i.

Corporations that meet the threshold:

 Stock Corporations with paid-up Capital of PhP50,000.00 or

more;
 Non-stock Corporations with Annual Gross receipts of
PhP100,000.00 or more, or a total assets of PhP500,000.00
or more;
 Branch Office of Stock Foreign Corporations with assigned
Capital of PhP1,000,000 or more;
 Branch Office of Non-stock Corporations with total assets in
the equivalent amount of PhP1,000,000.00 or more;
 Regional operating headquarters of Foreign Corporations with
total revenues in the equivalent amount of PhP1,000,000.00
or more.
“FS SHOULD BE IN ACCORDANCE WITH THE
PHILIPPINE FINANCIAL REPORTING
FRAMEWORK”

4
5
Large or publicly accountable entities are:

 Those with total assets of more than P350 Million or total liabilities of
more than P250 Million; or

 Required to file financial statements under Part II of the SRC Rule 68

as follows: listed companies, issuers of securities to the public,
mutual funds; or

 In the process of filing their financial statements for the purpose of

issuing any class of instruments in a public market; or

 Holders of secondary licenses issued by regulatory agencies.

6
A set of financial reporting framework other
than the full PFRS may be allowed by the
Commission for certain sub-class (e.g., banks,
insurance companies) of publicly accountable
entities upon consideration of the
pronouncements or interpretations of the
Bangko Sentral ng Pilipinas, Insurance
Commission, Financial Reporting Standards
Council

7
SMALL AND MEDIUM ENTITIES

8
EXEMPTIONS FROM THE MANDATORY
PFRS FOR SMES

BY REASON OF GROUP REPORTING

1) An SME which is a subsidiary of a parent company reporting

under the PFRS;

2) An SME, either as a significant joint venture or associate, is

part of a group that is reporting under the PFRS;

3) An SME which is a subsidiary of a foreign parent company

which will be moving towards International Financial
Reporting Standards (“IFRS”) pursuant to the foreign
country’s published convergence plan;

9
Exemptions from PFRS for SMEs…

4) An SME which is a subsidiary of a foreign parent company

and has been applying the standards for a non-publicly
accountable entity for local reporting purposes. It is
considering moving to PFRS instead of the PFRS for
SMEs in order to align its policies with the expected move
to full IFRS by its foreign parent company pursuant to its
country’s published convergence plan;

5) An SME which is a branch office or regional operating

headquarter of a foreign company reporting under the
IFRS;

6) An SME (parent company) which has a subsidiary that is

mandated to report under the PFRS.
10
BY REASON OF BUSINESS PLANS

 An SME which has a short term projection that show that

it will breach the quantitative thresholds set in the criteria
for an SME. The breach is expected to be significant and
continuing due to its long-term effect on the company’s
asset or liability size;

 An SME which has a concrete plan to conduct an initial

public offering within the next two (2) years.

11
BY REASON OF STATUS

 An SME which has been preparing financial

statements using PFRS and has decided to
liquidate;

BY DECLARATION OF THE COMMISSION

Such other cases that the Commission may

consider as valid exceptions from the mandatory
adoption of PFRS for SMEs.

12
“Discussion of the facts supporting the
Company’s adoption of Full PFRS instead of
PFRS for SMEs in the notes to Financial
Statements should be made”

13
 SME breaches the floor /ceiling of the size
criteria at the end of the accounting period
◦ Event that caused the change is considered “significant
and continuing” - transition to the applicable accounting
framework in the next accounting period
◦ Not considered “significant and continuing – continue to
use the same financial reporting framework

14
 Management Judgment taking into consideration
the quantitative and qualitative impact

 20% rule will be considered significant

15
MICRO ENTITIES
Micro entities are those that meet ALL of the following criteria:

Total assets and liabilities are below P3 Million;

Are not required to file financial statements under Part II of the

SRC Rule 68 as follows: listed companies, issuers of securities to
the public, mutual funds;

Are not in the process of filing their financial statements for the
purpose of issuing any class of instruments in a public market;

Are not holders of secondary licenses issued by regulatory

agencies.

