THE Securities and Exchange Commission (SEC) wants to raise the asset or liability threshold for companies required to submit audited financial statements to reduce compliance costs for micro, small and medium enterprises (MSME).
In a policy paper submitted to the Department of Finance (DoF) on Oct. 28, the corporate regulator recommended that companies with total assets or liabilities of P3 million or less be allowed to file annual financial statements certified under oath by their treasurer or chief financial officer, instead of audited reports.
“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 Chairman Francis Ed. Lim said in a statement on Friday.
At present, corporations with total assets or liabilities of at least P600,000 must submit audited financial statements. Those below the threshold only need certified statements.
Under the proposed rule, the SEC said it would continue to exercise its visitorial powers to maintain oversight, assuring that the policy would not weaken supervision of entities involved in public infrastructure or other regulated sectors that typically exceed the P3-million limit.
If approved, the policy would apply to financial statements for fiscal years ending on or after Dec. 31. The SEC said the change would streamline regulatory requirements and lower operating costs for small firms.
“Our proposed policy will not only improve the ease of doing business, but also cut unnecessary compliance requirements for micro entities, in support of the government’s goal of driving inclusive economic development,” Mr. Lim said.
In October, the SEC reported granting more than P80 million in fee discounts across 40,157 transactions processed under three memorandum circulars issued from July to October, with more than half of the savings benefitting MSMEs.
MSMEs, which account for more than 99% of business establishments and 63% of the workforce in the country, contribute about 40% to the Philippine economy. — Alexandria Grace C. Magno
