MANILA, Philippines – The Board of Accountancy (BOA) has agreed to work on the exemption of micro, small, and medium enterprises (MSMEs) from engaging certified public accountants (CPAs) to prepare and sign companies’ financial statements, the Philippine Exporters Confederation Inc. said.
In statement yesterday, the export group said BOA chairman Joel Tan-Torres has committed to push for the amendment of the Accountancy Law to exclude MSMEs from the CPA compilation services policy.
Philexport said a consultation has been set later this month to start work on the amendment raising the revenue threshold from P10 million – as stipulated in the Philippine accountancy law – to between P100 million – as prescribed by the Department of Trade and Industry – up to P350 million, as defined by the Securities and Exchange Commission.
Once the amendment is approved, Philexport said MSMEs would be exempted from the coverage of BOA Resolution 03-2016 which instructs firms with P10 million annual revenues to have CPAs compile, certify, and sign their financial statements as a way to assure the public and regulators of the soundness of these reports.
Philexport and the Philippine Chamber of Commerce and Industry have earlier urged the BOA to review and relax its new ruling requiring CPAs to prepare and sign companies’ financial statements.
The business groups pointed out some MSMEs do not have the means to engage the services of a CPA to draw up their financial reports and these pose as an additional burden for them.
“Most of them don’t have CPAs to function as chief accountants or finance managers, since in some cases the owner, who may not be a CPA, takes on these functions, the two executives explained,” the groups said.
“As such, hiring a CPA as mandated by the new ruling will clearly be another unnecessary cost, especially for a company that does not have shareholders to give an accounting of its finances,” they added.
To ensure the integrity of a company’s financial statements, Philexport instead recommended implementing the rules and regulations already issued or approved by BOA or SEC to adequately address the controls needed.
They also called for the enforcement of stricter external auditing guidelines and processes, “especially for publicly-listed firms which have the real accountability for stockholder funds.”
It is a good news for the MSME once passed, however, a tight internal control system has to be strictly followed for the good interests of the stakeholders.