16
 Micro entities have the option to use as financial reporting
framework either any of the following:
Income tax basis
Accounting standards in effect as of December 31, 2004
PFRS for SMEs

PROVIDED however, that the financial statements shall at least consist

of the Statement of Management’s Responsibility, Auditor’s Report,
Statement of Financial Condition, Statement of Income and Notes to
Financial Statements, all of which cover the two-year comparative
periods, if applicable.

 If an entity uses a basis of accounting other than the PFRS for

SMEs in the preparation of its financial statements, its
management shall assess the acceptability of such basis of
accounting in the light of the nature of the entity and the
objective of the financial statements, or the requirements of
the law or regulators.
17
“FINANCIAL STATEMENTS SUBMITTED WITH THE
COMMISSION ARE PRIMARILY THE
RESPONSIBILITY OF THE MANAGEMENT OF THE
REPORTING COMPANY”

Accordingly fairness of the representations made

therein is an implicit and integral part of the
Management’s Responsibility

19
 SMR Should be signed by the following:
 Domestic Corporation

◦ CHAIRMAN OF THE BOARD

◦ CEO/PRESIDENT
◦ CFO/TREASURER

 Branch Offices or ROH of Foreign Corp.

◦ RESIDENT AGENT
 “Second Paragraph may be deleted”

20
“Failure of any of the prescribed
signatories to sign the SMR constitutes
a material deficiency in the Financial
Statements”
◦ The financial statements have been prepared in conformity
with PFRS/other framework
◦ Management maintains a system of accounting and reporting
which provides for necessary internal controls
◦ Board of Directors has reviewed and approved the financial
statements
◦ Independent auditors were appointed by the stockholders.

22
The management of (name of reporting company) is responsible for all information and
representations contained in the financial statements for the year (s) ended (date), in accordance
with the prescribed financial reporting framework indicated therein. This responsibility includes
designing and implementing internal controls relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether du to fraud or error, selecting
and applying appropriate accounting policies, and making accounting estimates that are reasonable
in the circumstances.

The Board of Directors or Trustees reviews and approves the financial statements and submit the
same to the stockholders or members.

(name of auditing firm), the independent auditors and appointed by the stockholders, has examined
the financial statements of the company in accordance with Philippine Standards on Auditing and
has expressed its opinion on the fairness of presentation upon completion of such examination.
Signature______________________
Name of the Chairman of the Board ___________________
Signature ______________________
Name of Chief Executive Officer ______________________
Signature ______________________
Name of Chief Financial Officer ______________________

23
 Complete set of financial statements;
 All information that are relevant to the preparation and
presentation of financial statements;
 All additional information that the auditor may request
from management;
 Unrestricted access to records and personnel.
 The Company should neither allow nor require its
external auditors to prepare its financial statements or
any of its supporting documents;

24
1. Amounts may be shown in whole currency units or
multiples.
2. Negative amount shall be shown in a manner
which clearly distinguishes the negative attribute.
3. Chronological arrangement of data maybe with
the most recent date to the right or to the left.
Ordering used shall be consistent.
4. FS, other than Consolidated Financial
Statements, shall have the stamped “received”
by the BIR or it authorized banks.

26
 FS should be accompanied by an auditor’s
report issued by an Independent Auditor (IA).

 All Corporations covered by the Rule shall
have IA duly registered with the BOA.
i. The financial statements of the following corporations
shall be audited by an Independent Certified Public
Accountant accredited by the SEC:
 Group A
 Issuers of registered securities which have sold a class of securities
pursuant to a registration under section 12 of the Securities
Regulation Code (SRC) except those issuers of registered
timeshares, proprietary and non-proprietary membership certificates
which are covered in Group B.
 Issuers with a class of securities listed for trading in an Exchange;
 Public companies or those Companies which have total assets of at
least fifty million pesos (PhP50,000,000.00) or such other amount
as the Commission shall prescribe and having two hundred (200) or
more holders each holding at least one hundred (100) share of a
class of its equity securities.

