SEC exempts micro enterprises from audited FS requirement

The Securities and Exchange Commission (SEC) has exempted micro enterprises—namely stock and nonstock corporations with P3 million or less in assets or liabilities—from submitting audited financial statements, as the regulator seeks to make compliance requirements more proportionate.

Under Memorandum Circular 4 issued on January 20, the SEC raised the threshold for those exempt from submitting audited financial statements from P600,000 to P3 million previously, applicable to financial statements covering fiscal years ending on or after December 31, 2025.

Corporations with fiscal years that end prior to the effectivity will follow the previous threshold.

Instead of audited financial statements, corporations will need to submit financial statements accompanied by a Statement of Management's Responsibility (SMR), which must be signed under oath by the chairman, president, or chief executive officer, and treasurer or chief financial officer.

"This reform recognizes the realities faced by micro enterprises, which often operate with very limited resources. By allowing the submission of certified financial statements in lieu of audited ones, we are making compliance more proportionate, allowing them to redirect their resources to growing their business," SEC Chairperson Francis Lim said.

"At the same time, the new threshold preserves accountability by requiring management to formally assume responsibility for the accuracy and integrity of their financial statements, ensuring that regulatory oversight remains firmly in place," he added.

The SEC noted, however, that incomplete, inaccurate, false, or misleading statements will be subject to penalties under the Securities Regulation Code and the Revised Corporation Code of the Philippines. — VDV, GMA Integrated News