August 19, 2019

REVISED SECURITIES REGULATION C ODE (SRC) RULE 68

This Rule is part of the Implementing Rules and Regulations (IRR) of

the Securities Regulation Code (SRC), the latest revision of which was
approved by the Commission en banc on 19 August 2019.
PART I
General Financial Reporting Requirements
1. APPLICATION AND DEFINITION OF TERMS
A. Application of this Rule
(i) This Rule (together with subsequent official pronouncements,
interpretations and rulings on accounting and reporting matters,
which may be issued by the Securities and Exchange
Commission, herein referred to as the Commission, from time to
time) states the requirements applicable to the form and content
of financial statements required to be filed with the Commission
by corporations which meet the threshold, as follows:
a) Stock corporations with total assets or total liabilities of Six
Hundred Thousand Pesos (P600,000) or more as prescribed
under the Revised Corporation Code of the Philippines
(Revised Corporation Code) and any of its subsequent
revisions or such amount as may be subsequently
prescribed;
b) Non-stock corporations with total assets or total liabilities of
Six Hundred Thousand Pesos (P600,000) or more as
prescribed under the Revised Corporation Code and any of
its subsequent revisions or such amount as may be
subsequently prescribed;
c) Branch offices/representative offices of stock foreign
corporations with assigned capital in the equivalent amount
of One Million Pesos (P1 Million) or more;
d) Branch offices/representative offices of non-stock foreign
corporations with total assets in the equivalent amount of
One Million Pesos (P1 Million) or more; and
e) Regional operating headquarters of foreign corporations
with total revenues in the equivalent amount of One Million
Pesos (P1 Million) or more.
(ii) Financial statements of branch offices of foreign corporations
licensed to do business in the Philippines by the Commission shall
comply with the requirements of this Rule unless otherwise
determined by the Commission as not applicable.
(iii) The submission of financial statements shall be required for all
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 corporations and organizations registered with the Commission
as of the fiscal year end including those newly incorporated
during the said year. Corporations and organizations with a fiscal
year end of 31 December must submit their annual financial
statements in accordance with the annual schedule of filing of
financial statements. For those with a fiscal year end other than
31 December, their annual financial statements shall be due
within one hundred twenty (120) days after the end of their fiscal
year.
(iv) Additional requirements for financial statements of corporations
covered under Section 17.2 of the SRC are set forth under Part II
of this Rule.
B. Definition of Terms Used in this Rule
(i) Unless otherwise used in a different context, the terms used in
this Rule shall have the same meanings as defined in the
accounting and auditing standards adopted by the Commission
as part of this Rule.
(ii) Financial reporting framework means a set of accounting
principles, standards, interpretations and pronouncements that
must be adopted in the preparation and submission of the annual
financial statements of a particular class of entities, as defined in
this Rule by the Commission. This includes, but is not limited to,
the Philippine Financial Reporting Standards (PFRSs), the
Philippine Financial Reporting Standard for Small and Medium-
Sized Entities (PFRS for SMEs) and the Philippine Financial
Reporting Standard for Small Entities (PFRS for SEs).
The Commission shall have the authority, subject to prior
consultation with concerned parties, to prescribe the most
appropriate requirement that shall form part of the applicable
financial reporting framework of corporations covered by this
Rule. In prescribing the applicable financial reporting framework
for a particular class or sub-class of entities covered by this Rule,
the Commission shall consider the pronouncements and
interpretations of the Philippine Financial Reporting Standards
Council. However, a financial reporting framework other than the
PFRSs that complies with the regulatory reportorial requirements
of the concerned regulatory agency such as the Bangko Sentral
ng Pilipinas (BSP) or the Insurance Commission (IC) may be
allowed by the Commission.
(iii) Entity, when used in this Rule, refers to a juridical person or a
corporation registered under the Revised Corporation Code.
(iv) Error means an unintentional mistake in the financial
statements which reduces or increases the related accounts by
ten per cent (10%) or more. For issuers of securities to the public
and public companies as identified under Section 3 (B) (i) (a) (1),
(2) and (3) of Part I of this Rule, the test to be used shall be five
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 per cent (5%). It may involve:
(a) Mathematical or clerical mistakes in the underlying
records and accounting data;
(b) Oversight or misinterpretation of facts;
(c) Unintentional misapplication of accounting principles and
accounting policies; or
(d) Inconsistency of accounting policies with the applicable
financial reporting framework.
