SEC proposes raising audited financial statements threshold to P3M

The Securities and Exchange Commission (SEC) is proposing to raise the threshold for audited financial statements to P3 million from P600,000 to reduce compliance costs for micro, small, and medium enterprises (MSMEs).

This policy change, submitted to the Department of Finance (DOF) on October 28, suggests that companies with assets or liabilities of P3 million or less can submit financial statements certified by their treasurer or CFO instead of an independent auditor.

SEC Chairperson Francis Lim stated this aims to enhance the ease of doing business and foster inclusive economic growth by easing the burden on budding entrepreneurs.

Under the Revised Corporation Code (RCC) of the Philippines, firms with total assets or liabilities of at least P600,000 are required to submit annual financial statements audited by an independent certified public accountant.

The RCC provides that the DOF has the authority to determine the threshold for the application of the requirement.

If implemented, the change will apply to financial statements covering fiscal years ending on or after December 31, 2025, subject to the final approval of the DOF.