The Philippine Securities and Exchange Commission (SEC) issued Financial Reporting Bulletin No. 17 dated March 7, 2013, entitled Newly-registered Corporations, which, among others, clarified the requirement for the submission of audited financial statements (AFS) of corporations and organizations lawfully doing business in the Philippines.
The main clarifications made are as follows:
- The requirement for filing of AFS by corporations and organizations lawfully doing business in the Philippines and registered with the SEC covering the preceding fiscal year within the prescribed period by the SEC. Unless exempt, all financial statements shall be audited.
- Corporations with year ending December 31, regardless of the date of incorporation shall file in accordance with SEC Memorandum Circular No. 7, Series of 2012, Annual Schedule of Filing of Financial Statements.
- For those with fiscal year other than December 31, their first AFS shall be due within 120 days after the end of their fiscal year.
Please see below to read the full text of Financial Reporting Bulletin No. 17.
Under Section 141 of the Corporation Code, every corporation, domestic or foreign, lawfully doing business in the Philippines shall submit to the Securities and Exchange Commission an annual report of its operations, together with a financial statement of its assets and liabilities, certified by any independent certified public accountant in appropriate cases, covering the preceding fiscal year and such other requirements as the Securities and Exchange Commission may require. Such report shall be submitted within such period as may be prescribed by the Securities and Exchange Commission.
A threshold for the submission of the said audited financial statements is indicated in Section 75 of the Code, as follows:
“SEC. 75. Right to financial statements. — Within ten (10) days from receipt of a written request of any stockholder or member, the corporation shall furnish to him its most recent financial statement, which shall include a balance sheet as of the end of the last taxable year and a profit or loss statement for said taxable year, showing in reasonable detail its assets and liabilities and the result of its operations.
At the regular meeting of stockholders or members, the board of directors or trustees shall present to such stockholders or members a financial report of the operations of the corporation for the preceding year, which shall include financial statements, duly signed and certified by an independent certified public accountant.
However, if the paid-up capital of the corporation is less than P50,000.00 the financial statements may be certified under oath by the treasurer or any responsible officer of the corporation.”
Except for the above limitation on the coverage of entities whose financial report must be audited, the provisions of the Corporation Code do not grant any exemption from the required submission of annual financial statements (AFS). The filing requirement is applicable to all corporations and organizations registered with the Commission as of the fiscal year end including those newly incorporated during the said year.
Corporations with fiscal year of 31 December that were registered during the last preceding year, regardless of the date of incorporation, must submit their AFS in accordance with the Annual Schedule of Filing of Financial Statements indicated in the applicable Circular of the Commission (for 2012 AFS, SEC Memorandum Circular No. 7, Series of 2012 is applicable). For those with fiscal year other than 31 December, their first AFS shall be due within 120 days after the end of their fiscal year.”
To see this Financial Reporting Bulletin in the SEC website, click here.
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How many copies of the FS is needed in filing at the SEC? Thanks!
Hi! 2 copies. These should be stamped as received by the BIR. Thanks.
Thank you very much Sir for your prompt reply and logical advice. Normally, the people at SEC are considerate. Nonetheless, some penalty would be expected as there seems to be a clear
violation of rules.
Again, many thanks Sir Olando.
Many many thanks for such informative writing.
Sir Orlando, I have an inquiry for which your expert advice is needed. The question is : If a corporation was incorporated in August 2010 and did not have any disbursement or activity
except “receipt” of stockholders’ payments for subscriptions amounting to P300,000, is it required to file audited financial statements? If the same corporation was issued a certificate of registration by the B.I.R.only in the following year, 2011, for which it started filing tax returns thereafter.
Assuming it did not file 2010 audited financial statements (AFS), will the B.I.R. accept the stamping of 2010 AFS? It was not yet registered in 2010. How can the company file the 2010 AFS with the SEC if there is no B.I.R. stamp of receipt?
Hi Sir Arsenio,
Yes. Even if a corporation has no disbursement activity, only receipts activity, needs to file an audited financial statements. It is also true that for the SEC to accept your filing, it should have been properly stamped “received” by the BIR first. I cannot tell exactly if during the year a corporation was registered with SEC and has not yet registered with the BIR can be exempt in filing with the BIR first but it is logical. Anyway, if you really need to confirm, I suggest you call the Office of the General Accountant in SEC at (+63) 2 584-9763. There will be available representative to answer your question.