Micro firms freed from audit requirement

The Securities and Exchange Commission (SEC) has exempted micro enterprises from submitting audited financial statements. This is a move aimed at easing compliance costs for the country’s smallest corporations.

In a memorandum circular issued on Jan. 20, the Commission amended provisions under Revised Rule 68 of Republic Act No. 8799, or the Securities Regulation Code. The amendments increased the threshold for mandatory audits to corporations with total assets or liabilities exceeding P3 million.

Previously, only firms with assets or liabilities below P600,000 were exempted.

The policy change, contained in Memorandum Circular No. 4, Series of 2026, applies to both stock and nonstock corporations classified as micro enterprises. The SEC said the reform is intended to streamline reportorial requirements while maintaining regulatory oversight.

SEC chair Francis Lim said the adjustment recognizes the operational realities of micro enterprises, which often have limited resources.

“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,” Lim said.

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Under the new rules, corporations that do not meet the audit threshold must submit financial statements accompanied by a Statement of Management’s Responsibility (SMR).

The SMR must be signed under oath by authorized officers, including the chair or board representative, president or chief executive officer and treasurer or chief financial officer.