30
Group B
 Issuers of Registered timeshares, proprietary and non-proprietary
membership certificates;
 Investment houses;
 Brokers and dealers of securities;
 Investment companies;
 Government securities eligible dealers;
 Universal Bank Registered as underwriters of securities;
 Investment Company advisers;
 Clearing agency and clearing agency as depository;
 Stock and securities exchanges;
 Special Purpose Vehicles registered under the Special Purpose
Vehicle Act of 2002;
 Special Purpose Corporations registered under the Securitization
Act of 2004 and its implementing rules;
 Such other corporations which may be required by law to be
supervised by the Commission.

31
Group C
 Financing Companies;
 Lending Companies;
 Transfer Agents.

Group D
 Registered Corporations which are mandated by other regulatory
agencies to have an external auditor accredited by the Commission.

32
 External auditors and auditing firms of
companies under Groups A & B should both be
accredited by SEC;

 For companies under Group C, the accreditation

of the auditing firm shall be sufficient;

 FS filed with the Commission shall be primary

responsibility of the Company. IA’s responsibility
is confined to expression of an opinion
supported by sufficient audit evidence;
 The Commission shall not be liable for any loss
or liability that may arise from the selection of IA;

 Accreditation of an external auditor and/or

auditing firm shall expire or automatically
delisted after three (3) years from the date of
approval unless an application of renewal is filed
not later than thirty (30) business days before its
expiration;

 Accreditation under Group A shall be considered

a general accreditation.
1. Accredited external auditor/auditing firm shall
not engage in any of the following non-audit
services for his statutory audit clients, unless
safeguards under the Code of Ethics are
undertaken to reduce threats to independence:

◦ Bookkeeping and other services related to the accounting

records or financial statements of the audit clients
◦ Financial information systems design and implementation
◦ Appraisal or valuation services, fairness opinions or
contributions-in-kind reports
◦ Actuarial services
◦ Internal audit outsourcing services
◦ Management functions or human resource
◦ Broker or dealer, investment adviser, or investment
banking services
◦ Legal services and other professional services
unrelated to the audit;
◦ Any other services that the Commission may declare
2. Firm/external auditor shall comply with the
following:
◦ Terms of engagement letter and undertakings;
◦ PSA, PAPS and other issuances of the AASC/SEC;
◦ Code of Professional ethics;
◦ SRC Rule 68 and 68.1 and other relevant regulations and
circulars of the SEC;
◦ Other pertinent laws, rules and regulations;
◦ Written procedure for quality assurance and monitoring
of professional ethics and independence from clients

3.SEC’s visitorial power over the accredited

firms/external auditor
“Change or amendment on the written
procedure for quality assurance and
monitoring of professional ethics and
independence shall be reported to the SEC
not less than ten (10) business days prior to
the date of effectivity. If the SEC did not
object or comment within ninety (90)
business days from the date of submission,
the document shall be considered noted and
approved”
3. External auditor shall implement the ff.
communication processes:

◦ Critical accounting policies and practices

◦ Alternative accounting treatments
◦ Other material written communications
 Reports on observations and recommendations on internal
controls;
 Schedule of unadjusted audit differences, and a listing of
adjustments and reclassifications not recorded, if any;
 Engagement letter and
 Independence letter
REPORTING TO THE SEC

• Breach of Privilege of Communications (Code of Ethics)

