The Securities and Exchange Commission (SEC) has exempted more micro enterprises from submitting audited financial statements after raising the audit threshold to P3 million in total assets or liabilities.
It issued Memorandum Circular No. 4, Series of 2026, on Jan. 20, allowing both stock and nonstock corporations with assets or liabilities of P3 million or less to file certified financial statements instead of audited ones.
The exemption previously covered only corporations with assets or liabilities below P600,000.
The SEC said this aims to ease the compliance burden on micro enterprises that face disproportionately high costs in meeting mandatory audit requirements despite their limited scale of operations.
The commission said the old threshold no longer reflected current economic conditions or the present definition of micro enterprises under Philippine law.
Under the revised rules, exempt corporations should submit financial statements accompanied by a Statement of Management’s Responsibility signed under oath.
For stock and nonstock corporations, the statement should be signed by board chairman, president or chief executive, and treasurer or chief financial officer. For one-person corporations, the statement should be signed by the president and treasurer.
Signatories will be held fully accountable for the accuracy and completeness of the submitted reports. The SEC said incomplete, inaccurate, false or misleading reports remain subject to penalties under the Securities Regulation Code and the Revised Corporation Code.
The commission said it may still require audited statements when necessary for investor protection or matters of public interest.
The exemption does not apply to corporations classified as Group A, Group B or Group C under Revised SRC Rule 68, or to entities the SEC may later determine to be vested with public interest. These corporations remain subject to mandatory audit requirements regardless of asset or liability size, it said.
The revised audit exemption applies to financial statements covering fiscal years ending on or after Dec. 31, 2025.
