors who have assured assets by way of a Deed of Covenant and Assurance to a Licensee who become insolvent may be called upon by a Liquidator or Trustee in bankruptcy to pay the defined amount relied upon by the Licensee at the time any outstanding debts were incurred by the Licensee, regardless of whether the Licensee relied on a Deed of Covenant and Assurance to meet the requirements of this policy at the time of appointment of the Liquidator or Trustee in bankruptcy.

Table 1 – Possible Assurers

* limited to only those direct Beneficiaries which are not subject to or under a legal disability, and have sufficient assets in their own right to assure to the Applicant or Licensee.

3. Maximum Revenue

Definitions for Section 3:

In this section:

Maximum Revenue – means the maximum Revenue from all sources a licensed entity may earn in each financial year. The Maximum Revenue issued to a Licensee applies to the licensed entity in combination with all trusts or partnerships through which it is trading. In the case of a company trading as part of a group of companies under ASIC class order 98/1418, the Maximum Revenue applies to the entity as it has

Applicant or Licensee Structure Possible Assurers

Individual – Sole Trader • None available

Company – Trading as a stand-alone Company • Directors of the Licensee company • Associated company

Company – Trading as part of a group of companies • Directors of the Licensee company • Associated company • Other companies in the group

Individual or Company – trading in a Partnership • Other partners within the Partnership • Directors of the Company (for Company licensees) • Associated Company (for Company licensees)

Individual or Company – acting as Trustee

• Beneficiaries of the trust administered by the Licensee as Trustee*

• Directors of the Company (for Company licensees) • Associated Company (for Company licensees)



reported to the Commission under this policy: either the consolidated group; closed group or the company on a stand-alone basis.

Revenue – means the total income received by the Applicant or Licensee, derived from all sources. Further:

• For Applicants or Licensees engaged directly in project or construction management (where project costs are paid directly by the Principal to parties lower in the contractual chain), or who have a building design licence, the revenue in respect of those activities is calculated on the total amount received by the Licensee rather than the value of projects. Alternatively, the component of the work processed via the Applicant or Licensee is deemed Revenue.

• In the case of a partnership, the Revenue is to be the revenue of the Applicant or Licensee and the partnership/s in combination.

• In the case of a trustee, the Revenue is to be the revenue of the Applicant or Licensee and the trust/s in combination.

• Includes the reference to turnover in section 35 of the Act.

Revenue excludes:

a) Salary and/or wages received as an employee; and b) GST collected as an agent, from which the Applicant or Licensee obtains no benefit.

3.1 Financial Requirement – Maximum Revenue

It is a financial requirement that a Licensee must not exceed their Maximum Revenue by more than 10% in each financial year.

3.2 Calculating Maximum Revenue A Licensee’s Maximum Revenue is calculated based on the Net Tangible Asset (NTA) position of the Applicant or Licensee as stated in the Declaration or MFR Report by applying the formula stated in Table A.

Amounts being assured by way of one or more Deeds of Covenant and Assurance may be added to the NTA of the Licensee when calculating Maximum Revenue.

The Commission will advise an Applicant or Licensee of the Maximum Revenue it may generate per Financial Year upon granting the licence and upon acceptance of updated Declarations or Reports.

The Maximum Revenue applies for all financial years until such time as it is updated by the provision of a new Declaration or Report and the Commission has notified the Licensee of the new Maximum Revenue.

3.3 Exceeding Maximum Revenue Pursuant to section 35 of the Act, it is a condition that Licensees must not exceed their Maximum Revenue by more than 10% in a financial year without first providing a new Declaration or Report to the Commission substantiating sufficient NTA to support a higher level of Maximum Revenue. Licensees who exceed their Maximum Revenue by more than 10% and do not report to the Commission as required do not meet the Minimum Financial Requirements and may be subject to licence suspension or cancellation or disciplinary action and a penalty.



4. Current Ratio


In this section:

Current Assets – means assets:

a) which are realised, sold or consumed in the normal operating cycle of the business; b) which are realised within twelve months after the reporting period; c) which are held primarily for the purpose of trading (refer AASB 139); d) which are cash or a cash equivalent (as defined in AASB 107) unless the asset is restricted

from being exchanged or used to settle a liability.

Related Entity loans and/or investments included as current assets must be collectible and convertible into cash as at balance date.

Real property listed as a current asset is to be shown at the lower of cost or net realisable value.

Trade debtors that are a current asset and not contingent are only included to the extent they are collectible and as a minimum requirement overdue debtors must be written off as follows:

a) Trade debtors at or over 180 days old from invoice date, to be 50% written off; and b) Trade debtors at or over 365 days old from invoice date, to be 100% written off.

Current Assets do not include:

a) Any Related Entity loans or investments assets which are not collectible; b) Contingent assets c) Intangible assets; d) Real property not currently listed on the market for sale; e) Disallowed assets.

Current Liabilities – means liabilities:

a) which are expected to settle in the normal operating cycle of the business; b) which are due to be settled within twelve months after the reporting period; c) which are held primarily for the purpose of trading; d) the entity does not have an unconditional right to defer settlement of the liability for at least

twelve months after the reporting period.

Current liabilities include:

a) the amount of any non-current liabilities which must be paid by the Applicant or Licensee in the 12 months following the reporting period; and

b) all Related Entity loans payable by the Applicant or Licensee in the 12 months following the end of the reporting period.

c) The full amount of all bank loans or finance facilities where the lender or syndicate of lenders has notified the Applicant or Licensee of a breach of bank or lending covenants.



Current Ratio – means the ratio calculated by using the following formula:

Current Assets

Current Liabilities

To meet the requirements an Applicant or Licensee’s current ratio must be at least 1:1.

4.1 Financial Requirement – Current Ratio It is a financial requirement that Applicants and Licensees must meet the Current Ratio requirement at time of Application, and at all times whilst the licence is held.

4.2 Calculating the Current Ratio

The Current Ratio is calculated in accordance with the defined formula.

Current assets included in the calculation of the Current Ratio must be in accordance with the definition of current assets in this policy.

The Commission may require the Applicant, Licensee or Accepted Independent Accountant to provide evidence of the classification of an asset as a current asset. Where such evidence is not provided the Commission may automatically reclassify such assets as non-current assets without further notice to the Applicant or Licensee.

All current liabilities of an Applicant or Licensee must be included in the calculation of the Current Ratio, including any loans to Related Entities payable by the Applicant or Licensee in the 12 months following the end of the reporting period.

Amounts assured by way of a Deed of Covenant and Assurance must not be included in calculating the Current Ratio.

The Current Ratio is required to be expressed as a ratio and must not be rounded up.

4.3 Determining Current Assets and Current Liabilities based on Licensee Structure

Depending on the structure of the Applicant or Licensee, the Current Ratio may only be met from current assets and current liabilities, as follows:

Table 2 – Ratio Structure

Structure of Applicant or Licensee: Current Assets and Liabilities of:

Individual – Sole Trader Individual Only

Company – trading as stand-alone company Company Only

Company - trading as part of a group of companies under ASIC Class Order 98/1418 or similar

Stand alone, closed group or consolidated group, as per reporting to the Commission

Individual or Company – trading in partnership Individual or Company in combination with partnership/s

Individual or Company - acting as trustee Individual or Company in combination with trust/s



4.4 Current Ratio for declaration categories (SC1 & SC2) Licensees and Applicants in categories SC1 and SC2 are not required to state their Current Ratio on their Declaration. The Commission may at any time require an Applicant or Licensee in categories SC1 and SC2 to provide a MFR Report demonstrating compliance with the minimum Current Ratio requirement.

5. Financial Monitoring


In this section:

Internal Management Accounts – means reports prepared by the Licensee showing the financial position and performance of the Licensee’s business. Internal Management Accounts include at a minimum:

a) Statement of Financial Performance (also known as a Trading and Profit and Loss Statement);

b) Statement of Financial Position (also known as a Balance Sheet); c) Aged listings of trade debtors and creditors; and d) Statement of Cash Flows.

5.1 Financial Requirement – Financial Monitoring

It is a financial requirement that a Licensee must prepare and maintain internal management accounts at quarterly intervals in each financial year at a minimum.

5.2 Provision of ASIC or ASX Reports to Commission

If a Licensee or any company within its group of companies is required to provide an auditor’s report or review report to the ASIC or ASX, then within 30 days of the report being signed and/or submission to the ASIC or ASX a copy of the report must be submitted to the Commission.

All Licensees or companies who were required to provide an auditor’s report or review report to ASIC or ASX for the 2014-15 financial year must submit a copy of the report to the Commission within 30 days of this policy commencing.

Failure to provide the required information may result in the Commission determining the Licensee fails to meet the Minimum Financial Requirements.

5.3 Provision of Internal Management Accounts to the Commission Licensees are required to submit their internal management accounts if required by the Commission.

The Commission may notify any Licensee of the requirement to provide their internal management accounts after the end of a quarter. The Commission will notify the Licensee of the timeframe to provide the information. Failure to provide the required information may result in the Commission determining the Licensee fails to meet the Minimum Financial Requirements.



6. Accepted Independent Accountants


In this section:

Accepted Independent Accountant – means a person with the qualifications specified in this policy who is permitted to complete MFR Reports regarding the financial position of an Applicant or Licensee.

An Accepted Independent Accountant must be independent of the Applicant or Licensee and must not be:

a) A director, secretary or employee of the Applicant or Licensee or their Related Entities; or b) A spouse of the Applicant or Licensee; or c) A business partner of the Applicant or Licensee or their Related Entities; or d) An investor or shareholder of the Applicant or Licensee or their Related Entities.

