SEC proposal forces top auditors on big gov’t projects

Large government contractors may soon be required to hire top-tier government-accredited auditors under a draft memorandum circular seeking to boost oversight, protect investors, and curb corruption in high-value contracts.

The Securities and Exchange Commission (SEC) said Monday that it has proposed stricter accreditation rules for auditing firms and external auditors, raising qualification standards, expanding scrutiny of government contractors, and tightening grounds for denial of accreditation.

Proposed guidelines

“The proposed guidelines seek to strengthen the accreditation framework and protect the public’s interest by expanding oversight for government contractors, elevating qualification and track record standards, and providing a more rigorous evaluation process, among others,” the SEC said.

The draft circular, issued on 1 April, specifically requires corporations awarded a single government contract of at least P100 million — or combined contracts totaling P150 million in a year — to engage Group A SEC-accredited auditors until project completion.

These companies must also submit notarized schedules detailing project descriptions, costs, and status, all verified by an auditor’s report.

Track record standards

Track record standards for auditors are also being raised under the proposal.

Group A auditors must now have at least five corporate clients with assets of P100 million each, up from P50 million, while Group B auditors are required to serve five clients with P50 million in assets each, up from three clients at P20 million.