SEC frees micro firms from audit requirement
MANILA, Philippines — The Securities and Exchange Commission (SEC) has exempted micro enterprises from submitting audited financial statements to ease compliance costs for the country’s smallest corporations.
In a memorandum circular issued on Jan. 20, the Commission amended provisions under Revised Rule 68 of Republic Act No. 8799, or the Securities Regulation Code. The amendments increased the threshold for mandatory audits to corporations with total assets or liabilities exceeding P3 million.
Previously, only firms with assets or liabilities below P600,000 were exempted.
The policy change, contained in Memorandum Circular No. 4, Series of 2026, applies to both stock and nonstock corporations classified as micro enterprises. The SEC said the reform is intended to streamline reportorial requirements while maintaining regulatory oversight.
READ: SEC poised to ease reporting obligation of small businesses
SEC chair Francis Lim said the adjustment recognizes the operational realities of micro enterprises, which often have limited resources.
“By allowing the submission of certified financial statements in lieu of audited ones, we are making compliance more proportionate, allowing them to redirect their resources to growing their business,” Lim said.
New framework
Under the new rules, corporations that do not meet the audit threshold must submit financial statements accompanied by a Statement of Management’s Responsibility (SMR).
The SMR must be signed under oath by authorized officers, including the chair or board representative, president or chief executive officer and treasurer or chief financial officer. For one person corporations, the president and treasurer are required to sign.
READ: Energizing MSMEs: The lifeblood of growth and the economy
The SEC emphasized that signatories will assume full responsibility for the truthfulness and completeness of the submitted financial statements.
Any false, misleading or inaccurate disclosures may result in penalties under the SRC and Republic Act No. 11232, or the Revised Corporation Code, without prejudice to the Commission’s authority to require audited statements when necessary.
The higher audit threshold will apply to financial statements covering fiscal years ending on or after Dec. 31, 2025. Corporations with earlier fiscal year-end dates will continue to follow the previous threshold.
However, the exemption does not apply to entities classified under Groups A, B and C of Revised SRC Rule 68. This includes public companies, issuers of listed securities, financial intermediaries and other corporations vested with public interest due to the nature of their operations and regulatory obligations./dda
