MSME Hub — Fueling Growth, Building Impact

The Securities and Exchange Commission (SEC) is pushing to exempt more corporations, particularly micro, small, and medium enterprises (MSMEs), from the mandatory submission of audited financial statements to reduce compliance costs and financial pressure.

In a policy paper submitted to the Department of Finance (DOF), the SEC recommended that corporations with total assets or liabilities not exceeding ₱3 million be required to submit financial statements certified under oath by their treasurer or chief financial officer, instead of audited financial statements.

Section 74 of the Revised Corporation Code (RCC) recognizes the authority of the DOF to determine the threshold for the application of the requirement for corporations to submit audited financial statements.

If approved by the DOF, the higher threshold would take effect for fiscal years ending on or after December 31, 2025. This proposed policy aims to reduce the financial and regulatory burden of micro enterprises that fall below the ₱3 million asset or liability mark, exempting them from mandatory audits.

Currently, corporations with total assets or liabilities of at least ₱600,000 are required to submit annual audited financial statements prepared by an independent certified public accountant. Meanwhile, corporations with total assets or liabilities below the threshold need only to submit financial statements certified under oath by their treasurer or chief financial officer, pursuant to the RCC or Republic Act No. 11232, Section 177. The proposed policy would significantly raise this threshold, providing greater relief for micro enterprises.

SEC Chairperson Atty. Francis Edralin Lim emphasized that the initiative supports the government’s goal of driving inclusive economic development by helping MSMEs, which form the backbone of the Philippine economy.

“Our proposed policy will not only improve the ease of doing business, but will also cut unnecessary compliance requirements for micro entities,” Lim stated.

According to the SEC, the proposed exemption will streamline procedures, reduce rubber-stamp audits, eliminate barriers to registration, and simplify compliance obligations, while allowing the SEC to focus its supervision on higher-risk entities.

Despite the removal of the audit requirement, the SEC assured that it will maintain oversight over corporations through its visitorial powers under the RCC, which allow the SEC to require audits if warranted by public interest.

Lim clarified that the proposed change will not compromise transparency or accountability in corporate regulation: 

“We assure the public that the proposal will not dilute oversight over corporations, including those engaged in infrastructure or regulated sectors, as they generally exceed the ₱3 million threshold,” he added.

The SEC reaffirmed its commitment to supporting MSMEs by implementing measures that will foster a more business-friendly environment that is easier to navigate for startup entrepreneurs, while upholding financial integrity and investor protection.

Read the full SEC Press Release here:  SEC BATS FOR MICRO ENTERPRISES' EXEMPTION FROM FILING AUDITED FINANCIAL STATEMENTS - Securities and Exchange Commission 

HJA

The Professional Regulatory Board of Accountancy (BOA), under the Professional Regulation Commission (PRC), has issued Resolution No. 44, Series of 2025, officially adopting the latest pronouncements of the Auditing and Assurance Standards Council (AASC) as part of the Philippine Auditing Standards.

This resolution includes the Implementation Guidance on Philippine Standards (IGPS) No. 001, Series of 2025 — Quality Management Series: Small Firm Implementation (Installment 3) and the Philippine Standard on Sustainability Assurance 5000 (PSSA 5000).

The new AASC guidance builds on the framework of the International Standards on Quality Management (ISQM 1 and ISQM 2) and the International Standard on Auditing (ISA 220 Revised), strengthening the internal systems of quality management (SOQM) for firms performing audits, reviews, and assurance engagements.

Installment 3 of the Quality Management Series focuses on Monitoring and Remediation, providing practical guidance for firms—especially small and medium-sized practices—on:

• Designing and performing internal monitoring activities;
• Evaluating findings and identifying deficiencies;
• Responding to deficiencies through remedial actions; and
• Communicating results within the firm for continuous improvement.
  

This installment highlights the importance of proactive, scalable, and iterative approaches to monitoring and remediation, helping firms uphold consistent audit quality and comply with international best practices.

“Quality management is not a one-time process but a continuous commitment to excellence,” the AASC noted in its publication. “This guidance supports firms in achieving ongoing improvement through effective monitoring, remediation, and communication.”

