Minimum Financial Requirements from 1 October 2014
A new financial policy was introduced on October 1, 2014. The Minimum Financial Requirements Policy forms part of the Government’s Service Reforms.
The new Minimum Financial Requirements (MFR) Policy no longer requires licensed contractors to provide financial information demonstrating they comply with the financial requirements yearly at renewal.
Previously, each year, licensed contractors (those who have a licence allowing them to contract directly with the public) were required to submit financial information to the Commission, in the form of a report from their external accountant in order to renew their licence.
Additionally, larger licensed contractors (with turnover in excess of $12m) had to submit audited financial statements.
The Commission has removed the requirement to submit financial information every year at renewal in order to streamline the process for these licensees.
Licensed contractors must still meet the Minimum Financial Requirements at all times. However, the changes mean that contractors with annual turnover in excess of $600,000 are only required to submit a financial report to the Commission when they first apply for a licence or in order to upgrade their turnover limit. This is necessary to ensure licensees operating in the industry remain financial viable.
The current Financial Requirements for Licensing imposes vastly different requirements on licensed contractors depending on their size, including different report types, different rules for ages of information and different monitoring requirements. · The new MFR aims to streamline the process and set the same rules for licensees across the categories and bases those rules on good business and accounting practices that encourage profitable and viable businesses. The new MFR introduces one report type for all categories and aligns the age of financial information and the regularity of financial monitoring for all categories. This report has been reduced to 44 pages instead of 86.
Kyla Dalton – Accountant