Businesses hire external auditors to examine their business records and assess the fairness of their financial statements through the issuance of an auditor’s independent opinion or report. Audited Financial Statements are usually used by regulatory government agencies where the business is required to submit, financial institutions where businesses apply loans, investors who want to assess the profitability and stability of the business, business owners and managers who want to analyze them to make better business decisions, and other users.
BIR accredited CPAs or external auditors
In the Philippines, individual (except for individual taxpayers who opted for the Optional Standard Deduction, BIR RR No. 16-2008 and 2010, and amended) and corporate taxpayers, whose gross quarterly sales or receipts exceed P150,000, are required by the Bureau of Internal Revenue (BIR) to attached audited financial statements on their annual income tax returns. These audited financial statements must have a certificate of Independent CPA duly accredited by the BIR.
SEC accredited auditing firms and external auditors
For corporations, which are regulated by the Securities and Exchange Commission (SEC), they are also required to submit to the commission Financial Statements audited by SEC accredited external auditors.
You may visit the official website of SEC for the list of accredited auditing firms and external auditors in the Philippines.
The auditing firms and external auditors accredited by SEC are classified in to the following four groups:
Group A – This group of auditors can audit the following companies, as well as the companies listed for Group B, C and D:
(1) Issuer of registered securities which have sold a class of its 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;;
(2) Issuer with a class of securities listed for trading in an Exchange;
(3) Public companies or those with total assets of at least Fifty Million Pesos (P50,000,000.00) having two hundred (200) or more stockholders each owning one hundred (100) shares of a class of its equity securities.;
Group B – This group of auditors can audit the following companies, as well as the companies listed for Group C and D:
(1) Pre-Need Companies,
(2) Issuers of registered timeshares, proprietary and non-proprietary membership certificates;
(3) Investment Houses,
(4) Brokers and Dealers in Securities,
(5) Investment Companies,
(6) Government Securities Eligible Dealers (GSEDs),
(7) Universal Banks Registered as Underwriter of Securities,
(8) Investment Company Advisers,
(9) Clearing Agency and Clearing Agency as depository,
(10) Stocks and Securities Exchange/s,
(11) Special Purpose Vehicles Act of 2004 and its implementing rules;
(12) Special Purpose Corporations registered under the Securitization Act of 2004 and its implementing rules; and
(13) Such other corporations which may be required by law to be supervised by the Commission.
Group C – This group of auditors can audit the following companies, as well as the companies listed for Group D:
(1) Financing Companies
(2) Lending Companies and
(3) Transfer Agents
Group D – This group of auditors can audit registered corporations which are mandated by other regulatory agencies to have an external auditor accredited by the Commission, provided however that the Commission has been consulted on such requirement by said agency and that it has agreed on the terms thereof through a Memorandum of Agreement duly executed between the Commission and the regulatory agency. This group will already cover external auditors of corporate bank borrowers with at least P15 Million in total assets pursuant to BSP Circular No. 439, Series of 2004.
List of external auditors accredited by other agencies
For other companies that are regulated by other government regulatory agencies and required to have their financial statements audited by external auditors accredited by the Bangko Sentral ng Pilipinas (BSP) and Insurance Commission, you may check their websites for the list of accredited external auditors.
Reference: BIR RR No. 16-2008 and 2010, SRC Rule 68, as amended, BSP Circular No. 439, Series of 2004,
Disclaimer: This article was published for informational use only and is not provided to serve as legal or tax advice. Hence, we do not guarantee and is not liable for the accuracy or completeness of any information provided herein or in any outcome as a result for using this information. New and subsequent tax rulings, issuances and or laws in the future may render the whole or part of the article obsolete or inaccurate.