The AASC IGPS No. 001, Series of 2025 provides firms with a structured approach that includes:

• Step-by-step implementation plans tailored to firm size and complexity;
• Practical examples and documentation aids for evaluating and enhancing the SOQM;
• Guidance on using technology for data collection and monitoring efficiency; and
• A case study illustrating the transition from the old ISQC 1 framework to the new ISQM-based SOQM.

It emphasizes professional judgment, scalability, and ongoing evaluation — ensuring that even small firms can maintain effective quality systems without excessive administrative burden.

By adopting both the Quality Management Implementation Guidance and the PSSA 5000, the BOA and AASC reaffirm their commitment to:

• Strengthening audit quality and governance systems;
• Promoting transparency and accountability through sustainability assurance; and
• Supporting Philippine CPAs and audit firms in achieving international alignment and competitiveness,

After careful review, the Board of Accountancy found these pronouncements 

well-founded and instructive for professional compliance. The resolution was approved by the Professional Regulation Commission, chaired by Hon. Charito A. Zamora, and shall take effect fifteen (15) days after publication in the Official Gazette or a newspaper of general circulation.

Through these standards, firms are encouraged to build a culture of quality and integrity, ensuring that Filipino CPAs remain trusted partners in driving responsible business practices and sustainable development.

The BOA and AASC continue to guide the profession toward a future where audit quality, accountability, and sustainability are not just regulatory requirements—but professional values.

To learn more about the new AASC Implementation Guidance on Philippine Standards No. 001, Series of 2025 (Installment 3 – Monitoring and Remediation) and the Philippine Standard on Sustainability Assurance 5000 (PSSA 5000), visit the Auditing and Assurance Standards Council (AASC) official website.

In a landmark move to bolster the Philippine corporate sector, the Securities and Exchange Commission (SEC) has rolled out a series of reforms that have already translated into over ₱80 million in savings for thousands of corporations—including micro, small, and medium enterprises (MSMEs). These reforms, introduced through three memorandum circulars since July 2025, are reshaping the financial landscape for businesses by reducing regulatory costs and streamlining incorporation and capital market access.

The SEC's reform agenda is anchored on inclusivity, accessibility, and economic empowerment. As of October 19, 2025, the Commission has processed 40,157 transactions under the new rules, with MSMEs accounting for more than half of the total savings.

Impact on MSMEs and the Broader Economy 

The reforms are a strategic response to the national government's push to unlock the economic potential of MSMEs. SEC Chairperson Francis Lim emphasized the Commission's commitment to lowering barriers to entry for small businesses, stating, “We are sending a strong message that the corporate sector is an inclusive space where everyone—not just established industry players—can survive and thrive.”

By reducing costs associated with incorporation, regulatory compliance, and capital market participation, the SEC is enabling MSMEs to formalize operations, access funding, and scale more efficiently. These savings not only improve cash flow but also encourage reinvestment into core business activities.

What This Means for Accountants and Corporate Advisors 

For accounting professionals and corporate service providers, these reforms present a timely opportunity to:

• Advise clients on cost-saving registration strategies under MC 6, MC 8, and MC 9
• Support MSMEs in formalizing their business structures and accessing capital markets
• Update internal compliance checklists to reflect discounted fee structures and revised documentation protocols
• Educate stakeholders on the financial and strategic benefits of incorporation under the new SEC regime

Looking Ahead 

The SEC has signaled its intent to continue reviewing and refining its policies to further support the corporate sector. As Chairperson Lim noted, “The SEC will continue to assess its rules and policies to see where we can provide further assistance to our stakeholders, consistent with our goal of empowering MSMEs and the overall corporate sector to become catalysts for economic growth.”

Source:  SEC REFORMS TRANSLATE TO MILLIONS IN SAVINGS FOR MSMEs, OTHER CORPORATIONS - Securities and Exchange Commission 

Disclaimer: The below document is shared for informational purposes only. All rights and authority remain with the Securities and Exchange Commission.

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