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Enhancing Corporate Governance and Audit Quality in the Philippine Capital Market

SECURITY AND EXCHANGE COMMISSION BULLETIN

Volume XX, Number 12

May 2023

The Securities and Exchange Commission (SEC) has issued several guidelines and revisions to enhance corporate governance and audit quality in the Philippine capital market.

Enhanced Expectations for an Effective Audit Function

The SEC emphasizes the importance of an effective audit function in ensuring the reliability and transparency of financial statements. To achieve this, the Commission has reiterated the principles for an effective external audit function, highlighting the responsibilities of independent auditors when conducting audits of financial statements.

Revised Statement of Management’s Responsibility for Financial Statements

The SEC has revised the standard form of Statement of Management’s Responsibility (SMR) to reflect new and revised auditor reporting standards. The revised SMR emphasizes the responsibility of management in preparing and presenting financial statements, as well as their assessment of the company’s ability to continue as a going concern.

Extension of Time for Auditors to File Audit Reports

The SEC has extended the deadline for auditors to file audit reports from 60 days to 120 days after the end of the fiscal year. This extension aims to provide more time for auditors to conduct thorough audits and ensure the accuracy and reliability of financial statements.

Strengthening Corporate Governance

The SEC emphasizes the importance of strengthening corporate governance in listed companies. The Commission has reiterated its guidelines on corporate governance, including the requirement that listed companies establish an audit committee composed of independent directors to oversee the audit process.

Call for Public Offerings of Securities

The SEC has called for public offerings of securities by listed companies, aimed at promoting liquidity and transparency in the capital market. The Commission emphasizes the importance of timely disclosure of information related to public offerings to ensure that investors are properly informed.

Conclusion

In conclusion, the SEC has taken several steps to enhance corporate governance and audit quality in the Philippine capital market. These initiatives aim to promote transparency, reliability, and accountability in financial reporting, as well as strengthen the overall stability and efficiency of the capital market.

For Further Information

Please contact the Security and Exchange Commission at (02) 584-1000 or visit our website at www.sec.gov.ph.