(v) Fraud means an intentional act by one or more individuals
among management, employees, those charged with
governance, or third parties involving the use of deception to
obtain an unjust or illegal advantage that results in a
misrepresentation of financial statements, which reduces or
increases the related accounts by ten per cent (10%) or more.
For issuers of securities to the public and public companies as
identified under Section 3 (B) (i) (a) (1), (2) and (3) of Part I of this
Rule, the test to be used shall be five per cent (5%). It may
involve:
(a) Manipulation, falsification or alteration of accounting
records or supporting documentation from which the
financial statements are prepared;
(b) Misappropriation of assets;
(c) Suppression or omission of the effects of transactions from
records or documents;
(d) Recording of transactions without substance;
(e) Intentional misapplication of accounting principles relating
to amounts, classification, manner of presentation, or
disclosure;
(f) Misrepresentation in, or intentional omission from, the
financial statements of events, transactions or other
significant information;
(g) Collusion;
(h) Forgery; or
(i) Override of internal controls.
(vi) Gross Negligence means wanton or reckless disregard of the
duty of due care in complying with Philippine Standards on
Auditing (PSA).
(vii) Issuer is any entity authorized by the Commission to offer to
sell, sell or promote the sale to the public of its equity, bonds,
instruments of indebtedness and other forms of securities.
(viii) Key Audit Partners pertain to the engagement partner (or in
most cases, the signing partner), the engagement quality control
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 reviewer and other audit partners, if any, on the engagement
team who make key decisions or judgments on significant
matters with respect to the audit of the financial statements on
which the firm will express an opinion. Depending upon the
circumstances and the role of the individuals on the audit, "other
audit partners" might include, for example, audit partners
responsible for significant subsidiaries or divisions, as defined in
paragraph (x) below.
(ix) Material Information, for purposes of this Rule, means
information whose omission or misstatement could influence the
economic decisions of its users.
(x) Significant Subsidiary means a subsidiary, including its
subsidiaries, which meets any of the following conditions:
(a) The parent company's investments in and advances to its
subsidiaries exceed twenty per cent (20%) of the
consolidated assets as of the end of the most recently
completed fiscal year.
The parent company and its subsidiaries' investments in
and advances to the other subsidiaries exceed twenty per
cent (20%) of the consolidated assets as of the end of the
most recently completed fiscal year; or
(b) The subsidiary's total assets, revenues or net income
(loss) (after intragroup eliminations) exceed twenty per
cent (20%) of the total consolidated assets, revenues or net
income (loss) as of the most recently completed fiscal year.
xxx xxx xxx
Computational note: For purposes of making the prescribed
income test, the following guidance shall be applied:
[1] When a loss has been incurred either at the
consolidated level or at the stand-alone financial
statements of the tested subsidiary, but not both,
the income or loss of the tested subsidiary shall
be excluded from the consolidated income for
purposes of the computation.
[2] Where the test involves combined entities, as in
the case of determining whether summarized
financial data shall be presented, entities
reporting losses shall not be aggregated with
entities reporting income.
xxx xxx xxx
The Commission, however, may consider qualitative factors,
depending on the circumstances, in identifying a significant
subsidiary or division.
(xi) SEC Oversight Assurance Review (SOAR) Inspection
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 Program refers to an on-site review of the quality control policies
and procedures of the accredited auditing firms auditing
companies with equity or debt securities listed in an Exchange
and review of portions of the audit work of selected audit
engagements from time to time. The Commission, however, is not
precluded from subjecting the independent auditors of other
companies for inspection as the circumstances would warrant.
(xii) Related accounts pertain to the classification and
aggregation on the face of the financial statements such as
current assets, non-current assets, current liabilities, non-current
liabilities, equity items, revenues, cost of sales, cost of service,
administrative expenses or operating expenses, as the case may
be.
2. GENERAL GUIDES TO FINANCIAL STATEMENTS PREPARATION
A. Financial Reporting Framework
The financial statements that shall be prepared and filed by entities
covered by this Rule shall be in accordance with the financial reporting
framework as prescribed under this Section.
(i) Large and/or Public Interest Entities
(a) For purposes of this Rule, large entities are those with
total assets of more than Three Hundred Fifty Million Pesos
(P350 Million) or total liabilities of more than Two Hundred
Fifty Million Pesos (P250 Million).
