SEC drafts tougher auditor accreditation rules
MANILA, Philippines — The Securities and Exchange Commission (SEC) is seeking public comments on proposed amendments to its accreditation guidelines for auditing firms and external auditors.
The draft circular aims to strengthen oversight under Revised Securities Regulation Code (SRC) Rule 68 and SEC Memorandum Circular No. 20, Series of 2019.
Among the key changes is the expansion of entities required to engage SEC-accredited auditors, including corporations with large government contracts.
Firms with a single government contract of at least P100 million, or combined contracts of at least P150 million in a year, will fall under Group A coverage.
The SEC is also raising qualification thresholds for auditors, requiring a stronger track record of corporate clients, depending on accreditation category.
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Categories
For instance, Group A applicants must have at least five clients with assets of at least P100 million each, while Group B requires five clients with P50-million assets.
Group C, meanwhile, will continue to cover smaller entities such as financing and lending companies, transfer agents and certain nonstock, nonprofit organizations meeting asset or donation thresholds.
Under the proposed amendments, these entities include financing firms with more than P10 million in assets and lending firms with more than P5 million.
Nonprofits that receive over P25 million in annual donations or hold fund balances above P100 million over three years will also be covered.
READ: Accreditation of external auditors
Sanctions
The proposal introduces stricter grounds for suspension or revocation of accreditation, including repeated violations, fraud and concealment of material findings.
Auditors may also face sanctions for misrepresenting findings or failing to comply with Philippine Standards on Auditing and other regulations.
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Under the revised rules, applications may be outrightly denied for serious breaches such as gross negligence, lack of independence or misleading financial reporting.
The SEC will also tighten evaluation standards, requiring audited financial statements to have no material findings for full five-year accreditation.
Conditional accreditation will be limited and cannot be used repeatedly, reinforcing compliance with audit quality standards.
The SEC likewise said companies with government contracts would be required to submit a notarized schedule detailing project information alongside their financial statements.
According to the regulator, disclosures must include project description, contract cost, status and timelines.
The SEC said the amendments would enhance audit quality, protect investors and uphold the integrity of financial reporting.
Interested parties may submit comments to the Office of the General Accountant until May 15, 2026. INQ
