Micro, small, and medium-sized enterprises (MSMEs) may soon see lower compliance costs under a Securities and Exchange Commission (SEC) proposal to exempt more corporations from the requirement to submit audited financial statements.
In a policy paper sent to the Department of Finance (DoF) last week, the SEC recommended that corporations with total assets or liabilities not exceeding P3 million be allowed to file annual financial statements certified under oath by their treasurer or chief financial officer, instead of audited statements.
“We have repeatedly said that MSMEs are the backbone of the Philippine economy, which is why the SEC remains committed to implementing measures that will foster a business environment that is easier to navigate for our budding entrepreneurs,” SEC chairperson Francis Lim said.
“Our proposed policy will not only improve the ease of doing business, but will also cut unnecessary compliance requirements for micro entities, in support of the government’s goal of driving inclusive economic development,” he added.
Audit burden eased
If approved by the DoF, the higher threshold will apply to financial statements for fiscal years ending on or after 31 December 2025. The exemption is expected to ease the regulatory and financial burden on micro enterprises by lifting the audit requirement for those with total assets or liabilities of P3 million and below.
Currently, corporations with total assets or liabilities of at least P600,000 are required to submit financial statements audited by an independent certified public accountant under Section 177 of Republic Act 11232, or the Revised Corporation Code. Those below the threshold may file statements certified under oath by their treasurer or chief financial officer.