(b) For purposes of this Rule, public interest entities are
those that meet any of the following criteria:
(1) Are holders of secondary licenses issued by
regulatory agencies; or
(2) Are required to file financial statements under
Part II of SRC Rule 68; or
(3) Are in the process of filing their financial
statements for the purpose of issuing any class of
instruments in a public market; or
(4) Such other corporations that the Commission
may consider in the future as imbued with public
interest regardless of the lack of a requirement to
obtain a secondary license from the Commission
and may fall under the following criteria:
(i) Those grantees of legislative franchises;
(ii) Those engaged in nationalized or partly
nationalized activities;
(iii) Those grantees or recipients of public
funds; and

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 (iv) Those regulated by other government
agencies other than the BSP or IC.
Subsequent issuances shall be made by the Commission to
specifically identify corporations which it may consider as
imbued with public interest.
(c) Large and/or public interest entities shall use the PFRSs, as
adopted by the Commission, as their financial reporting
framework. However, a set of financial reporting framework
other than the full PFRSs may be allowed by the
Commission for certain sub-class (e.g., banks, insurance
companies) of these entities upon consideration of the
pronouncements or interpretations of any of the bodies
listed in Section 1 (B) (ii) above.
(d) In the presentation of their PFRSs financial statements, all
banks licensed by the BSP shall use as reference the
account names/titles in the uniform chart of accounts per
BSP's financial reporting package. A reconciliation schedule
shall be attached to the said financial statements showing
the difference between the presentation, recognition and
measurement differences between the PFRSs and the BSP's
financial reporting framework. This schedule need not be
covered by an Auditor's Report.
(ii) Medium-Sized Entities
(a) Medium-sized entities are those that meet all of the
following criteria:
(1) Total assets of more than One Hundred Million
Pesos (P100 Million) to Three Hundred Fifty Million
Pesos (P350 Million) or total liabilities of more
than One Hundred Million Pesos (P100 Million) to
Two Hundred Fifty Million Pesos (P250 Million). If
the entity is a parent company, the said amounts
shall be based on the consolidated figures;
(2) Are not required to file financial statements
under Part II of SRC Rule 68;
(3) Are not in the process of filing their financial
statements for the purpose of issuing any class of
instruments in a public market; and
(4) Are not holders of secondary licenses issued by
regulatory agencies.
(b) Medium-sized entities shall use as their financial reporting
framework the PFRS for SMEs as adopted by the
Commission. However, the following medium-sized entities
shall be exempt from the mandatory adoption of the PFRS
for SMEs and may instead apply, at their option, the full
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 PFRSs:
(1) An SME which is a subsidiary of a parent
company reporting under the full PFRSs;
(2) An SME which is a subsidiary of a foreign parent
company which will be moving towards
International Financial Reporting Standards
(IFRSs) pursuant to the foreign country's published
convergence plan;
(3) An SME, either as a significant joint venture or
associate, which is part of a group that is
reporting under the full PFRSs;
(4) An SME which is a branch office or regional
operating headquarter of a foreign company
reporting under the full IFRSs;
(5) An SME which has a subsidiary that is mandated
to report under the full PFRSs;
(6) An SME which has a short-term projection that
shows 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;
(7) An SME which has a concrete plan to conduct an
initial public offering within the next two (2) years;
(8) An SME which has been preparing financial
statements using full PFRSs and has decided to
liquidate;
(9) Such other cases that the Commission may
consider as valid exceptions from the mandatory
adoption of PFRS for SMEs.
(c) An SME availing itself of any of the above-mentioned
grounds for exemption shall provide a discussion in its
Notes to Financial Statements of the facts supporting its
adoption of the full PFRSs instead of the PFRS for SMEs.
(d) If an SME that uses the PFRS for SMEs in a current year
breaches the floor or ceiling of the size criteria at the end of
that current year, and the event that caused the change is
considered "significant and continuing," the entity shall
transition to the applicable financial reporting framework in
the next accounting period. If the event is not considered
"significant and continuing," the entity can continue to use
the same financial reporting framework it currently uses.
(e) The determination of what is "significant and continuing"
shall be based on management's judgment taking into
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 consideration relevant qualitative and quantitative factors.
As a general rule, twenty per cent (20%) or more of the
consolidated total assets or total liabilities would be
considered significant.
