InsightsWhat happens when the QBCC come knocking…
Dealing with the regulator on Minimum Financial Requirements (MFR)… what happens when the QBCC come knocking?
As 2020 gains momentum and the QBCC analyses Annual Reporting documentation lodged by licensees, it’s worth considering what happens when the QBCC come knocking.
Because likely they will.
Like most regulators, the QBCC currently have access to an unprecedented amount of data about their licensees. The digital age means data can be queried with speed and cross-referenced with other information in the blink of an eye. Add in some additional skilled manpower and your chances of review or audit by the QBCC have never been higher. This is the real consequence of the QBCC’s new online reporting system launched late last year.
Based on our interactions in the past year assisting QBCC Licensees and their advisors, the number one tip we offer for interacting with the QBCC is this:
Lodge all documentation on time and in full.
While we don’t guarantee a trouble free experience by lodging on time, late lodgement is an easy red-flag to avoid. As a regulator, the QBCC is very aware that statistically, late lodgers are more likely to have issues complying with MFR. Even if you don’t have issues, it’s best to avoid the additional scrutiny lodging late will trigger.
So you’ve lodged information with the QBCC and they’ve responded with one of the following:
- A warning letter
- A Review or Audit
- Formal Notice of Reasons for Proposed Suspension or Cancellation.
“The QBCC will typically issue a request to be responded to within 21 days, so get your skates on.”
In short, the QBCC have come knocking!
What do you do?
- Understand the request – It’s critical to review your position and gain a full understanding of the issues. Respond methodically and in-full to each item within the timeframes indicated. Avoid the misunderstandings and angst arising from responses that are too brief, or don’t adequately address the issue raised.
- Develop a strategy – Once you’ve reviewed your position more closely and understood the issues, you may find you aren’t meeting the MFR. It’s likely you’ll have several options available to resolve the matter. Identify your options and work out how quickly they can be implemented.
- You’re not an island. Get help – Seeking professional advice or a second opinion is a wise course of action and can save you in the long run. The MFR regulations are very technical and some areas are very new. They cite references to Accounting Standards (AASB’s) and other related legislation, so often the “experts” need expert advice.
- Time is your friend, use it wisely – The QBCC will typically issue a request to be responded to within 21 days, so get your skates on. It’s surprising how much time is often wasted. And we know from experience the QBCC are not fond of granting extensions.
- Be timely, never hasty – Be timely with your responses, but never hasty. Use the allotted time to review your information, check and re-check. Ensure your responses align with your strategy and your financials are correct. No-one enjoys re-stated financial statements, least of all a regulator.
- Evidence, evidence, evidence – Evidence is data or information that supports your position, preferably objective and independent. For example, providing evidence to support your Work In Progress position is likely to require copies of Contracts, Claims, Invoices and Job Cost Reports generated from your financial system. In addition, you’ll need to establish your Margin Methodology and its reasonableness evidenced with historical information and budget estimates.
- Agree to disagree – If there is a way to resolve your issue and retain your licence, don’t get too hung up on who is right or wrong on a technical issue. Pushing your matter through to the Tribunal should be your last option. It can be an expensive exercise with uncertain outcomes.
- Credibility – Your credibility, and the credibility of your advisors and representatives is important. Don’t risk credibility by providing misleading information, or information you know to be incorrect. Your advisors can assist you best by understanding ALL the issues – the good, the bad and the ugly.
- Size doesn’t matter – You may be a big fish in the pond. You may be bigger than all of your customers and suppliers put together. It won’t save your licence. As a regulator, the QBCC has the law on their side and will challenge businesses they believe to be falling short of the requirements.
There is nothing magical about any of these suggestions, some are straight-out common sense. Unfortunately, they don’t always happen.
“The number one tip we offer for interacting with the QBCC is this: Lodge all documentation on time and in full.”
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Founded by Michael and Ashley Garrone, Mage Advisory is a specialist business and accounting advisory firm, committed to sharing their expertise every day for the benefit of their clients, their profession and their greater network.
This publication is © Mage Advisory and is for general guidance only. Legal and financial advice should be sought before taking action in relation to any specific issues.