An Accepted Independent Accountant does not include a person who:

a) Has been convicted of, or plead guilty to, providing false or misleading information to the Commission about an Applicant or Licensees satisfaction of the financial requirements pursuant to s53B of the Act; or

b) Has been notified in writing the Commission considers they have provided incorrect information about an Applicant or Licensees satisfaction of the financial requirements; or

c) Has been notified in writing the Commission considers they have failed to appropriately apply the requirements of this policy.

6.1 Qualifications for Accepted Independent Accountants The qualifications required of Accepted Independent Accountants for completion of MFR Reports or other reports are set out in Table 3.

Table 3 – Accepted Independent Accountant Categories

Qualification May Complete MFR Report for

Registered company auditor holding professional indemnity insurance of at least $250,000 Categories 1 to 7

Holder of a current public practising certificate from the Australian Society of Certified Practising Accountants (CPA) Category 1 to 2*

Holder of a current public practising certificate from the Institute of Chartered Accountants in Australia (ICAA) Category 1 to 2*

Holder of a current public practising certificate from the National Institute of Accountants (NIA) Category 1 to 2*

Holder of a current public practising certificate from the Association of Taxation and Management Accountants (ATMA) Category 1 to 2*

Holder of a current public practising certificate from the National Tax & Accountants Association (NTAA) Category 1 to 2*

Holder of at least Membership status of one of the above professional associations Category 1 Only



*May also complete MFR Reports for Categories 3-7 only where the Applicant or Licensee is not subject to ASIC audit requirements.

6.2 Another Responsible Person Where a MFR Report or other report is provided by ‘another responsible person’, details of the extraordinary circumstances and the reporter’s professional qualifications, audit experience (if any), business relationship and length of time of association with the Applicant or Licensee must be provided. Approval as ‘another responsible person’ will only be given on a case by case basis and is entirely at the discretion of the Commission.

6.3 Notice to Accepted Independent Accountants for MFR Reports

The following Australian Accounting Standards are mandatory when submitting MFR Reports or other reports to the Commission:

• AASB 101 Presentation of Financial Statements; • AASB 102 Inventories; • AASB 107 Cash Flow Statements; • AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors; • AASB 110 Balance Sheet becomes Reporting Period; • AASB 111 Construction Contracts; • AASB 136 Impairment of Assets; • AASB 137 Provisions, Contingent Liabilities and Contingent Assets; • AASB 139 Financial Instruments: Recognition and Measurement; • AASB 1048 Interpretation of Standards; • Plus any other standards relevant to the Licensee’s business.

All MFR Reports are to be prepared by an Accepted Independent Accountant based on financial information of the Applicant or Licensee.

MFR Reports are required to be completed by the Accepted Independent Accountant at the time of an initial licence application and from time to time as the need arises, in accordance with this policy. A review of the Applicant or Licensee’s financial position is required to be conducted by the Accepted Independent Accountant in order to provide the MFR Report.

The processes and utilisation of the Review Control Sheet (Attachment 6) is a minimum requirement only. Applicants and Licensees may opt to have their financial situation reviewed on a more rigorous basis.

Any replacement or modified Standards of the Australian Accounting Standards Board are adopted by the Commission and should be applied by Accepted Independent Accountants when submitting any information to the Commission.

6.4 Warning to Accepted Independent Accountants Accepted Independent Accountants have obligations under the Act not to provide false or misleading information.

It is an offence for a person to provide the Commission with any information that is false or misleading in circumstances where the person has either knowingly provided the information, or has not taken

Registered Tax Agent – Category 1 Only

Another Responsible Person – in extraordinary circumstances At the discretion of and only with the prior approval of the Commission



appropriate steps to ensure the information is not false or misleading. The maximum penalty for providing false or misleading information to the Commission is 2 years imprisonment.

The Commission may require an Accepted Independent Accountant to provide evidence of the tests and checks performed in completing a MFR Report or other report at any time.

6.5 Reporting Requirements for Accepted Independent Accountants

The Accepted Independent Accountant providing Reports must make appropriate enquiries of the Applicant or Licensee, and seek independent evidence that is appropriate in the circumstances, in their professional opinion, to justify the information stated in the MFR Report.

The Accepted Independent Accountant providing the MFR Report must carry out the tests and checks referred to in the Review Control Sheet as a minimum requirement.

MFR Reports or any other reports to the Commission will be deemed incomplete for assessment where they are qualified by disclaimer clauses or emphasis of matter clauses by the Accepted Independent Accountant giving the report.

6.6 Determining Collectability of Related Entity Loans or Investment Assets

The Accepted Independent Accountant must determine collectability of any Related Entity loan or investment assets based on the financial position of the Related Entity as at the same balance date as the MFR Report or other report.

As a minimum the Accepted Independent Accountant is required to view the balance sheet of the Related Entity, for the relevant balance date and ensure the Related Entity loan or investment is shown as a liability for the same amount, and classification, as stated by the Applicant or Licensee. The Related Entity must then have a positive net asset position in its own right as at the relevant balance date.

Where the Related Entity in question is owed loans by other Related Entities, the Accepted Independent Accountant must also determine those loans are collectible or deduct those amounts from the Related Entities net assets.

Where a Related Entity has a deficiency of assets, any loans owed to the Applicant or Licensee by that Related Entity must be deducted from the Net Tangible Assets and Current Ratio of the Applicant or Licensee. Evidence of collectability is required to be provided to the Commission upon request.

6.7 Implied Warranty by Accepted Independent Accountant Where an Applicant or Licensee is relying upon one or more Deeds of Covenant and Assurance to meet the Minimum Financial Requirements, the Accepted Independent Accountant signing the Report is warranting to the Commission they have conducted all reasonable checks, pursuant to Australian Auditing and Accounting Standards into each Covenantor’s entire financial position to ensure they have Net Real Unencumbered Assets to cover the amount secured by the Deed.

Where amounts are considered not collectable, have not been sufficiently evidenced with regard to their value or ownership, are intangible, or are disallowed assets the Accepted Independent Accountant signing the Report must reduce the Covenantor’s total Net Real Unencumbered Asset position by that disallowed amount.

The Accepted Independent Accountant accepts that the Commission relies upon this warranty in order to grant or maintain the entity’s licence.



7. Submission of Financial Information to the Commission

7.1 Applicants for a Licence

Applicants for a licence must satisfy the relevant financial requirements stated in this policy.

Applicants are required to advise the Commission on application the financial year applicable to the entity applying for a licence. For Australian residents and most companies incorporated in Australia the financial year applicable will be 1 July to 30 June. However, for overseas companies or for Australian companies where ASIC has approved a different financial year, the applicant is to notify the Commission of the applicable financial year. If no notification is given the Applicant or Licensees financial year will be 1 July to 30 June.

Applicants must demonstrate at the time of application satisfaction of the relevant financial requirements for the level of Maximum Revenue being sought per financial year by providing information in the form set out in Table A.

7.2 Existing Licensees Applying for a New Licence Where an Applicant holds a current licence and the Applicant is not seeking to increase its Maximum Revenue it is not required to submit new financial information.

Existing Licensees applying for a Builder class of licence for the first time will need to provide a Declaration or Report where it is reasonable to expect they will exceed their Maximum Revenue for the financial year, or do not meet minimum requirements for a Builder class of licence.

7.3 Self-Certification Categories (SC1 & SC2) Self-Certification Category 1 (SC1) is available to all Applicants and Licensees not seeking or holding a Builder class of licence, provided their revenue remains within the limit. Applicants for and holders of Builder classes of licence are not eligible to hold a licence in SC1.

Self-Certification Category 2 (SC2) is available to all Applicants and Licensees irrespective of the classes of licence sought or held, provided their revenue remains within the limit, and is the minimum financial category available to Builder classes of licence.

If notified by the Commission, Applicants and Licensees in a self-certification category will be required to submit a MFR Report demonstrating compliance with the requirements of this policy.

7.4 Financial information for Categories 1-7 The Applicant or Licensees financial information in the MFR Report or other report can be no more than 4 months in age, from the end of the financial reporting period being relied upon, at the time the Accepted independent Accounts signs the Report, unless otherwise stated in this policy, or as approved by the Commission.

To comply with this requirement, the financial information may be based on the Applicant or Licensee’s most recent financial information, being either:

a) last financial year end accounts; or b) the current financial year to date accounts.



The Report must not be signed more than 30 days prior to the date the Report is provided to the Commission.

A copy of the Signed Financial Statements being relied upon must accompany the Report.

7.5 Applicants and Licensees subject to ASIC Audit Requirements Applicants or Licensees subject to ASIC audit requirements, shall, if required by the Commission provide a MFR Report based on the most recently audited financial statements. These accounts may be more than 4 months in age. A copy of the signed audited financial statements on which the Report is based must accompany the Audit Report.

If the Applicant or Licensee is operating as a stand-alone company, the MFR Report is to be based on the company in its own right.

If the Applicant or Licensee is a company operating within a group of companies, and is party to a Deed of Cross Guarantee (ASIC Class Order 98/1418) the MFR Report is to be based on either:

a) the consolidated group of companies; b) the “closed group” of companies, being only those companies subject to the Deed of Cross

Guarantee; or c) the Applicant or Licensee in its own right as a stand-alone company.

The Applicant or Licensee will be required to provide evidence the Class Order was in place for the period of review on which the Report is based.

In the event the Accepted Independent Accountant is providing an MFR Report or other Report to the Commission based on qualified audited financial statements or emphasis of matter, that qualification or emphasis of matter must be notified to the Commission in writing attached to the MFR Report.

