If you own a business in the Philippines, you must submit audited financial statements regularly. This enables the Philippine government to see how a company manages its finances and to know if the business abides by the rules and requirements.
Does my Company Need to Submit an Audited Financial Statement?
Under the Bureau of Internal Revenue (BIR), corporations, partnerships, or individuals earning gross sales of more than P3,000,000 per year must submit an Audited Financial Statement to the BIR each year. The AFS should be filed as an attachment to the company’s annual income tax return or AITR. It should be noted that there may be instances when a taxpayer may not be required to file an AFS with the BIR based on the filing conditions but must still do so if they need to file an AFS with SEC as SEC requires an AFS stamped by the BIR before submission with the SEC.
Under the Securities and Exchange Commission (SEC) and by the Revised SRC Rule 68, the following are the companies that are required to submit an AFS to the SEC:
- Branch offices/representative offices of foreign stock corporations with total assets equivalent to P1,000,000 or more
- Branch offices/representative offices of non-stock foreign corporations with total assets equivalent to P1,000,000 or more
- Non-stock corporations with total assets or total liabilities of P600,000 or more
- Stock corporations with total assets or liabilities of P600,000 or more
- Regional operating headquarters (ROHQ) of foreign corporations with total revenue equivalent to P1,000,000 or more
Deadline for Filing the Audited Financial Statement in the Philippines
The AFS should be submitted to the BIR, attached with the Annual Income Tax Return by the 15th day of the fourth month after the company’s financial year-end date.
Companies that have aligned their financial year with the regular calendar year for 2021 must submit their Audited Financial Statements to the BIR by April 15, 2022.
For companies whose financial year differs from the calendar year, the deadline is on or before the 15th day of the 4th month following the close of the taxpayer’s taxable year.
For SEC filing, check out the SEC website for any memorandum released in December or January that will confirm the deadlines for filing AFS based on SEC registration/license numbers. Companies are usually required to file their AFS with the SEC according to the deadlines following the last numerical digit of a company’s SEC registration or license numbers.
Schedule for the Submission of Audited Financial Statement
According to the Securities and Exchange Commission (SEC), all stock and non-stock corporations must submit their annual reports online through eFAST, formerly known as the Online Submission Tool. Corporations and their authorized representatives should enroll in the eFAST before they can submit reports. The deadline for submission of enrolment is until March 31, 2022. This entails submitting a board resolution authorizing the corporation’s representative to file reports on their behalf, as well as submitting a copy of their accomplished GIS form version 2020 or submitting it in compliance with SEC Memorandum Circular No. 28, Series of 2020 (MC 28).
All types of corporations, including branch offices, representative offices, regional headquarters, and regional operating headquarters of foreign corporations whose fiscal year ends on December 31, 2021, shall file their audited financial statement according to the last digit of their SEC registration or license number. The AFS should be submitted on or before their respective dates:
|SEC Registration/License Number Ending||Schedule for Submission|
|1 and 2||July 1 to 15|
|3 and 4||July 16 to 31|
|5 and 6||August 1 to 15|
|7 and 8||August 16 to 31|
|9 and 0||September 1 to 15|
For corporations that do not end their fiscal year on December 31, 2021, AFS should be filed within 120 calendar days from the end of its fiscal year.
For broker-dealers, the same rules should be applied. If the fiscal year ends on December 31, just follow the table to know the date of filing based on the last digit of your registration number. On the other hand, broker-dealers that do not end their fiscal year on December 31, 2021, must be filed 110 calendar days within the end of their fiscal year.
Corporations with securities listed on the Philippine Stock Exchange and covered by the Securities Regulation Code (SRC) are advised to follow the deadline for filing their AFS within 105 calendar days after the end of their fiscal year. Their AFS should be attached to their annual reports. However, due to current events, these corporations will be given an extension for filing their annual reports until May 15, 2022.
Meanwhile, corporations with AFS that are being audited by the Commission on Audit (COA) are exempted from the said schedule as long as they attach a duly signed affidavit to their AFS to ascertain that they provided the COA with the financial statements and supporting documents on time and a confirmation letter from the COA confirming that the audit has just been finalized.
COA will accept late filings starting September 16, 2022. Late submission of reports will subject corporations to fines computed from the last date of the filing schedule.
Filing Audited Financial Statement with the BIR and SEC
Filing AFS with the BIR
Filing your Audited Financial Statement with the BIR may be done manually or online. Manual filing involves visiting your local Regional District Office (RDO) of the BIR and filing hard copies of the AFS at the BIR office. For online filing, you can do it via Electronic Audited Financial Statements (eAFS) System. Most bookkeepers/accountants are familiar with BIR’s online filing and registration system.
Filing AFS with the SEC
After the AFS has been officially received and stamped by the BIR; the AFS can then be filed with the SEC following the filing deadlines for SEC via SEC Electronic Filing and Submission Tool (eFAST).
How to Choose the Right Auditor for your Audited Financial Statement
Here are some things to consider when choosing the right auditor for your AFS:
- Choose a reputable audit firm for your company. It is crucial to research the audit firm you are considering before hiring their services. Make sure to choose an accredited and licensed audit firm. You may also request references from their previous clients to help you learn about the key competencies of the audit firm.
- Ensure that no conflict of interest may exist between the audit firm and your company before the audit process begins.
- Make sure that you understand the audit expenses from your audit firm clearly and that you learn about its scope of work and limits before you let them start the audit work.
Tips for Audit Management
The auditing process can take time and require the skills and expertise of trained professionals. Every firm should carefully designate audit management to a reputable audit firm.
Here are a few tips for managing your audit process:
- Divide the audit process into tasks and establish timelines for each job.
- Assign an audit manager within the company and the audit firm to ensure that the audit process is managed correctly and unified for both teams.
- Set enough time to finish a thorough review of the audit firm’s work and submit it in time for the deadline set by the government agencies.
Get Professional Help in Preparing your Audited Financial Statement
Triple i Consulting has a team of skilled finance and accounting professionals ready to audit and review your business’ finances, determine your current tax plans, and make necessary adjustments to improve your company’s finances.
Our auditing assistance services include:
- Accounting and auditing statements
- Assessment and evaluation of internal accounting controls and procedures to make necessary recommendations
- Comparative financial analysis for your business management team
- Inventory of company assets
- General audit of financial statements and accounting system to prepare for an auditor’s report
Would you like some help? Contact Us Here, fill out the form below, call us at +63 (02) 8540-9623, or email us at firstname.lastname@example.org to schedule an initial consultation with one of our accounting and auditing experts.