The Supreme Court affirmed the Securities and Exchange Commission’s (SEC) authority to approve external auditors for companies, including publicly listed firms and investment firms.
It also dismissed claims that the SEC’s approval process interfered with the accounting profession.
The SEC, in a Jan. 28 ruling, reversed its previous decisions and upheld the legality and constitutionality of Rule 68 of the Securities Regulation Code (SRC) and SEC Memorandum Circular No. 13, Series of 2009.
These regulations set rules for accrediting auditors of SEC-covered companies, including publicly listed firms, investment firms, and similar entities.
The case stemmed from a complaint filed by 1Accountants Party-List Inc., which argued the SEC lacked the authority to create these rules, claiming the Board of Accountancy (BOA) was responsible for overseeing the accounting profession. The group also contended that requiring Certified Public Accountants (CPAs) to be accredited by the SEC restricted their ability to practice their profession.
“While the Accountancy Act created the BOA…to regulate the practice of accountancy…other government agencies like the SEC are not precluded from implementing the policy of the State for so long as the express or implied powers granted to them by law allows them to do so,” the Supreme Court said. Jenniffer B. Austria