7.6 Applicant and Licensees not previously audited who become subject to ASIC Audit Requirements

An Applicant or Licensee who has not been audited previously and becomes subject to ASIC audit requirements shall, if required by the Commission provide a MFR Report completed by the Registered Company Auditor based on the first set of financial statements prepared which have been audited.

If the Applicant or Licensee is operating as a stand-alone company, the MFR Report is to be based on the company in its own right.

If the Applicant or Licensee is a company operating within a group of companies, and is party to a Deed of Cross Guarantee (ASIC Class Order 98/1418) the MFR Report is to be based on either:

a) the consolidated group of companies; b) the “closed group” of companies, being only those companies subject to the Deed of Cross

Guarantee; or c) the Licensee in its own right as a stand-alone company.

The Applicant or Licensee will be required to provide evidence the Class Order was in place for the period of review on which the Report is based.



7.7 Applicants and Licensees in Categories 3-7 Not Required by ASIC to be Audited

An Applicant or Licensee in Categories 3-7 who is not currently subject to ASIC audit requirements and expect to continue to be relieved from such requirements under the Corporations Act 2001, shall if required by the Commission, submit a MFR Report and a copy of the signed financial statements on which the Report is based. The Applicant or Licensee that is a company may be required to provide information evidencing the exemption to ASIC audit requirements.

The Commission reserves the right to require a company to be audited for the purposes of demonstrating compliance with the Minimum Financial Requirements. Where the Commission exercises this right, written notice of the audit requirement will be issued to the Licensee or Applicant.

In considering whether an applicant or Licensee should be audited, the Commission will consider whether the Applicant or Licensee is currently, or will be, subject to audit requirements pursuant to Section 45A(3) of the Corporations Act 2001, and one of the following:

• Individuals • Small proprietary companies • Large Proprietary companies with Class Order 98/1417 or similar • Overseas companies

Where an Applicant or Licensee has obtained relief from ASIC audit requirements under Class Order 98/1417 or similar, evidence the Class Order was in place for the period of the financial statements is required to be provided with the Report.

7.8 Overseas Companies in Categories 3-7 If an Applicant or Licensee is based overseas and does not have its financial accounts audited by an Australian Registered Company Auditor, the Applicant or Licensee shall, if required by Commission rely upon an MFR Report with any appropriate qualifications as agreed to by the Commission, signed by an Australian Registered Company Auditor.

The Financial Information stated in the Report is required to be stated in Australian Dollar (AUD) equivalents.

If the company is audited overseas, it may rely on its last audited accounts, which may be more than 4 months in age.

If the company is not audited overseas, it shall, if required by the Commission provide a Report based on accounts no older than 4 months in age.

A copy of the signed financial statements for the respective period in review must be provided with the Report, and are required to be translated into English.

7.9 Compliance Audit Pursuant to section 50C of the Act, the Commission may give written notice to a Licensee requiring delivery of, or access to, specified financial records in circumstances where the Licensee is selected to be audited under an approved compliance audit program or where the Commission is satisfied, because of information received, that there are reasonable grounds for concern that the Licensee does not satisfy the Minimum Financial Requirements stated in this policy.

If Licensees do not comply with the Commission’s written notice within 21 days, the Licensee may be subject to disciplinary proceedings. Licensees will also be taken to have contravened a condition imposed on the licence and the Commission may suspend or cancel the licence.



7.10 Power to Require Production of Documents Pursuant to section 106A of the Act, if an inspector has reasonable grounds to suspect a person has in their possession or control a document relevant to any of a variety of matters including, breach of a condition of licence (such as the Minimum Financial Requirements) then the inspector may require a person to make the document available at a reasonable time and place nominated by the inspector. Failure to comply with a section 106A request may result in a penalty being applied against the person who has failed to provide the required documents.

7.11 Licensee’s financial circumstances must at all times satisfy Minimum Financial Requirements

Further to section 1.4 of these Minimum Financial Requirements and section 35 of the Act, a licence is subject to the condition that the Licensee’s financial circumstances must at all times satisfy the Minimum Financial Requirements and variations in the contractor’s turnover and assets must be notified and approved in accordance with the Minimum Financial Requirements .

Section 36 of the Act also provides that if the Commission has reason to believe that a Licensee may have insufficient financial resources to meet possible liabilities in relation to building work that the commission may impose an appropriate condition on the licence.

7.12 Documents that may be provided to satisfy Commission

Where the Commission has concerns regarding a Licensee complying with the condition imposed by section 35 of the Act or other conditions imposed or proposed to be imposed under section 36 of the Act then the Commission may require a Production of Documents MFR Report:

Where the Commission requires a Production of Documents MFR Report then:

• For Licence Categories 5-7, and Reporting Entities (any licence category), financial statements provided shall be general purpose financial statements, audited or reviewed by a registered Company Auditor.

• For Non-Reporting Entities up to and including Licence Category 4, all of the recognition and measurement standards of the Australian Accounting and Auditing Standards must be applied (irrespective of the Company’s adopted Accounting Standards).

7.13 Restructure of Licensee When a Licensee undertakes a restructure in relation to its ownership, management or financial structure, updated financial information may be required to satisfy the Commission the Licensee continues to comply with this policy. Restructures will usually result in a change to the Licensee’s financial position from that last advised to the Commission. Such restructures may include, but are not limited to:

• Changes of Ownership or Officeholders; • Restructure to partnership or trust structure; • Change or withdrawal of Covenantors.

In instances where a restructure has occurred, the Licensee is required to provide either a Declaration or MFR Report, and if necessary new Deed/s of Covenant and Assurance, which reflect the Licensee’s new business structure or financial position.



Upon receipt of the financial information which meets the requirements of the policy, the Commission will advise the Licensee of its adjusted Maximum Revenue based on the Licensee’s Net Tangible Assets in relation to its new financial position.

8. Assessment of Financial Information by the Commission

8.1 Assessment of financial information The Commission has the right to assess Applicants and Licensees financial information at the times set out below:

• on application for a licence; • where the Maximum Revenue requires adjustment; • where the Net Tangible Asset position has decreased by more than 30%; • on compliance audit; • pursuant to an approved audit program • on expiry of the Licensee’s Professional Indemnity Insurance Policy; • on request by the Licensee; or • at the discretion of the Commission.

Where the requirements of this policy have been met, the Applicant or Licensee will be notified of the Maximum Revenue that can be performed per financial year.

8.2 Failure to meet minimum financial requirements

If an Applicant fails to meet the requirements of this policy their application will be rejected.

Licensees are required to notify the Commission at the time of their licence renewal if they fail to meet any of the requirements stated in this policy.

If a Licensee fails to meet the requirements of this policy their licence may be suspended. To reinstate a suspended licence, the Licensee will be required to demonstrate to the Commission’s satisfaction they meet the requirements of this policy. The licence may be subsequently cancelled where the Commission has not been satisfied.

Where the Licensee has submitted a Report relying upon a Deed of Covenant and Assurance, regardless of whether the Licensee meets the requirements of this policy, the Commission may accept the Defined Amount stated in the Report and advise the Licensee of any other deficiency. The Covenantor is liable for the Defined Amount stated in the Report, despite any other deficiencies, until at least a compliant Report is provided and accepted by the Commission.

If a licence is cancelled, the Licensee is required to reapply for the licence and satisfy all of the licensing requirements that are applicable at the time the new application is received.



9. Payment of Debts


In this section:

Creditor – means the entity owed an amount of money by a Licensee or Applicant.

Debt – means an amount of money owing by a licensed contractor for the provision of goods or services or for a legally enforceable obligation or statutory obligation.

Industry Trading Terms - means:

a) Payment within 25 business days of invoice date for debts owing to subcontractors; b) Payment within 30 days of invoice date for debts owing to suppliers; or c) Terms as agreed between the parties in writing.

9.1 Financial requirement – payment of debts

It is a financial requirement that a Licensee must at all times pay all undisputed debts as and when the debts fall due and within industry trading terms. It is also a financial requirement that a Licensee or Applicant must pay all debts as ordered by a Court or Tribunal within 28 days of the order or a longer period if allowed by the Court or Tribunal.

9.2 Financial requirement does not apply in certain circumstances The financial requirement stated in paragraph 9.1 will not apply if the Commission is satisfied that one or more of the following apply to the unpaid debt:

a) the debt owed is the subject of a genuine dispute by the Applicant or Licensee and evidence of the reasons for the dispute is provided to the Commission;

b) in the case of a genuine dispute, any undisputed portion of the debt has been paid;

c) the creditor has extended the terms for payment of the debt and documents exist to evidence the extended trading terms;

d) the Licensee or Applicant and the creditor have entered into a payment arrangement in relation to the debt and the licensed contractor is not in breach of that arrangement.

e) legal proceedings have been commenced in relation to the debt and have not yet concluded;

f) a Court or Adjudicator has made a determination the Licensee or Applicant does not owe the debt;

g) the Licensee or Applicant has appealed the decision of the Court or Tribunal;

h) the order of the Court or Tribunal has been set aside or the Licensee or Applicant has made an application to have the order set aside.



9.3 Documents and evidence to be provided to the Commission Where a Licensee or Applicant has an unpaid debt, the Commission may require the provision of any documents or evidence deemed necessary to determine whether the Licensee or Applicant meets the Minimum Financial Requirements. The Commission will notify the Licensee or Applicant of a timeframe to provide the information. Failure to provide the required information may result in the Commission determining the Licensee or Applicant fails to meet the Minimum Financial Requirements.

10. Professional Indemnity Insurance


In this section:

Individual consumer – means:

a) a person who intends to reside in the building that is the subject of the contract upon completion (or within six months of completion); or

b) a person who currently resides in the building where the work that is the subject of the contract is to be carried out; or

c) a person who is the owner of the building.