– Material fraud or error
– Material losses or potential losses (10%)
– Going concern issue
– Material internal control weaknesses
• Within five (5) business days from the date of the report
of its external auditor
• Form of Report to be made by the Management
– Group A – SEC Form 17-C
– Group B to C – letter duly signed by the Chairman of the
Board or Chairman of the Audit Committee
– Group D – disclosure to the concerned agency and OGA
• Report to be made by Auditor (Mngt.’s failure to
report)
SEC Form Au-Rep – within 30 business days
 The independent auditor shall submit
findings to the Audit Committee or BOD.
Adverse findings shall be discussed by the IA
with the said body to preserve the concerns
of the supervisory authority and IAs on the
confidentiality of Information.
 IA shall document management’s explanation
on the findings. Explanation shall be included
in the report;
 Engagement contract shall contain a

provision that the disclosure of information

by the external auditor to SEC shall not be a
ground for civil, criminal or disciplinary
proceedings against the external auditor
 Independent Auditors or in the case of an
audit firm, the signing partner, of the
regulated entities shall be rotated every after
(5) years of engagement. Two-year cooling
off period shall be observed.
i. Conduct due diligence
ii. Require the presentation of PRC license and BOA
certificate of accreditation
iii. Confirm the authenticity of BOA Certificate of
Accreditation
iv. Check the level of accreditation with the SEC
v. Verify the authenticity of the certificate
vi. Preliminary meetings with the Management and the
exit conference shall be attended to personally by
the independent auditor or by the handling
partner;
i. Copies of the ff should be kept by the Company:
 PRC License
 BOA Accreditation Certificate
 Commission’s certificate of accreditation
 Engagement Contract
 Minutes of conference with the auditors
QUALIFICATION REQUIREMENTS (Initial)
(Individual External Auditors/Partners)

a. General
i. At least five (5) years audit experience in
external audit (in-charge, manager,
partner)
– It may include concurring review partner (with
certification from managing partner)

ii. Accredited with the BOA

iii. Adequate policies and procedures
related to elements of a system of
quality control (PSA 220, PSQC No. 1
and their amendments)
a. Specific
i. Knowledge on the regulatory req’ts.,
operations and functions of Companies
under Group A, B or C for which he/she is
applying for accreditation;
ii. 60 units of trainings and seminars within
the last 3 years:
 15 units PFRS
 15 units PSA
 18 units Taxation
 8 units Professional ethics
 4 units relevant laws and recent issues
TRACK RECORD OF CLIENTS

• Group A – (5) clients with at least P50 Million TA each

• Group B – (3) clients with at least P20 Million TA each

• Group C - (3) clients with at least P5 Million TA each

• Group D – (1) client with P5 Million TA or (5) clients

regardless of amount of TA
a. Accredited with the BOA;

b. At least one (1) signing practitioner or

partner who is already accredited or is
already qualified and applying for
accreditation;

c. Adequate policies and procedures related to

elements of a system of quality control (PSA
220, PSQC No. 1 and their amendments)
DOCUMENTARY REQUIREMENTS (Individual)

1. Notarized application form

2. Copy of BOA Certificate of Registration as a public
practitioner
3. List of corporate clients showing engagement period
and amount of respective total assets
4. Copy of Audited Financial Statements of top 2 clients
5. Notarized certification on fundamental knowledge of
the regulatory requirements on each of secondary
licensees
6. Copy of Certificates of participation in seminars
7. Quality Assurance Manual
a. Group A or B – comprehensive
b. Group C or D – at least compliant with PSA 220
DOCUMENTARY REQUIREMENTS (Firms)

1. Notarized application form

2. Copy of BOA Certificate of Registration as a public

practitioner

3. Quality Assurance Manual

a. Quality assurance process (client acceptance and
retention policies, concurring partner review, consultation
process)
b. Monitoring profession ethics and independence from
clients
c. Other quality assurance policies provided under PSA 220,
PSQC No. 1 and their amendments)
1. Qualification Requirement
◦ CPE units shall be 90 units for the last 3 years
◦ Additional units shall be on topics relevant to
Companies under the category which the auditor is
accredited

2. Documentary Requirements
3. BOA Certificate of Registration
4. Notarized renewal application form
5. SEC Certificate of Accreditation
6. Certificates of participation in trainings and seminars
7. Updated documents (if applicable)
8. AFS of two (2) largest clients
1. Notarized application form

2. BOA Certificate of Registration

3. SEC Certificate of Accreditation

4. Updated documents (if applicable)

1. Individual (Initial/Renewal)

◦ Group A PhP 5,000.00

◦ Group B PhP 3,000.00
◦ Group C or D PhP 2,000.00

2.Firm (Initial/Renewal)

◦ Group A PhP20,000.00
◦ Group B PhP15,000.00
◦ Group C or D PhP 5,000.00
 Accreditation granted by BSP and IC on the external
auditors of the ff. entities shall be recognized under
category C and D:
◦ Rural or thrift banks regulated by the BSP;
◦ Insurance brokers regulated by the IC.

