The Securities and Exchange Commission (SEC) has released a draft rule that would raise the audit threshold for corporations to more than P3 million in total assets or liabilities. The proposal aims to cut compliance costs for micro, small, and medium enterprises.
Currently, corporations with at least P600,000 in assets must submit audited financial statements. Under the new proposal, companies below the P3-million threshold would no longer need an audit. Instead, they would file financial statements certified under oath by their president and treasurer (or by the treasurer alone for One Person Corporations).
The SEC said the existing threshold no longer matches today’s economic conditions or the legal definition of micro enterprises. The proposed P3-million limit would apply to both stock and non-stock corporations.
Corporations meeting the threshold must still ensure the accuracy of their filings. Incomplete or misleading statements may face penalties under the Securities Regulation Code and the Revised Corporation Code, and the SEC may still require an audit when needed for investor protection or public interest.
If approved, the new threshold would apply to financial statements for fiscal years ending December 31, 2025 and beyond. The SEC is accepting public comments on the proposal until December 24.
SEC chairman Francis E. Lim said the change will ease the burden on micro enterprises without weakening regulatory oversight, noting that the commission retains its authority to order audits when necessary. He added that companies involved in public infrastructure and other regulated sectors typically exceed the P3-million threshold and will remain subject to audit requirements.