10.1 Financial Requirement - Professional Indemnity Insurance It is a financial requirement that Applicants for and Licensees who hold a class of licence specified in Table 4 must hold professional indemnity insurance, in addition to satisfying any other requirements in this policy.

The policy conditions for the required professional indemnity insurance must have a minimum limit of indemnity for any one claim and the sum of all claims during any one period of insurance of not less than the limits specified in Table 4.

Table 4 – Licence Classes Requiring Professional Indemnity Insurance

Licence Class Limit of Indemnity Amount

Building design – open $500,000

Building design – medium rise $500,000

Building design – low rise $500,000

Termite management – chemical $500,000

Hydraulic services design $1,000,000

Hydraulic services design excluding design of on-site domestic waste water management $1,000,000

Site classifier $1,000,000

Site classifier excluding design of on-site domestic waste water management $1,000,000



*Continuing licence class under section 50 of the Queensland Building and Construction Commission Regulation 2003.

10.2 Terms and Conditions of Insurance Policy

An Applicant or Licensee in one of the classes specified in section 10.1 must have a professional indemnity insurance policy that:

1. Indemnifies the Licensee against legal liability resulting from any claims first made against the Licensee during the period of insurance arising out of any act, error or omission on the part of the Licensee in the conduct of the Licensee's business in respect of one of the classes referred to in section 10.1, whether as a director, principal, partner or employee.

2. At all times ensures the Licensee is covered to the minimum amount stated in section 10.1 of the Minimum Financial Requirements Policy for their respective class.

3. Provides indemnity against legal liability in respect of claims for damages or compensation made against the Licensee for misleading or deceptive conduct, but excludes any claims arising from dishonest, fraudulent, malicious or criminal conduct.

4. Names as the Insured the Licensee, or the company or partnership of which the licence holder is a director, partner or employee, including if the Insured is a company:

(i) persons who are or become partners, directors or employees of the company during the period of insurance and are licensed in the appropriate class; and

(ii) persons who are former partners, directors or employees of the company and who are, or have been but no longer are, licensed in the appropriate class, in respect of acts,

Completed residential building inspection $1,000,000

Passive fire protection – fire doors and shutters – Certify $1,000,000

Passive fire protection – fire collars, penetrations and joint sealing – Certify, install and maintain $1,000,000

Passive fire protection – fire and smoke walls and ceilings – Certify $1,000,000

Special hazard suppression systems – Certify – restricted to gaseous, water mist and reticulated foam proportioning systems $1,000,000

Special hazard suppression systems – Certify – restricted to chemical and foam special hazard systems $1,000,000

Sprinkler and suppression systems (reticulated water based) – Certify $1,000,000

Sprinkler and suppression systems (reticulated water based) – Certify – restricted to commercial or industrial type $1,000,000

Sprinkler and suppression systems (reticulated water based) – Certify – restricted to domestic or residential types $1,000,000

Fire pump – Certify $1,000,000

Fire hydrants and hose reels – Certify $1,000,000

Portable fire equipment and hose reels (hose reels down stream of stop cock only) – Certify $500,000

Fire detection, alarm and warning systems – Certify See 10.3 below Emergency lighting – Certify $1,000,000 Fire suppression systems - special hazards* $1,000,000 Fire suppression systems – special hazards restricted to certification of, and preparation of reports about, certain work* $1,000,000



errors or omissions committed or allegedly committed by them whilst they were partners, directors or employees of the company.

5. Does not exclude liability for loss or damage arising out of or concerning building work as defined under the Queensland Building and Construction Commission Act 1991 in the State of Queensland unless that liability would otherwise have been excluded by the Insurer’s standard wording for professional indemnity insurance policy for businesses of the type conducted by the Licensee;.

6 Includes, in addition to the limit of indemnity, provision for payment of the costs and expenses incurred by the Insured with the consent of the Insurer in defending or settling any claim and, in respect of any one claim, the policy may limit this sum to $100,000 or 20% of the limit of indemnity, whichever is the greater.

7. Must:

(a) comply with the all relevant State and Commonwealth legislation; or

(b) placed by a general insurance broker registered in Australia.

10.3 Insurance requirements for Fire detection, alarm and warning systems – Certify licence

For the licence class of Fire detection, alarm and warning systems – Certify, the Applicant or Licensee must hold one of the following:

(a) Broad form public and products liability insurance with a minimum limit of indemnity of $5 million with policy extension to include the certification of the installation of fire detection systems under the Building Act 1975 and its subordinate legislation; or

(b) Professional indemnity insurance that specifies a limit of indemnity for any one claim and the sum of all claims during any one period of insurance of not less than $5 million.

10.4 Evidence of Cover

Evidence of insurance must be produced at the time of application, renewal, audit or any other time as requested by the Commission. The following may be accepted as evidence of the insurance:

(a) if the policy complies with all relevant State and Commonwealth legislation - a certificate of currency issued by the Insurer; or

(b) if the policy has been arranged by a general insurance broker registered in Australia - a certificate of currency plus a receipt from the broker.

10.5 Implied warranty by insurance companies and insurance brokers

By supplying a certificate of currency to the Commission, the Licensee and/or the general broker is warranting to the Commission that the professional indemnity policy taken out by the Applicant/Licensee complies with Section 10 of the Minimum Financial Requirements Policy.

10.6 Circumstances when insurance is not required

The requirement for a Licensee to have the level of insurance specified in this Section will not apply if:

(a) the insurance is not available in the market place; or



(b) the insurance would be economically unviable for the Applicant, taking into consideration relevant factors, including:

(i) the cost of the insurance; and

(ii) the previous and expected future turnover of the relevant business or part of the business.

The onus is on the person who is applying for, or seeking to renew a licence to establish to the Commission (including a declaration in the form at Attachment 4 that the Applicant has been unable to obtain the insurance in the market place because it is unavailable, or that it is economically unviable for the Applicant’s business to obtain it.

If a Licensee ceases to hold relevant insurance under this Section at any time during the licence period, and the Licensee is unable to obtain replacement insurance or it is economically unviable for the Licensee to obtain replacement insurance, the Licensee must:

(a) notify the Commission in writing of the Licensee’s non-compliance with the requirement to hold insurance; and

(b) establish by providing documentation to the Commission (including a declaration in the form at Attachment 4) that the Licensee has been unable to obtain the insurance in the market place because it is unavailable or that it is economically unviable for the Licensee’s business to obtain it.

10.7 Commission may impose licence conditions If, because of circumstances described in 10.6, a Licensee who contracts with individual consumers does not hold professional indemnity insurance as prescribed by this Policy, they should clearly and unequivocally notify every individual consumer in writing, either by way of a clause in a contract or by a separate notice.

The Commission has power to impose a condition on the licence to that effect if it considers it appropriate. In making a decision as to whether a condition is to be imposed on a licence, the Commission must comply with the requirements of the Act.

11. Incorrect Information

It is an offence, with a maximum penalty of 2 years imprisonment, for a person to give a document to the Commission about a Licensee’s satisfaction of the Minimum Financial Requirements stated in this policy where:

(a) the person knows the document contains information that is false or misleading; or

(b) the document contains information that is false or misleading and the person did not take reasonable steps to make sure that the information was not false or misleading.

The Commission may refuse to accept MFR Reports or other financial information from a person who has provided incorrect information to the Commission.



12. Confidentiality

The Information Privacy Act 2009 applies to information and documents held by the Commission containing personal information. The Right to Information Act 2009 (RTI Act) applies to all information and documents held by the Commission.

Information provided about an Applicant’s or Licensee’s compliance with this policy may be disclosed by the Commission to another party with the consent of the Applicant or Licensee or otherwise as authorised or required by law. In addition, the Commission may provide all or some of this information to a financial specialist engaged by the Commission to provide advice relevant to the Applicant’s or Licensee’s ability to satisfy the Minimum Financial Requirements Policy.

An application may be made under the Information Privacy Act 2009 for access to personal information by the person to whom that information relates.

An application may be made to the Commission, or the State, under the RTI Act seeking access to information held by the Commission. Applications will be reviewed in accordance with legislative requirements. The RTI Act provides the Licensee with the right to review a decision made by an RTI Officer.

For further information refer to the QBCC website at www.qbcc.qld.gov.au .

13. Transitional Provisions

13.1 Repeal of financial requirements policies existing prior to the Commencement Date

Effective on and from the Commencement Date of this policy, the Board repeals all financial requirements policies which existed immediately prior to this Policy coming into effect.

13.2 Transitional provisions The following provisions apply if, before the repeal of the Board’s policies mentioned above, (the repealed policies), an applicant for a licence or a licensee has:

(a) completed a Declaration in compliance with a repealed policy immediately before commencement of this Policy on the Commencement Date; or

(b) provided an Independent Review Report or Audit Report in compliance with the repealed policy which has a review year end date before the Commencement Date.

The Allowable Annual Turnover applicable under the repealed policy declared or reported by an Applicant or Licensee will become the Applicant or Licensee’s Maximum Revenue limit per financial year under the new policy until such time as the Applicant, Licensee or Commission amends this limit.

Despite the repeal of the policies which existed immediately prior to this Policy coming into effect on the Commencement Date pursuant to the above clause, if a Deed of Covenant and Assurance provided under a repealed policy is in force immediately before the commencement of the New Policy on the Commencement Date, the Deed is taken to have been given under this Policy.

To remove doubt, this Policy does not allow or authorise a Licensee to:

(a) complete a declaration under a repealed policy after the Commencement Date; or




(b) provide an Independent Review Report or Audit Report in compliance with a repealed policy with a review year end date on or after the Commencement Date.

