MANILA, Philippines – The country’s corporate watchdog has reminded companies to comply with the strict rules on financial reporting obligations.
In a public notice, the Securities and Exchange Commission (SEC) said the board of directors and management of registered corporations are required to strictly observe their responsibilities over the preparation and submission of their annual financial statements.
“The Commission firmly believes that it has set sufficient regulations and has actively conducted administrative actions towards a change in the old culture in financial reporting that incorrectly allowed external auditors to prepare and review the financial statements at the same time,” said SEC chairperson Teresita J. Herbosa.
Corporations and external auditors must strictly observe their respective responsibilities over financial statements, Herbosa said, adding that appropriate penalties will be imposed on erring entities.
Listed firms are required to submit quarterly and annual financial reports to the SEC and the Philippine Stock Exchange.
Under the Securities Regulation Code, companies’ financial statements are primarily the responsibility of their respective management.
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“The board of directors reviews and approves the financial statements before these are submitted to the stockholders,” SEC said.
SEC said that during the independent examination of the financial statements, the management should provide the external auditor with the complete set of financial statements.
“In order to have an independent review of the financial statements prepared by the management, the external auditor must not create a template format of financial statements for mere accomplishment by the management,” SEC said.
The management should also provide the external auditor the review of all information, such as records and documentation, and other matters relevant to the financial statements.
