Following the approval, the SEC on Dec. 9 released for public comment the proposed amendments to the Application and Definition of Terms under the Revised SRC Rule 68, which governs financial reporting requirements under Republic Act No. 8799, or the Securities Regulation Code (SRC).
Higher audit threshold proposed
Under the proposal, the SEC seeks to raise the audit exemption threshold to cover stock and nonstock corporations with total assets or liabilities not exceeding P3 million, exempting them from submitting audited financial statements.
At present, only corporations with assets or liabilities below P600,000 are exempt from mandatory audits.
The SEC aims to apply the higher threshold to financial statements covering fiscal years ending on or after Dec. 31, 2025.
Certified statements allowed
In lieu of audited financial statements, covered corporations will be allowed to submit financial statements certified under oath by both the president and the treasurer or chief financial officer, as authorized by the board of directors.
The certifying officers will assume full responsibility for the accuracy and completeness of the submitted reports.
Any incomplete, inaccurate, false, or misleading disclosures will be subject to penalties under the SRC and Republic Act No. 11232, or the Revised Corporation Code of the Philippines (RCC).
The SEC emphasized that it retains the authority to require audited financial statements when necessary for investor protection, regulatory enforcement, or public interest.
Exclusions remain
The proposed higher audit threshold will not apply to corporations classified under Groups A, B, and C of the Revised SRC Rule 68, as well as entities vested with public interest due to the nature of their operations or regulatory obligations.
Group A includes public companies, listed issuers, stock and securities exchanges, and firms with at least P50 million in assets and a wide shareholder base. Group B covers investment houses, brokers, dealers, underwriters, and issuers of registered securities. Group C includes financing and lending companies above certain asset levels, transfer agents, and nonstock, nonprofit organizations that solicit donations or maintain substantial fund balances.
Supporting MSMEs, maintaining safeguards
Section 74 of the RCC authorizes the SEC to revise the audit threshold, subject to DOF approval. In October, the SEC formally recommended the adjustment to ease financial pressure on micro, small, and medium enterprises (MSMEs), reduce incidents of “rubber-stamp” audits, and streamline compliance.
In a letter dated Nov. 18, the DOF approved the proposed threshold adjustment, citing its alignment with the government’s efforts to stimulate economic growth while maintaining strong compliance monitoring and accountability among corporate officers. —Ed: Corrie S. Narisma
