SEC Secures DOF Approval To Exempt Micro Enterprises from Submitting Audited FS, Releases Draft Rules

The Securities and Exchange Commission (SEC) has secured approval from the Department of Finance (DOF) to simplify the reportorial requirements of micro enterprises by allowing them to submit certified, instead of audited, financial statements.

Accordingly, the Commission on December 9 issued for public comment the proposed Amendments to the Application and Definition of Terms under the Revised SRC Rule 68 in Relation to the Adjustment of the Audit Threshold.

Under the proposal, the Commission seeks to amend Part I, Section 1(A) of the Rule 68 of Republic Act No. 8799, or the Securities and Regulation Code (SRC), to exempt both stock and nonstock corporations with total assets or liabilities not exceeding P3 million from submitting audited financial statements.

At present, only stock and nonstock corporations with total assets or liabilities less than P600,000 are exempted from mandatory audit. The SEC targets to apply the higher P3 million threshold to financial statements covering fiscal years ending on or after December 31, 2025.

In lieu of audited financial statements, a corporation within the audit threshold will be allowed to submit financial statements certified under oath by both the president and treasurer or chief financial officer, as duly authorized by the board of directors.