The Securities and Exchange Commission (SEC) has proposed exempting more micro, small and medium enterprises (MSMEs) from the mandatory submission of audited financial statements to ease compliance costs and streamline regulatory requirements.
In a policy paper submitted to the Department of Finance (DOF), the SEC recommended raising the audit threshold so that corporations with total assets or liabilities not exceeding ₱3 million would only need to submit annual financial statements certified under oath by their treasurer or chief financial officer, instead of audited ones. The new rule, if approved by the DOF, will apply to financial statements for fiscal years ending on or after December 31, 2025.
Currently, corporations with total assets or liabilities of at least ₱600,000 are required to file audited financial statements, while smaller firms may submit unaudited, sworn statements.
SEC chairman Francis E. Lim said, “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.”
He added, “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.”
According to the SEC, the move would not only lessen the financial burden on small firms but also curb “rubber-stamp audits,” simplify registration and reporting, and allow the agency to focus its oversight on higher-risk corporations.
The Commission clarified that despite removing the audit requirement for smaller entities, regulatory supervision will remain intact through its visitorial powers under the Revised Corporation Code, which allows it to mandate audits “if warranted by public interest.”
“We assure the public that the proposal will not dilute oversight over corporations, including entities engaged in public infrastructure projects or other regulated sectors, as they generally exceed the ₱3 million threshold,” Lim said.
