SEC wants MSMEs exempted from audited financial statement requirement

The Securities and Exchange Commission (SEC) is looking to have micro, small, and medium enterprises (MSMEs) with total assets or liabilities less than P3 million be exempted from filing audited financial statements, in a bid to ease their regulatory and financial burdens.

In a statement released Monday, the SEC said it recommended to the Department of Finance (DOF) that corporations with total assets or liabilities less than P3 million be required to instead submit annual financial statements certified under oath by their treasurer or chief financial officer.

Under the Revised Corporation Code (RCC) of the Philippines, firms with total assets or liabilities of at least P600,000 are required to submit annual financial statements audited by an independent certified public accountant.

The RCC provides that the DOF has the authority to determine the threshold for the application of the requirement which is also reiterated in the implementing rules and regulations of the Securities Regulation Code.

Should the recommendation be implemented, it will apply to financial statements covering fiscal years ending on or after December 31, 2025, subject to the final approval of the DOF.

“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 in the statement.

“Our proposed policy will not only improve the ease of doing business, but will also cut unnecessary requirements for micro entities, in support of the government’s goal of driving inclusive economic development,” he added.

Data from the Department of Trade and Industry (DTI) show that MSMEs make up 99.63% of registered businesses in the country as of 2024.

Majority or 90.66% are micro enterprises or those with total asset sizes of up to P3 million, 8.60% are small enterprises or those with assets from over P3 million to P15 million, and 0.37% are medium enterprises or those with assets from over P15 million to P100 million.

“We assure the public that the proposal will not dilute oversight over corporations, including entities engaged in public infrastructure or other regulated sectors, as they generally exceed the P3-million threshold,” Lim said. — RSJ, GMA Integrated News