• Subject to BSP restriction: banks and their subsidiary and

affiliate banks; quasi-banks; trust entities; non-stock
savings and loan associations (NSSLAs) and their
subsidiaries and affiliates engaged in allied activities; and
other financial institutions which are under BSP’s
consolidated supervision, only one (1) external auditors
or auditing firm shall audit their individual and
consolidated financial statements.
Documents to submitted for SEC to recognize the
accreditation granted by BSP and IC

◦Duly Notarized application form

◦Certificate of accreditation issued by the BSP and IC
◦Proof that the applicant has had a minimum of three (3)
corporate clients with TA of 5M each (For Group C)
◦Certification on the applicant’s knowledge on the
operation, and functions of Companies for which he/she is
applying for accreditation
◦AFS of two (2) largest clients
1. External auditors of Universal Banks listed in Exchange
◦ Common and special accreditation requirements
of BSP and SEC

2. External auditors of insurance companies and banks

that are not listed in the exchange
◦ Common and special accreditation requirements
of BSP or IC
◦ For purposes of submission to the SEC – at least
audited by BOA registered external auditor
“Engagement contract shall contain a
provision that the disclosure of information
by the external auditor to SEC shall not be a
ground for civil, criminal or disciplinary
proceedings against the external auditor”
FINDINGS ON AFS OF CLIENTS
• Group A or B
– Findings must only be limited to minor disclosure
deficiencies
– Group A: <two (2) minor disclosure deficiencies
– Group B: <five (5) minor disclosure deficiencies
– The applicant must submit a written explanation

• Group C or D
– Findings must not be material to affect the quality of the AFS
• Basic components must be complete
• Substantially the policies are in conformity with GAAP or
PFRS

If findings exceeded the limit: for probationary or downgrade

 Effective for a period of four (4) months from the
date of grant

 AFS of two (2) largest clients signed during the

probationary period shall be submitted at least 15
days before the lapse of the 4-month period

 Final approval shall not be granted unless the AFS

fully comply with the effective accounting standards
and SRC rule 68

 Penalty has been paid

1. Failure to Submit the report required under section 10
of Circular No 13 S2009

2. Material misrepresentation
◦ Application for Accreditation
◦ Certification submitted with the application
◦ Report required under section 10 of the Circular

3.Refusal to submit requested documents

4.Gross negligence in the conduct of Audit

5. Issuance of an unqualified opinion which is not
supported by full compliance by the auditee

6. Conduct of Audit despite the lack or eventual loss of

independence

7. Conduct of any non-audit services enumerated under

section 9.1 of circular 13

8. Failure to obtain accreditation appropriate to company-

client’s category prior to engagement
IMPOSABLE PENALTY FOR VIOLATION

• The corporation hiring an unaccredited

external auditor shall be penalized
P100,000 (A); P50,000 (B); P25,000 (C)

• For Group D Companies, no monetary penalty under the Guidelines -

but
– It may be delisted or suspended
– The regulatory agency concern may impose separate
penalty
1. Violation of reportorial & representation obligations,
and independence requirement
Group A
Auditing Firm External Auditor
First Offense PhP 25,000.00 PhP 5,000.00
Second Offense PhP 50,000.00 PhP 10,000.00
Third Offense PhP 100,000.00 PhP 20,000.00

