InsightsBEWARE: QBCC MFR requires General Purpose Financial Statements
QBCC Licensee $800k+ revenue = General Purpose Financial Statements (GPFS).
This is not a misprint.
- Need to increase turnover?
- New Licensee application?
- In a review or audit with QBCC and an MFR has been requested?
QBCC Licensees lodging MFR Reports with $800k+ turnover will need to prepare “General Purpose Financial Statements” if the MFR has a period or year end date after 30 June 2022. If you are able to prepare an MFR report based on 30 June 2022 accounts, you can still use Special Purpose accounts.
This change came into effect on 1 July 2022 and we are aware of at least two accounting firms having had an MFR Report rejected for not being accompanied by General Purpose Financial Statements.
What about QBCC Annual Reporting?
The impact on Annual Reporting is more limited.
For licensees in Category 1 to 3 ($800k to $30m turnover) there is no change. For licensees in Category 4 and up ($30m + turnover) GPFS are required from 30 June 2023.
How did this happen?
Back in 2019, the QBCC linked the preparation of the Financial Statements to the Accounting Standards (AAS). However, the AASB had exemptions for circumstances (like privately held companies).
So up until this change, MFR’s could be lodged as Special Purpose Financial Statements with the caveat of applying several accounting standards. For example, WIP in AASB 15, deferred tax balances and AASB 16 Leases.
What is a General Purpose Financial Report?
GPFS are far more comprehensive reports meant for the reporting of financial information of widely held companies like BHP. GPFS contain a significant amount of detail which allows other stakeholders to make more informed decisions.
Most licensees will be able to use a “Reduced Disclosure Regime” that is not as strict on the use of accounting standards and disclosure. Tier 2 as it called. However, it goes without saying you will still be putting a lot more information into the accounts.
Why is this a problem?
Who is going to prepare these reports?
Prior to this change, many licensees and accountants were struggling with the requirement to prepare Special Purpose Financial Statements for MFR that encompassed a few specific accounting standards. Unfortunately, most external accountants will not have the knowledge or software required to prepare GPFS. So, where is this expertise being sourced from?
Who is paying?
In an industry already hurting from weather, supply chain issues, labour shortages and ever-changing legislative requirements (BIF Act amongst others), Licensees will be digging further into their pockets to pay for this new level of reporting. This is before we mention the added distraction to their business while their internal finance people grapple with collating the extra data required to pull a GPFS together.
To what benefit?
This new change is incredibly onerous on both the licensees and their advisors. Increased costs, and lost time, for what benefit? Will there be additional transparency or improved business practices because of this change?
The answer is a hard no. No-one benefits from this change, not even the QBCC.
What does the QBCC say?
“These legislative changes are as a result of amendments to AAS, not the QBCC”
The QBCC state the change is outside their jurisdiction. While AASB changes are not their jurisdiction, it would be a simple thing for the MFR Regulations to allow licensees not subject to GPFS for any other reason to be allowed to continue with Special Purpose Financial Statements.
Want to talk QBCC? Contact us today
“In an industry already hurting from weather, supply chain issues, labour shortages and ever-changing legislative requirements (BIF Act amongst others), Licensees will be digging further into their pockets to pay for this new level of reporting.”
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