13.3 Continuing classes of fire protection licence

To remove doubt, this policy applies to the holder of a continuing class of licence referred to in section 50 of the Queensland Building and Construction Commission Regulation 2003.

14. Definitions

Act – means the Queensland Building and Construction Commission Act 1991.

Applicant – means an applicant for a contractor’s licence issued under the Queensland Building and Construction Commission Act 1991.

Associated entity – means an entity that:

a) is related to the Applicant or Licensee within the meaning of section 50 of the Corporations Act 2001; or

b) has the same shareholders and directors as the Applicant or Licensee.

ASIC – means Australian Securities and Investment Commission.

ASX –

Means Australian Stock Exchange

Board – means the Queensland Building and Construction Board.

Builder – means an individual or company carrying out building work for which a Builder or equivalent licence is required under the Queensland Building and Construction Commission Act 1991.

Building Designer – means an individual or company carrying out building work for which a Building Design – Open, Building Design – Medium Rise or Building Design – Low Rise licence is required under the Queensland Building and Construction Commission Act 1991.

Collectible – means convertible to cash as at balance sheet date. For Related Entity Loan or Investment assets it means the Related Entity has net current assets and net tangible assets as at balance sheet date sufficient to repay the loan in full.

Commencement Date- Means the date this policy is approved by regulation. Commission – means the Queensland Building and Construction Commission.



Compliance Audit – means an audit carried out by the Commission on a Licensee pursuant to section 50C of the Queensland Building and Construction Commission Act 1991.

Contingent Asset – means an asset which is not recognised in the financial statements of the licensee because it’s recovery is contingent on an outcome which is not within the control of the licensee, regardless of prospects, for example a debt owed to the licensee which is the subject of legal action where the matter has not been heard, a judgment made or where no amount has been awarded or agreed to.

Contingent assets must be determined in accordance with the current relevant Australian Accounting Standard.

Contingent assets cannot be included in the calculation of Net Tangible Assets or Current Ratio.

Contingent assets that are determined to no longer be contingent, for example where legal proceedings have concluded, may be brought to account and included in the financial statements only after collectability has been established. Evidence of collectability is required to be provided to the Commission upon request.

Contractor – means the holder of a contractor’s licence.

Contractor’s Licence – means a licence pursuant to section 30 of the Queensland Building and Construction Commission Act 1991.

Construction Contract Work in Progress – means revenue and costs associated with construction contracts. Construction contract work in progress is to be valued in accordance with AASB 111, Construction Contracts.

Declaration – means a Declaration in the prescribed form provided to the Commission in order to meet the requirements of this policy and includes the following:

a) Attachment 2 – Declaration – Allowable Annual Turnover up to $200,000 per annum b) Attachment 3 – Declaration – Allowable Annual Turnover up to $600,000 per annum c) Declaration contained within the Commission’s Licence Application forms d) Verbal declaration provided by the Licensee.

Deed of Assurance – means the Deed of Covenant and Assurance which is attached to this policy.

Defined Amount – means the amount determined pursuant to the Minimum Financial Requirements, as being the amount assured by the Covenantor to the Licensee by Deed of Covenant and Assurance, as stated in the MFR Report provided to the Commission from time to time. The amount is the difference between the Net Tangible Assets held by the Licensee and the Net Tangible Assets required for the Licensee’s Maximum Revenue.

Directors – has the meaning given to it in the Corporations Act 2001 and also includes an Officer (refer definition of an Officer).

Disallowed Assets – means an entity’s assets, or portion thereof, which are unable to be relied upon for the purposes of meeting the requirements in this policy, and include but are not limited to:



a) assets expressly not included, as set out in the Definition of Assets at section 2., such as uncollectible debts, excluded Related Entity Loan and Investment assets, superannuation benefits (yet to vest), units in unlisted trusts; and

b) personal Net Tangible Asset requirement of a Licensee who provide a Deed of Covenant and Assurance to another entity; and

c) the total of all defined amounts being assured to another entity by way of Deed of Covenant and Assurance.

Entity – means:

a) a company; b) a partnership; c) an unincorporated body; d) an individual; e) for a trust --the trustee/s;

Intangible Assets – means identifiable, non-monetary assets without physical substance and include, but are not limited to:

a) Goodwill; b) Right of Indemnity; c) Intellectual Property; d) Formation Expenses; e) Value of Trademark; f) Patents; g) Borrowing Expenses; and h) Net Deferred Tax Assets.

Inventory – includes raw materials, work in progress (including contract work in progress) and finished stock. Inventory, except for construction contract work in progress, is to be valued for balance sheet purposes at the lower of cost or net realisable value as set out in AASB 102 Inventories.

Investments – means only investments that are assessed by as collectible.

Investments do not include:

a) Shares in companies that are not publicly listed; b) Units trusts that are not publicly listed; c) Investments in Related Entities; d) Investments valued using equity accounting methodology.

Licensee – means the holder of a builder, contractor or designer licence issued under the Queensland Building and Construction Commission Act 1991.

Net Real Unencumbered Assets – means the maximum amount a Covenantor can assure to an Applicant or Licensee by way of a Deed of Covenant and Assurance.

A Covenantor’s Net Real Unencumbered Assets are to be calculated using the same process in determining an Applicant or Licensee’s Net Tangible Assets.

The entire financial position of the Covenantor/s must be taken into account in determining Net Real Unencumbered Assets, that is, all assets and all liabilities from all sources.

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1276.html#body_corporate

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html#body



Where assets are jointly owned, only the Covenantor’s share of equity within an asset can be included.

Net real unencumbered assets do not include:

a) assets subject to securities or encumbrances, other than to the extent to which the real value of those assets can be shown to exceed the liability under all encumbrances provided (including Personal Guarantees, Indemnities and the like);

b) assets being assured by a Deed of Covenant and Assurance to another Applicant or Licensee;

c) all Related Entity loans and/or investments assets owed to the Covenantor.

In the case of beneficiaries of trusts, net real unencumbered assets do not include any assets that are held on trust on behalf of the beneficiary, unless there is a presently existing right not subject to a legal disability under the trust for the beneficiary to call for transfer of the asset into the beneficiary’s name and the transfer is called for and completed prior to the Accepted Independent Accountant sign off of the MFR report and Covenantor’s Statement of Financial Position.

Non Reporting Entity - means any entity which is not a reporting entity. See definition below for a Reporting Entity.

Officer – has the meaning given to it in the Corporations Act 2001 and Associations Incorporation Act 1981.

Production of Documents MFR Report

means the Production of Documents MFR Report (Attachment 7 or 8).

Public Private Partnership – has the meaning given to it in the Queensland Building and Construction Commission Act 1991.

Related Entity – for a company means:

a) An associated entity (as that term is defined in the Corporations Act 2001) b) A director or shareholder of the company or an associated entity; c) A spouse or de facto of a director or shareholder of the company or an associated entity; d) A parent, step-parent, son, step-son, daughter, step-daughter, brother, half-brother, step-

brother, sister, half-sister or step-sister of a director or shareholder of the company or an associated entity;

e) A company over which one or a combination of the above persons have control; f) A parent entity, sibling entity or subsidiary entity of the company.

for an individual means:

a) A spouse or de facto, parent, step-parent, son, step-son, daughter, step-daughter, brother, half-brother, step-brother, sister, half-sister or step-sister;

b) Any entities in which the individual is a director, officer, shareholder or business partner. for a licensee that is a trustee of a trust means:

a) A trust beneficiary or unit holder; b) A spouse or de facto, parent, step-parent, son, step-son, daughter, step-daughter, brother,

half-brother, step-brother, sister, half-sister or step-sister of a beneficiary or unit holder.

Related Entity Loans and Investments – means only Related Entity Loans and Investments with debit balances that are assessed by an Accepted Independent Accountant as collectible from Related Entities.



Related Entity Loan liabilities owed by the Licensee may not be deducted from the calculation of Net Tangible Assets or the Current Ratio under any circumstances.

Report – means the MFR Report.

Reporting Entity –

has the meaning given to it in Statement of Accounting Concepts 1 (SAC1).

Review Control Sheet – means the review control sheet contained this policy (Attachment 6).

Signed Financial Statements –

For an MFR Report means:

A complete set of financial statements, including the notes, and any statement by those responsible for the financial report. The notes must at least comprise a summary of significant accounting policies.

At a minimum the Commission requires, special purpose financial statements prepared to all relevant accounting standards and significant accounting policies which at least contain the following:

a) A statement of Financial Performance (Profit and Loss Statement)

b) A statement of Financial Position (Balance Sheet)

c) Notes to the financial statements which at least comprise a summary of significant accounting policies

d) A signed proprietors/directors declaration

For a Production of Documents MFR Report means:

For Reporting Entities (See MFR Definition for Reporting Entities):

Financial Statements shall be general purpose financial statements as defined in the Corporations Act 2001. The provisions of sections 295A, 296, 297 and 298 must also be incorporated in the financial statements irrespective of reporting date, audited or reviewed by a registered Company Auditor.

For non- reporting entities up to and including Licence Category 4:

Financial Statements shall be, at a minimum, special purpose financial statements containing at least the following:

• A statement of Financial Performance (Profit and Loss Statement) • A statement of Financial Position (Balance Sheet) • A signed proprietors/directors declaration.

Statements are prepared with all of the recognition and measurement standards of the Australian Accounting and Auditing Standards applied (irrespective of the Company’s adopted Accounting Standards), including the notes and any statement by those responsible for the financial report. The notes must at least comprise a summary of significant accounting policies.

Special Purpose Vehicle – has the meaning given to it in the Queensland Building and Construction Commission Act 1991.