Group B
Auditing Firm External Auditor
First Offense PhP 10,000.00 PhP 2,000.00
Second Offense PhP 20,000.00 PhP 4,000.00
Third Offense PhP 40,000.00 PhP 8,000.00
Group C
Auditing Firm External Auditor
First Offense PhP 5,000.00 PhP 1,000.00
Second Offense PhP 10,000.00 PhP 2,000.00
Third Offense PhP 20,000.00 PhP 4,000.00

Group D
Auditing Firm External Auditor
First Offense PhP 2,000.00 PhP 500.00
Second Offense PhP 4,000.00 PhP 1,000.00
Third Offense PhP 8,000.00 PhP 2,000.00
2. Material
deficiency or misstatement in
financial reports

◦ For Groups A to C: 50% of the fine imposable on the

client-company, based on SEC Memorandum
Circular No 8, Series of 2009. Penalty shall be
computed on a per client basis.
◦ For Group D: penalty shall be imposed upon written
recommendation by the concerned regulatory
agency
3. Violation of Accreditation Requirement
Group A
Auditing Firm External Auditor
First Offense PhP 100,000.00
Second Offense PhP 200,000.00
Third Offense PhP 400,000.00

Group B
Auditing Firm External Auditor
First Offense PhP 50,000.00
Second Offense PhP 100,000.00
Third Offense PhP 200,000.00
Group C
Auditing Firm External Auditor
First Offense PhP 25,000.00 PhP 10,000.00
Second Offense PhP 50,000.00 PhP 20,000.00
Third Offense PhP 100,000.00 PhP 40,000.00
 Suspension
◦ Failure to settle penalty
◦ Continued failure to comply with the requirements
of the Circular or directives of the SEC

Note:
◦ Suspension of accreditation shall be for a period of ninety (90)
business days from the date of the Order of the Commission;
◦ The Firm/external auditor shall be delisted if after due notice and
hearing, and the firm/external auditor fails to settle the assessed
penalty or comply with the req’ts. within the 90-day suspension
period
◦ Delisted firm/external auditor may re-apply if:
 2 years have lapsed; assessed penalty is paid; requirement is
complied
 Delisting
◦ Dissolution
◦ Accreditation of the ff number or percentage of
external auditors, whichever is lesser, has been
suspended or delisted
 At least ten (10) signing partners and currently
employed accredited external auditors, taken together;
or
 50% or more of the total number of firm’s signing
partners and currently employed accredited external
auditors taken together
A. SRC RULE 68

1. TECHNICAL REQUIREMENTS
Auditor’s Report shall:
 be dated;
 be signed by the certifying external auditor (in the case of
auditing firm, the certifying partner shall sign his/her own
signature and shall indicate that he/she is signing for the firm,
the name of which is printed the report);
 identify the financial statements covered by the report;
 state the signing auditor’s:
 PRC License;
 Tax Identification Number;
 PTR Number;
 BOA/PRC Registration Number including expiration date;
 SEC Accreditation Number including category and
expiration date;
 mailing address of the client and the auditor
74
2. REPRESENTATIONS AS TO THE AUDIT

Examination was made in accordance with Philippine

Standards on Auditing

3. OPINION TO BE EXPRESSED

State clearly the opinion of the independent auditor on the

fairness of presentation in conformity with the prescribed
financial reporting framework

75
4. EMPHASIS

Unless exempted, the external auditor of a Company which

has incurred a capita deficiency, shall provide in the audit
report an emphasis paragraph indicating the following
information:

 The fact that the company has incurred a capital deficiency

that raises an issue on its going concern status;

 A brief discussion of a concrete plan of the company to

address the capital deficiency and reference to the note to
financial statements that provides a complete disclosure of
the said plan;

 A statement that the auditor conducted sufficient audit

procedures to verify the validity of the aforementioned plan.
 Failure of the Company to present a concrete plan or
sufficient supporting documents to address capital
deficiency, the auditor shall provide an emphasis of a
matter paragraph indicating that the Company is no longer
a going concern and should use liquidation basis in the
preparation of FS

