Publicly listed companies and other entities of public interest are now required to disclose fees paid to their external auditors to improve transparency and accountability in financial reporting.
The Securities and Exchange Commission (SEC) issued Memorandum Circular No. 18, Series of 2024, which applies to annual financial statements (AFS) for companies with fiscal years ending 31 December 2024, and beyond.
These guidelines cover listed companies, issuers registered under the Securities Regulation Code (SRC), public firms with assets of at least P50 million and 200+ shareholders, as well as companies holding secondary licenses from the SEC, BSP and Insurance Commission, and other entities deemed public interest by the SEC.
Covered companies must disclose specific fee-related information in a two-year comparative format as part of their AFS, including fees paid to external auditors and network firms for audit opinions.
Publicly listed companies and other entities of public interest are now required to disclose fees paid to their external auditors to improve transparency and accountability in financial reporting.
Any fees charged to the company and its related entities, controlled directly or indirectly, must also be disclosed. Additionally, fees from services provided by external auditors or network firms to controlled entities must be included.
If applicable, companies must disclose fees representing over 15% of the auditor’s total fees received over two consecutive years.
Exemptions apply if the information relates to a parent entity or a wholly-owned subsidiary preparing consolidated financial statements. Non-compliance will result in penalties.