The Market Monitor Minding the Nation's Business
By Luis Leoncio
The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest trade group, has lauded the Securities and Exchange Commission’s (SEC) recent decision not to amend its Securities Regulation Code (SRC) 68 on existing regulations in accepting audited financial statements.
PCCI President George Barcelon said the SEC decision spared companies, particularly the small and medium enterprises, from unnecessary, redundant, and additional cost burdens that would have resulted had the SEC adopted a proposal by the Board of Accountancy to amend SRC 68.
The amendment would have required companies to engage certified public accountants (CPAs) accredited by the BOA to prepare financial statements and to sign a Certificate of Preparation and Disclosure Noted as attachments to annual financial statements.
“Business deserves a break from rising costs of doing business,” Barcelon said. SEC Chairman Teresita J. Herbosa, in a letter to PCCI President George T. Barcelon on February 12, said maintaining the existing rules and regulations was decided on en banc (with all the commissioners participating) bench) last January 26.
“The said rules do not require the new (Board of Accountancy) policy/requirements,” the SEC chairman wrote. Thus, a registered company filing an audited FS (financial statement) to the SEC would not be compelled to also attach a disclosure note or certification signed by a CPA that he compiled or prepared the financial statement.
Barcelon wrote that many SMEs who do not have CPAs as employees would have had to engage CPAs to prepare financial statements. Further, he said a CPA disclosure note would be redundant because management was already required to submit a duly signed Statement of Management Responsibility together with the FS.
Herbosa also told Barcelon the SEC would inform the Board of Accountancy (BOA) that SRC 68 will be kept as is.
The BOA had requested the SEC to monitor compliance with the BOA Resolution No. 3-2016 when companies submit audited FS to the SEC.
The resolution required companies with revenues above P10 million a year to engage the services of CPAs to prepare or compile financial statements.
External auditors are prohibited from preparing or assisting in the preparation of financial statements and disclosure notes of their clients.
The PCCI is set to dialogue with the BOA Chairman Joel Tan Torres following the Bureau of Internal Revenue’s (BIR) adoption of the new BOA policy through Revenue Memorandum Circular 21-2016 requiring the submission of certificate by the responsible CPA on the compilation services for the preparation of financial statements and notes.