How to adequately prepare for Public Trust Accounting
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The Project Trust Account framework was designed to strengthen the security of payments to subcontractors and suppliers, helping ensure they get paid for the work they’ve completed on construction projects. While each state and territory has slightly different requirements, the framework typically requires that general contractors hold money that’s paid by a project principal in a separate account with enough cash available to cover invoice payments and retention held.
General contractors are responsible for setting up and administering a project trust account for each project, with compliance and reporting overseen by various governing bodies. In Queensland, it’s the Queensland Building and Construction Commission (QBCC), which enacted the framework starting in 2018. While the framework originally applied to only a small range of state government contracts – typically those above AUD $10 million – it’s been progressively expanding over time to capture more contracts and contractors.
In Queensland, these requirements will soon cover all eligible private, local government, statutory authorities and government-owned contracts valued at AUD $3 million or more from 1 March 2025, and all eligible contracts valued at AUD $1 million or more from 1 October 2025.
This is a major change that contractors need to be adequately prepared for as the reporting and compliance requirements are no easy feat. Luckily, there are several business practices that contractors can put into place well ahead of the deadlines – from technology tools to new processes and workflows – that can help them become – and stay – compliant.
Overhaul Key Business Workflows
Since the framework will require contractors to have possibly hundreds of bank accounts that must be monitored and kept in the black, many contractors will need to start and/or change their processes to establish the necessary workflows to facilitate the management of this new task.
As we all know, change can be hard, so the earlier these are implemented, the better, as it will give employees and the overarching business ample time to establish new workflows well before auditing commences:
- Implement new monthly process workflow – QBCC is auditing customers regularly, with as many as eight different reports required, along with backup data, so it’s important that contractors establish a new monthly process workflow that covers the myriad of new tasks required to be compliant. This includes everything from ensuring there’s always enough cash on hand to moving retention to the correct trust accounts on time.
- Minimise repetition of steps – When establishing a new monthly process workflow, it's best to minimise the repetition of steps as much as possible since that can help streamline processes, making the tasks that much easier for the business to manage. For example, consolidating to one subbie payment per month or enforcing retention release by separate claims can help streamline how bills are paid out so that it’s done at the same time every month using the same process.
Reconcile qualifying projects monthly – Another important step is to reconcile each qualifying project on a monthly basis (at minimum), which can help management keep tabs on how every project is faring financially. This enables issues to be more easily caught and rectified early on, helping ensure that projects are capable of being successfully audited at any given time.
Adopt Technology To Create New Efficiencies and Streamline Workflows
In addition to changing how a business conducts its financials, there are various technology tools that contractors can adopt to help them physically execute all the required tasks and produce the necessary reports required when audited.
This is where Jobpac Connect can play a key role for contractors, as it has a number of PTA-compliance productivity tools built-in. It’s unique in that it covers all the state-by-state variations, while also being flexible enough to allow for future changes as requirements continue to be modified.
Some of Jobpac Connect’s top compliance-oriented tools include the following:
- Automated tools to flag qualifying projects and agreements
- Streamlining payment administration, including tools that allow contractors to pay from the correct cash accounts at the right time
- Retention transfer automation
- Automation of the ‘separate’ PTA and RTA ledgers
- Vendor statements and compliance audit reporting at the touch of a button
- Cash account and treasury management enhancementsReconciliation tools and true-up facilities, which enables an account to be reconciled at any point in time
Once you have the right technology tools in place, it may also be helpful to keep the following tips in mind, but please be sure to check the specific legislative requirements that apply to your geography and adapt to suit your needs:
- Use RCTI’s where possible and ensure the RCTI invoice date reflects the SOP delivery date. This will ensure the PTA ledger reflects the beneficial interest from the date of SOP issue.
- Pay qualifying invoices on or before the due date. The beneficial interest for retention is activated at the due date of the invoice and must be moved to RTA at that time. Transferring retention prior to payment is harder to manage.
- Ensure retention transfers are made using trust journals of the beneficiary line type, which will ensure correct sequencing in the record of deposits and withdrawals. Be sure to also complete your physical EFT retention transfers on the same day.
- You may want to put a policy into place where retentions are released as retention only claims. This makes payment administration easier and means less true up’s.
- Enter fees and interest as direct debits to ensure they are captured under the trustee beneficiary. Use trust journals of the trustee line type for top ups and draw down’s.
- Consider using the new flexible payments terms functionality for accurate due dates.
While many contractors often don’t know where to start on the journey towards compliance, there is no need to feel overwhelmed by the process. Between implementing a few new business practices and adopting the right technology tools, your firm will be able to adequately prepare for all the compliance and reporting requirements that lay ahead.
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