Trade Contractor – means an individual or company carrying out building work for which a trade licence is required under the Act

Trade Debtors – means only debtors that are collectible.

Trade debtors does not include:

a) 50% of trade debtors that are 180 days or older from invoice date; b) 100% of trade debtors that are 365 days or older from invoice date; and c) trade debtors that are contingent.



Attachment 1 - Minimum Financial Requirements

MFR Report

TO: Queensland Building and Construction Commission (QBCC)

RE: _____________________________ (QBCC Licensee Name and Licence number)

I, ………………………………………………………………………(name) of………………………………………………………………………(address or firm name)

being an Accepted Independent Accountant by virtue of…………………………………………………………………(professional qualification)

and being a holder of a public practising certificate state the following regarding the financial information of……………….. ………………………………………..………………………………..(name of Client) (‘the Client’) for the period ended……………………………(date).

This MFR Report has been compiled and prepared for distribution to the Client and the QBCC, for the purpose of reporting on whether the Client meets the Minimum Financial Requirements for Licensing. I acknowledge the QBCC relies on this report to determine the Client’s eligibility for a licence and that I may be required to provide evidence of the tests and checks conducted in the preparation of this report to the QBCC. I disclaim any assumption of responsibility for any reliance on this report or on the financial information to which it relates to any person other than the Client and the QBCC or for any purpose other than that for which it was prepared.

(Tick box if appropriate) Review Engagements

I have conducted a review of the Client’s financial information.

My review has been conducted in accordance with Australian Accounting and Auditing Standards applicable to review engagements. I have not performed an audit and accordingly, I do not express an audit opinion.

I confirm the tests or checks I have conducted, and the evidence sighted, comply with those set out in the Minimum Financial Requirements and that I have applied the Minimum Financial Requirements Policy and all relevant Australian Accounting Standards and significant accounting policies to the financial information presented below.

Based on my review of the Client’s financial Information, which is NOT an audit, and the application of the Minimum Financial Requirements and all relevant Australian Accounting Standards and significant accounting policies I provide the financial information below for the Client as at and for the period ended as stated above.

Audit Engagements

I have conducted an independent audit of the Client’s financial information in order to express an opinion on it to the Client and the QBCC.

The audit has been conducted in accordance with Australian Auditing Standards. The procedures for the audit included examination, on a test basis of evidence supporting the information included in the Client’s financial information. These procedures have been undertaken to form an opinion whether, in all material respects, the financial information is presented fairly in accordance with Australian Accounting Standards and other mandatory professional reporting requirements. The Minimum Financial Requirements of the QBCC have then been applied to the financial statements in order to present the financial information below.

The audit opinion expressed in this report has been formed on the above basis.



In determining the Financial Information of the Client, I verify I have NOT included any Related Entity Loans or Investment Assets in the Financial Information stated below unless otherwise stated

(Tick box if appropriate)

I HAVE included Related Entity Loan and/or Investment asset amounts in the Financial Information stated below and I have independently verified such assets are collectible by the client in accordance with the Minimum Financial Requirements policy.

Financial Information of the Client:

Current Assets: $ Disallowed and Intangible Current Assets $ Current Liabilities: $

Current Ratio: (please state as a ratio) :

Assets: $ Disallowed Assets $ Intangible Assets: $ Liabilities $

NTA (at least) $

Total of Related Entity Loan or Investment Asset amounts included in NTA $

Revenue: $

Deed of Assurance provided to Client (if applicable):

Full and Correct Name(s) of each Covenantor

Amount Assured ‘Defined Amount’

Relationship to Client

Original Deed Previously Provided

(Yes/No)

Pick one of the following:

The Client meets the Minimum Financial Requirements. Nothing has come to my attention that causes me to believe that the Client does not meet the Minimum Financial Requirements as at and for the period end date as stated above. Based on the Client’s NTA, the Maximum Revenue the client may earn per financial year is $............................................

or

The Client does not meet the Minimum Financial Requirements for the following reasons:………………………………………

…………………………………………………………………………………………………………………………………………………………………………………………..



I CERTIFY THAT this MFR Report has not been altered from the MFR Report attached to the Minimum Financial Requirements policy other than by the completion of information in the spaces provided.

In order for me to make the above statement, attached to this MFR Report are the signed financial statements for the Client as at and for the period end date as stated above which are the financial statements the report is based on. Where Deeds of Assurance have been relied upon, I have attached a verified Statement of Financial Position for each Covenantor.

_______________________________________ ___________________________________________ (Name of Accepted Independent Accountant) (Signature of Accepted Independent Accountant)

_______________________________________ ___________________________________________ (Address and Telephone Number) (Date)

Client declaration regarding MFR Report

I/we have viewed the financial information presented in this report including the Maximum Revenue I/the company may earn per financial year. I/we acknowledge the information contained in this report will be relied upon by the QBCC in determining my/the company’s eligibility for a licence.

I/we are responsible for the information given to the Accepted Independent Accountant in order to prepare this report and we are of the opinion it represents a true and fair view of my/the company’s financial position. I/we are aware it is an offence to give the QBCC false or misleading information regarding my/the company’s financial position.

______________________________ __________________________________________ ____________ Client/Director Signature Client/Director Name (& Position if a Company) Date ______________________________ __________________________________________ ____________ Client/Director Signature Client/Director Name (& Position if a Company) Date ______________________________ __________________________________________ ____________ Client/Director Signature Client/Director Name (& Position if a Company) Date

PRIVACY NOTICE

QBCC is collecting the information on this form to ascertain whether your client satisfies the financial requirements of the Queensland Building and Construction Board for a contractor’s licence under the Queensland Building and Construction Commission Act 1991. The information you have provided may be disclosed by QBCC to another party with your client’s consent or as authorised or required by law. In addition, QBCC may provide all or some of this information to a financial specialist engaged by QBCC to provide expert advice as to financial matters relevant to your client’s ability to satisfy the Minimum Financial Requirements policy. For further information visit the QBCC website at www.qbcc.qld.gov.au.




Attachment 2 - Declaration – Maximum Revenue up to $200,000 per annum

Declaration – Maximum Revenue up to $200,000 per annum

Only applicants for and holders of a Trade Contractor class of licence may complete this declaration.

An applicant for and holder of a Trade Contractor class of licence may make this Declaration to the Queensland Building and Construction Commission stating they have a minimum of $12,000 in Net Tangible Assets (NTA), and will not earn Revenue more than $200,000 per financial year.

By completing this Declaration, the Applicant or Licensee declares they have the required Net Tangible Assets in their own right, and are not relying on assets of another entity, or those assets held on trust, and comply with the Minimum Financial Requirements Policy. For the meaning of “Net Tangible Assets” and “Revenue” see the definitions contained in the Minimum Financial Requirements Policy.

The Queensland Building and Construction Commission can prosecute any person who knowingly provides information, which is false or misleading, whether this information is provided in writing or verbally.

INDIVIDUAL DECLARATION (To be completed by Applicant/Licensee)

Warning: Incorrect or misleading information may lead to a review and possible cancellation of your licence.

• My Revenue per financial year WILL NOT exceed $200,000. I have at least $12,000 Net Tangible Assets. • I acknowledge that I am required to maintain the above NTA at all times and not exceed the above Revenue per financial

year without reporting it to the QBCC.

I DECLARE THAT THE ABOVE PARTICULARS ARE TRUE AND CORRECT.

Signature of Applicant/Licensee: ………………………………………………………………….. Date: ……………………………………….

Name of Applicant/Licensee: ……………………………………………………………………….. Licence No.: ……………………………..

COMPANY DECLARATION (To be completed by a Director of the Company)

Warning: Incorrect or misleading information may lead to a review and possible cancellation of the company’s licence.

• The Company’s Revenue per financial year WILL NOT exceed $200,000. The Company has at least $12,000 Net Tangible Assets.

• I acknowledge that the Company is required to maintain the above NTA at all times and not exceed the above Revenue per financial year without reporting it to the QBCC.


Signature of Director: ……………….………………………………………………………………….. Date:…………………………………………..

Name of Director: ………………………………………………………………………………………………………………………………………………

Name of Company: ………………………………………………………………………………………… Licence No.: ..…………………………..

PRIVACY NOTICE




39 | P a g e

Attachment 3 - Declaration – Maximum Revenue up to $600,000 per annum

Declaration – Maximum Revenue up to $600,000 per annum

An applicant for and holder of a Builder or Trade Contractor class of licence may make this Declaration to the Queensland Building and Construction Commission stating they have a minimum of $36,000 in Net Tangible Assets (NTA), and will not earn Revenue more than $600,000 per financial year.

By completing this Declaration, the Applicant or Licensee declares they have the required Net Tangible Assets in their own right, and are not relying on assets of another entity, or those assets held on trust, and comply with the Minimum Financial Requirements Policy. For the meaning of “Net Tangible Assets” and “Revenue” see the definitions contained in the Minimum Financial Requirements Policy.

The Queensland Building and Construction Commission can prosecute any person who knowingly provides information, which is false or misleading, whether this information is provided in writing or verbally.

INDIVIDUAL DECLARATION (To be completed by Applicant/Licensee)

Warning: Incorrect or misleading information may lead to a review and possible cancellation of your licence.

• My Revenue per financial year WILL NOT exceed $600,000. I have at least $36,000 Net Tangible Assets. • I acknowledge that I am required to maintain the above NTA at all times and not exceed the above Revenue per financial

year without reporting it to the QBCC.


Signature of Applicant/Licensee: ………………………………………………………………….. Date: ……………………………………….

Name of Applicant/Licensee: ……………………………………………………………………….. Licence No.: ……………………………..