 The independent auditor shall likewise consider other

instance which would raise an issue on going concern status
of the Company that shall require an emphasis paragraph in
the report
The requirement that requires an emphasis paragraph shall not apply to a
company that incurred a capital deficiency due to any of the following
reasons:

The entity is at pre-operating stage and has incurred capital deficiency

due to higher pre-operating expenses than its initial capitalization.
Projected financial statements indicate that it will generate net income
once it starts commercial operations;

Significant losses incurred in prior years but has generated positive

results (net income) from operations over the current period due to
developments in the business or regularization of its operation;

An entity has incurred capital deficiency during the current period only
due to a significant adjustment arising from the adoption of new financial
reporting framework or occurrence of non-recurring transaction for the
period.

Such other cases which the Commission may consider as valid ground
for considering the Company as going concern
 Any Company covered by the aforementioned
exemptions shall provide in Note 1 of its
Audited FS a discussion on the reason for its
capital deficiency and a concrete plan to
address the same
 For stock corporations filing under Part I of the
rule, issue supplemental written statement as
prescribed under Annex 68-B;
 Said Statement may be incorporated in the report
accompanying the income tax return, which is
required to be submitted with the BIR;
 The auditor should undertake the audit
procedures deem necessary, such as the
following:

Obtain a certification from the issuer’s corporate secretary

on the number of stockholders and their corresponding
shareholdings;
Inspect the stock and transfer book and conduct the tests
needed to validate their entries and balances.
To the Board of Directors and Stockholder of
(Company)
(Address)

We have examined the financial statements of __________ (the “Company”) for the year ended
_________________, on which we have rendered the attached report dated

In compliance with SRC Rule 68, We are stating that the said company has a total of __________
stockholders owning one hundred (100) or more shares each.

For the firm: (if signing for the firm)

[Auditor’s signature]
[BOA No.]
[PRC License No.]
[SEC Accreditation]
[PTR No., issue date and place]
[Date]

82
 A schedule showing the nature and amount
of each items comprising the total receipts
and disbursements according to sources and
activities
 A sworn statement of the foundation’s
President and Treasurer on the following:

1. Specificsources of Funds;
2. Application of Funds with the following
information on activities accomplished, on
going and planned:
 Complete name, address and contact number of
project officer-in-charge;
 Complete address and contact number of project
office.
3. As supporting documents to the
aforementioned information, copies of the
certification from the Office of the Mayor or
the Head of either the DSWD or DOH, on the
existence of the subject program or activity
in the locality on which it exercises
jurisdiction.
 Reconciliation of RE available for dividend
declaration which shall present the prescribed
adjustments (Annex 68-C)
 A schedule showing financial soundness
indicators in two comparative periods, as follows:
1. Current/liquidity ratios;
2. Solvency ratios;
3. Debt-to-equity ratios;
4. Asset to equity ratios;
5. Interest rate coverage ratios;
6. Profitability ratios;
7. Other relevant ratios as the Commission may consider
necessary.
This schedule shall be submitted with the annual AFS and
if applicable, with the Company’s Interim AFS.
 A schedule showing the following information
two comparative periods:
◦ Ratio or percentage of total real estate investments
to total assets
◦ Total receivables to total assets;
◦ Total DOSRI receivables to net worth;
◦ Amount of receivables from a single corporation to
total to total receivables.

This schedule shall be submitted with the annual AFS

and if applicable, with the company’s interim FS
 Schedule showing the following information if
two comparative periods:
◦ Percentage of investment in a single enterprise to net
asset value;
◦ Total investment of the fund to the outstanding
securities of an investee company
◦ Total investments in liquid or semi-liquid assets to total
assets;
◦ Total operating expenses to total net worth
◦ Total assets to total borrowings.

