The SEC has issued MC No. 4, Series of 2026, which amends the application of the audit requirement under Revised SRC Rule 68, particularly, on the audit threshold and filing of audited financial statements.  Here are the key updates for your guidance:

  1. Revised audit threshold

Corporations with total assets or total liabilities exceeding PHP 3,000,000 are required to submit audited financial statements. This applies to both stock and non-stock corporations.

  1. Entities below the threshold

Corporations with total assets or total liabilities at or below PHP 3,000,000 are no longer required to submit audited financial statements. Instead, they must file financial statements accompanied by a Statement of Management’s Responsibility (SMR), signed under oath by the required officers.

  1. Signatories for the SMR
  • For stock and non-stock corporations: Chairman of the Board, President or CEO, and Treasurer or CFO (or duly authorized Board representative)
  • For One Person Corporations (OPCs): President and Treasurer.  The signatories remain fully responsible for the accuracy and completeness of the submitted financial statements.
  1. Entities still subject to mandatory audit

The exemption does not apply to corporations classified as Group A, B, or C under SRC Rule 68, or those deemed vested with public interest, regardless of asset or liability size.

  1. Updated definitions of Small and Micro Entities
  • Small entities: Assets or liabilities exceeding PHP 3 million but not exceeding PHP 100 million
  • Micro entities: Assets or liabilities at or below PHP 3 million
    Micro entities may use either the income tax basis or PFRS for SEs, subject to the minimum FS components required by the Circular.
  1. Applicability

The revised threshold applies to financial statements covering fiscal years ending on or after December 31, 2025. Fiscal years ending prior to this date will follow the audit threshold applicable at their respective year.

While this SEC issuance lowers the audit requirement for entities that fall below the revised threshold, companies may still voluntarily submit audited financial statements if preferred, such as for bank, investor, or internal reporting purposes. Should you wish to continue with an audit despite the exemption, please let us know so we can align on the appropriate scope, timeline, and professional fees.