COMPANY DECLARATION (To be completed by a Director of the Company)

Warning: Incorrect or misleading information may lead to a review and possible cancellation of the company’s licence.

• The Company’s Revenue per financial year WILL NOT exceed $600,000. The Company has at least $36,000 Net Tangible Assets.

• I acknowledge that the Company is required to maintain the above NTA at all times and not exceed the above Revenue per financial year without reporting it to the QBCC.


Signature of Director: ……………….………………………………………………………………….. Date:…………………………………………..

Name of Director: ………………………………………………………………………………………………………………………………………………

Name of Company: ………………………………………………………………………………………… Licence No.: ……………………………….

PRIVACY NOTICE




40 | P a g e

Attachment 4 - Declaration – Professional Indemnity Insurance

Declaration – Professional Indemnity Insurance

Name of Licensee:

Licence Number:

1. Tick one of the following boxes:

Insurance cannot be obtained due to being declined/refused. (Go to Question2)

Insurance cannot be obtained/maintained as it is not economically viable. (Go to Question 4)

Complete this section if insurance was declined/refused:

2. What insurance companies/brokers have you contacted to obtain insurance? Include contact names and telephone numbers.

3. What reasons were given for denying you insurance?

No further Questions are required to be completed. Go to end of form and sign Declaration

Complete this section if it is not economically viable to obtain insurance:

4. Why is it economically unviable for you to obtain professional indemnity insurance?

5. What is your Maximum Revenue per financial year and your Revenue for the last financial year?

Maximum Revenue: Revenue last financial year:

6. What insurance companies/brokers have you contacted to obtain insurance? Include contact names and telephone numbers

7. What was the cost of the insurance quoted? Attach quotations and any other supporting documentation.



8. If you previously held a professional indemnity insurance policy, what change in circumstances now makes it economically unviable to maintain it?

If a Licensee is granted a licence and is not required to hold insurance at the level of insurance prescribed in the Minimum Financial Requirements Policy, the Commission may impose additional conditions on the licence. These may include a condition that the Licensee must clearly and unequivocally advise an individual consumer in writing, prior to entering any contract, that the Licensee does not hold the professional indemnity insurance prescribed in the Minimum Financial Requirements Policy of the Queensland Building and Construction Board.

WARNING

Providing incorrect or misleading information may lead to a review and possible cancellation of your licence and is an offence under the Act with a maximum penalty of 2 years imprisonment.

I declare the information provided in this document is true and correct and give my consent for the Commission to make enquiries with third parties in relation to the information provided.

Name: Signature:

Position held if signing on behalf of the company:

DATED THIS____________________________DAY OF______________________________20____________

PRIVACY NOTICE

QBCC is collecting the information on this form to ascertain whether your client satisfies the financial requirements of the Queensland Building and Construction Board for a contractor’s licence under the Queensland Building and Construction Commission Act 1991. The information you have provided may be disclosed by QBCC to another party with your client’s consent or as authorised or required by law. In addition, QBCC may provide all or some of this information to a financial specialist engaged by QBCC to provide expert advice as to financial matters relevant to your client’s ability to satisfy the Minimum Financial Requirements policy. For further information visit the QBCC website at www.qbcc.qld.gov.au




Attachment 5 – Statement of Financial Position - Covenantors

Covenantor’s Statement Of Financial Position As At …………………………(Date) (must be no earlier than the year end date on which the MFR Report has been based)

Covenantor’s Full Name:………………………………………………………………………………………………………….. (as stated in the Report and Deed of Covenant and Assurance)

CURRENT ASSETS

Cash Assets Receivables

$ $

Inventories Other

$ $

Total Current Assets (a) $ (a)

NON CURRENT ASSETS Receivables $ Property, Plant and Equipment $ Other $ Total Non Current Assets (b) $ (b) TOTAL ASSETS (e) =(a+b) $ (e)

CURRENT LIABILITIES Payables $ Interest-Bearing Liabilities Current Tax Liabilities Provisions

$ $ $

Other $ Total Current Liabilities (c) $ (c)

NON CURRENT LIABILITIES Interest-bearing Liabilities $ Deferred Tax Benefits $ Provisions $ Other $ Total Non Current Liabilities (d) $ (d)

TOTAL LIABILITIES (f) =(c+d)

$ (f)

NET ASSETS (y) =(e-f)

$ (y)

DISALLOWED AND INTANGIBLE ASSETS (z)

$ (z) NET REAL UNENCUMBERED ASSETS * =(y-z) $

* This figure must at least equal the ‘Defined Amount” figure stated in the MFR Report

If the Covenantor has any contingent liabilities or is involved in any legal proceedings attach a separate list detailing each contingent liability and legal matter.

….……….. ………………………………………………………………… ……………………………………………………………………… (Date) (Name of Accepted Independent Accountant) (Signature of Accepted Independent Accountant)

PRIVACY NOTICE





Attachment 6 – Review Control Sheet

Review Control Sheet

Client Name:

Date:

Address:

Contact Person:

Telephone:

Reviewed by: ______

Program No. Details Completed

date/initial Work Paper Reference

Comments/Further Action

1.1 Obtain an understanding of the client’s business through discussions with client.

1.2 Inquire with management that all relevant financial information is included in the financial statements.

1.3 Compare previous year financial statements and discuss with management any significant account balance differences.

1.4 Review the classification of items in the financial statements including the allocation between ‘current’ and ‘non-current’.

1.5 Are there any Related Entity items or transactions in the financial statements?

1.6 Have there been any significant changes in the client’s business structure or nature of business during the year? If yes, discuss with client the reasons for the changes.

2.1 Examine the last bank statements and bank reconciliations for the period and match to balance sheet. Ensure large reconciliation items have been subsequently cleared by examining subsequent bank statements and reconciliations and that all un-presented cheques have been promptly cleared.






3.1 Review aged debtors and creditors list and agree with trial balance.

3.2 Discuss with client any long outstanding debtors listed on aged debtors ledger (including retentions) and assess prospects of recovery.

3.3 Verify major debtors, either through circularisation or by checking payments since the date of the debtors ledger.

3.4 Examine creditors list with client to assess if any amounts have been omitted

3.5 Test cut off of creditors to ensure that the liability for delivery of inventory has been recognised. This can be performed by reviewing delivery of inventory just prior to, and just after, the reporting date.

3.6 Examine timeliness of payments for PPS, Group Tax and Superannuation Guarantee Levy by examining the dates that cheques were cleared for each.

4.1 Inquire as to the nature and extent of any contingent liabilities such as guarantees, potential legal action or rectification work

5.1 Inquire whether debtors have been pledged, factored or discounted and whether any other assets have been pledged or are subject to financing arrangements.

5.2 Enquire whether or not any debtors are subject to legal processes for collection of any kind. If so set out full particulars and if you have determined the accounts have not become contingent assets please explain.

6.1 Inquire whether work in progress is completely recoverable. Test recoverability with post balance date transactions (billings, cash receipts etc.).



PRIVACY NOTICE





7.1 Obtain a schedule of property including accumulated depreciation (for example a tax depreciation schedule) and agree the totals to the trial balance.

7.2 Discuss with client any financing arrangements in place (leases, mortgages etc.).

7.3 Consider the basis of valuation of assets and, if those assets are material, obtain an independent valuation (such as a kerbside valuation from a licensed real estate agent).

8.0 Ensure any joint venture operations, joint ownership or joint and several ownerships are fully disclosed in the notes hereto.

8.1 Ensure any real property owned by the licensee is registered in its name and is fully owned by it any exceptions to be fully disclosed. For example by sighting the most recent rates notice or a current title search.

9.1 Examine loan documents and correspondence with lenders and make enquiries of directors to ensure there have been no breaches of loan covenants. If there have been breaches assess impact on classification of those debts.

Reviewed by: _____________________________________ ____________________________ Partner Date

Note: Working papers are to be maintained in accordance with Australian Auditing Standard AUS 208 “Documentation”.




Attachment 7 Production of Documents MFR Report


(Non- Reporting Entities – up to and including Category 4)

To: Queensland Building and Construction Commission (‘QBCC’)

Re: ………………………………………………..(QBCC Licensee Name and Licence number)

Scope

I…………………………………..(name) of ………………………………………………………..(address or firm name) being an Accepted Independent Accountant by virtue of …………………………………(qualification) and being a holder of a public practicing certificate state that I have compiled and reviewed the financial information of ……………………………………………..(name of Client) (‘the Client’) for the period ended …………………………….(date).

The Client or where the Client is a company, its directors, are responsible for the financial information. I have performed the review of the financial information against the financial criteria set out below in order to state whether, on the basis of the procedures described, anything has come to my attention that would indicate that the financial information in relation to those criteria is not presented fairly, in accordance with all applicable Australian Accounting and Auditing Standards, other mandatory professional reporting requirements and the Minimum Financial Requirements (‘MFR’) of the QBCC. If there is any inconsistency between all applicable Australian Accounting and Auditing Standards, other mandatory professional reporting requirements and the Minimum Financial Requirements (MFR) of the QBCC, then the MFR takes precedence.

This Production of Documents MFR Report has been prepared for distribution to the Client and the QBCC, for the purpose of reporting on MFR. I disclaim any assumption of responsibility for reliance on this Production of Documents MFR Report or on the financial information to which it relates to any person other than the Client or the QBCC.

My review has been conducted in accordance with Australian Accounting and Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the personnel of the Client AND analytical procedures applied to the financial information. These procedures do not provide all the evidence, which would be required in an audit, thus the level of assurance provided is less than given in an audit. I have not performed an audit and accordingly, I do not express and audit opinion.

