SEC pushes strong audit oversight
The SEC presented at the IFIAR Inspection Workshop for the first time, demonstrating its commitment to global initiatives and elevating the Philippines’ presence in the international audit and regulatory community
Securities and Exchange Commission Oversight Assurance Review team leader Guada May Preciados outlines audit quality, financial reporting integrity in a global workshop for independent audit regulators.
Photograph courtesy of SEC
Corporate regulator Securities and Exchange Commission (SEC) seeks to strengthen financial reporting standards by pushing for higher audit quality — a move expected to enhance investor confidence and corporate governance.
The regulator represented the Philippines at the International Forum of Independent Audit Regulators (IFIAR) Inspection Workshop in Africa to keep up with global audit oversight.
“The SEC marked another milestone as it presented at the IFIAR Inspection Workshop for the first time, demonstrating its commitment to global initiatives and elevating the Philippines’ presence in the international audit and regulatory community,” SEC chairperson Emilio Aquino said on Thursday.
“(We) remain steadfast in our commitment to ensuring that companies are strictly compliant with accounting policies and upholding audit quality as we continue to promote good governance in the corporate sector,” he added.
Audit lapses dissected
SEC officials Guada May Preciados and Rizzo Tarroza co-presented a session with South Africa on revenue inspections, a critical audit area due to complexities in applying IFRS 15 or Revenue from Contracts with Customers.
The SEC presented cases where companies misapplied accounting policies under Philippine Financial Reporting Standards (PFRS) 15, particularly in revenue recognition and measurement. It also flagged lapses in auditor evaluations, highlighting gaps in professional judgment and audit quality.
To address these issues, the SEC called for stricter oversight and better auditor training to ensure professional skepticism and due diligence in revenue assessments. It also pointed out the importance of robust consultation policies within audit firms to challenge complex accounting treatments effectively.
In line with its audit quality initiatives, the SEC recently issued Memorandum Circular No. 1, Series of 2024, adopting PFRS and Philippine Interpretations Committee guidance as part of its financial reporting rules.
The IFIAR Inspection Workshop, an annual gathering of independent audit regulators, was hosted this year by Mauritius’ Financial Reporting Council, drawing over 100 regulators from 56 countries.