This schedule shall be submitted with the annual AFS and

if applicable, with the company’s interim FS
 Schedules showing the following information:
◦ Details (per issue) of underwriting activities for the year
 Name of the issuer-client;
 Nature of commitment;
 Amount of issue;
 Underwriting and other fees generated;
 Basis of computation for each.
◦ Transaction with DOSRI
 Name of related party;
 Description of transaction;
 Total volume/amount of transaction for the year;
 Terms and conditions, such as maturity date, security, mode
of payment
 If secured, carrying amount of assets used as collateral
 A map showing the relationships between
and among the company and its ultimate
parent company, middle parent, subsidiaries
or co-subsidiaries, and associates
 A schedule showing the following amounts:
◦ Gross and net proceeds as disclosed in the final
prospectus;
◦ Actual gross and net proceeds;
◦ Each expenditure item where the proceeds was
used;
◦ Balance of the proceeds as of end of reporting
period.

This schedule shall be submitted with the annual AFS

and if applicable, with the company’s interim FS
 A schedule, in table format, showing in the
first column a list of all the effective
standards and interpretations under the PFRS
as of year end, and an indication opposite
each in the second column on whether it is
“Adopted”, “Not adopted” or “Not applicable”
 “Our audit was conducted for the purpose of forming an
opinion on the basic financial statements as a whole. The
supplementary information shown on Schedules A, B, C, D, E,
F, G, H and I is presented for purposes of additional analysis
and is not a required part of the basic financial statements.
Such information has been subjected to the auditing
procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as
a whole”
 FS shall be presented in Comparative Form;
 Balance sheet or Statement of Financial

Position shall be as of the end of each of the

two most recently completed fiscal year;
 SCI, SCF, and SCE shall be presented for each

of the two most recent completed fiscal years

or such shorter period as the company has
been in existence.
 Explanation through a note shall be made

explaining the reasons for filing a single-

period statement
 When FS are presented on a comparative basis
for more than the periods required, the auditor’s
report need not extend to prior periods for which
the FS are not required to be audited
◦ FS of Prior Year not audited – mark “UNAUDITED”. Also
disclose in “Other matter paragraph”
◦ Prior period FS audited b another auditor – disclose that
the figure are not being reported by the current auditor.
If predecessor auditor did not give an unqualified
opinion disclose in the other matter paragraph:
 That the FS of the prior-period were examined by other
auditors
 The date of the report;
 The type of opinion expressed by the predecessor auditor
 Substantive reason for qualification
 Violations to incur penalties:
◦ Material misrepresentation in the FS
◦ Any material misstatement resulting from material
deviation from the applicable financial reporting
framework, such as:
 failure to adopt the prescribed financial reporting framework
or any accounting standard resulting n a material
misstatement;
 Failure to disclose required information and other relevant or
material information
 Failure to submit any basic component of the financial
statements;
 Failure to present the required comparative figures
◦ Failure to submit FS audited by a qualified auditor;
◦ Failure to submit a complete SMR;
◦ Failure to comply with any other requirements of the
Rule
 Penalty imposable shall be in addition to the
fine imposable due to late or incomplete
filing.
 Penalty may be imposed to the auditor due t

any of the following violations:

◦ Failure to submit reports required under paragraph
3B (vii and 3F of Part I of the Rule
◦ Any material misrepresentation in the following
documents:
 Application for accreditation
 Certification submitted with the SEC;
 Any of the reports required under 3B (vii) and 3F of
Part I of the Rule
 Refusal to submit requested documents;
 Gross negligence in the conduct of audit
 Issuance of an unqualified opinion which is not
supported by full compliance by the auditee
 Conduct of an audit despite the lack or eventual
loss of independence
 Conduct of any non-audit services for statutory
audit client, if safeguard to reduce threats to
independence has not been undertaken;
 Failure to obtain an accreditation appropriate to
company-clients category
 Memorandum Circular No 8, series of 2009
 FS found to be materially deficient/misstated
shall be determined by the commission;
 FS of listed/public companies cannot re-issue

AFS without prior request from and approval

by the Commission;
 An amendment or reissuance of the FS shall

not exonerate the Company from the penalty

that may be assessed by the Commission due
to the material deficiency or misstatement of
the original FS.