I confirm the tests or checks I have conducted, and the evidence sighted, comply with those minimum requirements set out in the MFR Review Control Sheet developed by QBCC, and that I have applied all relevant Australian Accounting and Auditing Standards and significant accounting policies in the preparation and presentation of the financial information. Where such standards and policies have not been applied, details of these are outlined below.

Qualification Paragraph


The Client meets the Minimum Financial Requirements. Nothing has come to my attention that causes me to believe that the Client does not meet the Minimum Financial Requirements as at and for the period end date as stated above. Based on the Client’s NTA, the Maximum Revenue the client may earn per financial year is $..................................



or

The Client does not meet the Minimum Financial Requirements for the following reasons:……………………………………

…………………………………………………………………………………………………………………………………………………………………………………………..

Statement

Based on my review of the Financial Information, which is NOT an audit, except for the effects described in the Qualification Paragraph above, nothing has come to my attention that causes me to believe that the Client has not met the MFR, as prescribed by the QBCC, as at and for the year ended date stated above.

In determining the Net Tangible Assets and Current Ratio of the Client, I verify I have NOT included any Related Entity Loans or Investment assets in the calculation, unless otherwise stated as follows:

In determining Net Tangible Assets and Current Ratio of the Client, I HAVE included Related Entity Loan and/or Investment asset amounts within the accounts of the Client, and I have independently verified such assets are collectable by the Client as at and for the year ended date as stated above in accordance with the MFR.

In determining Net Tangible Assets and Current Ratio of the Client, I have applied all of the recognition and measurement standards of Australian Accounting Standards, including but not limited to the impairment and collectability of assets;

In determining Net Tangible Assets and Current Ratio of the Client, I have applied or adopted the provision of AASB111 – Construction Contracts;



Current Ratio: (please state as a ratio) : Assets: $ Disallowed Assets $ Intangible Assets: $ Liabilities $

NTA (at least) $

Total of Related Entity Loan or Investment Asset amounts included in NTA

$

Revenue: $



PRIVACY NOTICE







(Yes/No)

I CERTIFY THAT this Production of Documents MFR Report has not been altered from the MFR Report contained in Attachment 7 of the QBC Board’s Minimum Financial Requirements Policy other than by the completion of the information in the spaces provided.

Attached to this Production of Documents MFR Report are the details of the calculation performed. Where Deeds of Assurance have been relied upon, I have attached a verified Statement of Financial Position for each Covenantor.

……………………………………………….

Name of Accepted Independent Accountant

……………………………………………….

Professional Qualifications

………………………………………………..

Signature of Accepted Independent Accountant

-------------------------------------------

-------------------------------------------

(Address and Telephone number)




Production of Documents MFR Report Attachment 7

Calculation Sheet

This calculation sheet must be completed and returned with the Production of Documents MFR Report and financial statements.


Current Assets:

Disallowed and Intangible Current Assets

Current Liabilities:

Current Ratio: (please state as a ratio)

Assets:

Disallowed Assets

Intangible Assets:

Liabilities

NTA (at least)


Revenue:



Amount Assured

‘Defined Amount’



(Yes/No)



PRIVACY NOTICE



The Client meets the Minimum Financial Requirements. Nothing has come to my attention that causes me to believe that the Client does not meet the Minimum Financial Requirements as at and for the period end date as stated above. Based on the Client’s NTA, the Maximum Revenue the client may earn per financial year is $..............................

or

The Client does not meet the Minimum Financial Requirements for the following reasons: ………………………………….

…………..………………………………………………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………..…………………………………………………………………………………………




Attachment 8 Production of Documents MFR Report


Category 5 to 7 Licensees

OR

Reporting Entities* – Any Licence Category

*Refer MFR Definition for Reporting Entities

To: Queensland Building and Construction Commission (‘QBCC’)

Re: ………………………………………………..(QBCC Licensee Name and Licence number)

Scope

I…………………………………..(name) of ………………………………………………………..(address or firm name) being an Accepted Independent Accountant by virtue of …………………………………(qualification) and being a holder of a public practicing certificate state that I have compiled and reviewed the financial information of ……………………………………………..(name of Client) (‘the Client’) for the period ended …………………………….(date).

The Client or where the Client is a company, its directors, are responsible for the financial information. I have performed the review of the financial information against the financial criteria set out below in order to state whether, on the basis of the procedures described, anything has come to my attention that would indicate that the financial information in relation to those criteria is not presented fairly, in accordance with all applicable Australian Accounting and Auditing Standards, other mandatory professional reporting requirements and the Minimum Financial Requirements (‘MFR’) of the QBCC applicable to General Purpose Financial Statements. If there is any inconsistency between all applicable Australian Accounting and Auditing Standards, other mandatory professional reporting requirements and MFR of the QBCC, then the MFR takes precedence.

This Production of Documents MFR Report has been prepared for distribution to the Client and the QBCC, for the purpose of reporting on MFR. I disclaim any assumption of responsibility for reliance on this Production of Documents MFR Report or on the financial information to which it relates to any person other than the Client or the QBCC.

My review has been conducted in accordance with Australian Accounting and Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the personnel of the Client AND analytical procedures applied to the financial information. These procedures do not provide all the evidence, which would be required in an audit, thus the level of assurance provided is less than given in an audit. I have not performed an audit and accordingly, I do not express an audit opinion.

I confirm the tests or checks I have conducted, and the evidence sighted, comply with those minimum requirements set out in the MFR Review Control Sheet developed by QBCC, and that I have applied all relevant Australian Accounting and Auditing Standards and significant accounting policies in the preparation and presentation of the financial information applicable to General Purpose Financial Statements. Where such standards and policies have not been applied, details of these are outlined below.



Qualification Paragraph


The Client meets the Minimum Financial Requirements. Nothing has come to my attention that causes me to believe that the Client does not meet the Minimum Financial Requirements as at and for the period end date as stated above. Based on the Client’s NTA, the Maximum Revenue the client may earn per financial year is $....................................

or

The Client does not meet the Minimum Financial Requirements for the following reasons:………………………………………

……………………………………………………………………………………………………………………………………………………………………………………...…….

Statement

Based on my review of the Financial Information, which is NOT an audit, except for the effects described in the Qualification Paragraph above, nothing has come to my attention that causes me to believe that the Client has not met the MFR, as prescribed by the QBCC, as at and for the year ended date stated above.

In determining the Net Tangible Assets and Current Ratio of the Client, I verify I have NOT included any Related Entity Loans or Investment assets in the calculation, unless otherwise stated as follows:……………………………………………………………

…………………………………………………………………………………………………………………………………………………………………………………………….



Current Ratio: (please state as a ratio) : Assets: $ Disallowed Assets $ Intangible Assets: $ Liabilities $

NTA (at least) $


$

Revenue: $



PRIVACY NOTICE







(Yes/No)

I CERTIFY THAT this Production of Documents MFR Report has not been altered from the MFR Report contained in Attachment 8 of the QBC Board’s Minimum Financial Requirements Policy other than by the completion of the information in the spaces provided.

Attached to this Production of Documents MFR Report are the details of the calculation performed. Where Deeds of Assurance have been relied upon, I have attached a verified Statement of Financial Position for each Covenantor.

……………………………………………….

Name of Accepted Independent Accountant

……………………………………………….

Professional Qualifications

………………………………………………..

Signature of Accepted Independent Accountant

-------------------------------------------

-------------------------------------------

(Address and Telephone number)




Production of Documents MFR Report Attachment 8

Calculation Sheet

This calculation sheet must be completed and returned with the Production of Documents MFR Report and financial statements.


Current Assets:

Disallowed and Intangible Current Assets

Current Liabilities:

Current Ratio: (please state as a ratio)

Assets:

Disallowed Assets

Intangible Assets:

Liabilities

NTA (at least)


Revenue:



Amount Assured

‘Defined Amount’



(Yes/No)



PRIVACY NOTICE



The Client meets the Minimum Financial Requirements. Nothing has come to my attention that causes me to believe that the Client does not meet the Minimum Financial Requirements as at and for the period end date as stated above. Based on the Client’s NTA, the Maximum Revenue the client may earn per financial year is $...............................

or

The Client does not meet the Minimum Financial Requirements for the following reasons:……………………………….

…………………………………………………………………………………………………………………………………………………………………………….………….

………………………………………………………………………………………………………………………………………………………………………………………..




Table A – Minimum Financial Requirements Criteria SC1 SC2 Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Category 7

Maximum Revenue*

Up to $200,000

Up to $600,000

Min (a) Max (b)

$600,001 - $3,000,000

$3,000,001 - $12,000,000

$12,000,001 - $30,000,000

$30,000,001 - $60,000,000

$60,000,001 - $120,000,000

$120,000,001 - $240,000,000

>$240M NTA x 16.67

Net Tangible Assets $12,000 $36,000.00 Min (c)

Max (d) $36,001 - $156,000

$156,001 -$480,000

$480,001 - $1,200,000

$1,200,001 - $2,400,000

$2,400,001 - $4,800,000

$4,800,001 - $14,400,000 >$14.4M

Information Required

SC1 Declaration

SC2 Declaration

MFR Report and Financial Statements







*The formula for deriving level of Maximum Revenue between minimum and maximum NTA values expressed within categories 1 to 6 is: Maximum Revenue = {[(Licensee’s NTA - c) / (d - c)] x (b - a)} + a. The calculation is not applied to SC1 and SC2 in determining Maximum Revenue

Minimum Financial Requirements - Queensland Building … · 1. Financial Requirements ... To...

Documents

Transcript of Minimum Financial Requirements - Queensland Building … · 1. Financial Requirements ... To...