The Securities and Exchange Commission (SEC) has broadened its exemption policy by allowing more small firms to forgo the submission of audited financial statements, covering companies with capital and liabilities of up to P3 million.
The policy change is intended to simplify compliance requirements and ease the regulatory load on micro enterprises, which often face financial and operational constraints. Under the previous rule, the exemption applied only to companies with total assets and liabilities below P600,000.
Under the revised guidelines, companies that fall below the new audit threshold are no longer required to submit audited financial statements. Instead, they must file financial statements together with a Statement of Management’s Responsibility (SMR). “In lieu of audited financial statements, a corporation that does not meet the audit threshold must submit financial statements accompanied by a Statement of Management’s Responsibility (SMR),” the SEC said in a news release issued Wednesday.
SEC Chairperson Francis Lim explained that the adjustment reflects the operational realities of smaller businesses. He said the policy “recognizes the realities faced by micro enterprises, which often operate with very limited resources.”
Lim added that easing the audit requirement allows these firms to focus on expansion and sustainability rather than compliance costs. “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,” he said.
At the same time, Lim emphasized that the new rule does not weaken oversight mechanisms. According to him, it also “preserves accountability by requiring management to formally assume responsibility for the accuracy and integrity of their financial statements, ensuring that regulatory oversight remain firmly in place.”
The SEC clarified that the revised policy will cover “financial statements covering fiscal years ending on or after December 31, 2025.”
For stock and non-stock corporations, the commission said the SMR must be sworn to and signed by the board chair, president or chief executive officer, and the treasurer or chief financial officer, all of whom must be duly authorized by the board. In the case of one-person corporations, the SMR must be signed by the president and treasurer.
“The signatories shall assume full responsibility for the accuracy, completeness and truthfulness of the submitted financial statements,” the SEC added.