(iii) Small Entities
(a) Small entities are those that meet all of the following
criteria:
(1) Total assets of between Three Million Pesos (P3
Million) to One Hundred Million Pesos (P100
Million) or total liabilities between Three Million
Pesos (P3 Million) to One Hundred Million Pesos
(P100 Million). If the entity is a parent company,
the said amounts shall be based on the
consolidated figures;
(2) Are not required to file financial statements
under Part II of SRC Rule 68;
(3) Are not in the process of filing their financial
statements for the purpose of issuing any class of
instruments in a public market; and
(4) Are not holders of secondary licenses issued by
regulatory agencies.
(b) Small entities shall use as their financial reporting
framework the PFRS for SEs as adopted by the Commission.
However, entities who have operations or investments that
are based or conducted in a different country with different
functional currency shall not apply this Framework and
should instead apply the full PFRSs or PFRS for SMEs. The
following small entities shall also be exempt from the
mandatory adoption of the PFRS for SEs and may instead
apply, as appropriate, the full PFRSs or PFRS for SMEs:
(1) A small entity which is a subsidiary of a parent
company reporting under the full PFRSs or PFRS
for SMEs;
(2) A small entity which is a subsidiary of a foreign
parent company which will be moving towards
IFRSs or IFRS for Small and Medium-Sized Entities
(IFRS for SMEs) pursuant to the foreign country's
published convergence plan;
(3) A small entity, either as a significant joint
venture or associate, is part of a group that is
reporting under the full PFRSs or PFRS for SMEs;
(4) A small entity which is a branch office or
regional operating headquarter of a foreign
company reporting under the full IFRSs or IFRS for
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 SMEs;
(5) A small entity which has a short-term projection
that shows that it will breach the quantitative
thresholds set in the criteria for a small entity.
The breach is expected to be significant and
continuing due to its long-term effect on the
Company's asset size;
(6) A small entity which has been preparing financial
statements using full PFRSs or PFRS for SMEs and
has decided to liquidate;
(7) Such other cases that the Commission may
consider as valid exceptions from the mandatory
adoption of PFRS for SEs.
(c) A small entity availing of any of the above-mentioned
grounds for exemption shall provide a discussion in its
Notes to Financial Statements of the facts supporting its
adoption of the full PFRSs or PFRS for SMEs instead of the
PFRS for SEs.
(d) If a small entity that uses the PFRS for SEs in a current
year breaches the floor or ceiling of the size criteria at the
end of that current year, and the event that caused the
change is considered "significant and continuing," the entity
shall transition to the applicable financial reporting
framework in the next accounting period. If the event is not
considered "significant and continuing," the entity can
continue to use the same financial reporting framework it
currently uses.
(e) The determination of what is "significant and continuing"
shall be based on management's judgment taking into
consideration relevant qualitative and quantitative factors.
As a general rule, twenty per cent (20%) or more of the
consolidated total assets would be considered significant.
(iv) Micro Entities
(a) Micro entities are those that meet all of the following
criteria:
(1) Total assets and liabilities are below Three
Million Pesos (P3 Million);
(2) Are not required to file financial statements
under Part II of SRC Rule 68;
(3) Are not in the process of filing their financial
statements for the purpose of issuing any class of
instruments in a public market; and
(4) Are not holders of secondary licenses issued by
regulatory agencies.
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 (b) Micro entities have the option to use as their financial
reporting framework either the income tax basis or PFRS for
SEs, provided however, that the financial statements shall
at least consist of the Statement of Management's
Responsibility (SMR), Auditor's Report, Statement of
Financial Position, Statement of Income and Notes to
Financial Statements, all of which cover the two (2)-year
comparative periods, if applicable.
(c) If an entity uses a basis of accounting other than the PFRS
for SEs 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.
In the event where an entity breaches the prescribed threshold in
terms of total assets or total liabilities and thus it falls within a different
classification, the Audited Financial Statements (AFS) of said entity shall be
prepared in accordance with the higher framework.
The Commission may from time to time prescribe other criteria for
each of the above-stated financial reporting framework.
B. Responsibility for Financial Statements
(i) The financial statements filed with the Commission are primarily
the responsibility of the management of the reporting company,
and accordingly, the fairness of the representations made therein
is an implicit and integral part of the management's
responsibility. The Board of Directors, in discharging its
responsibilities, reviews and approves the financial statements
before these are submitted to the stockholders.
(ii) The SMR for Financial Statements that shall be attached to the
financial statements shall read as follows:
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
FOR FINANCIAL STATEMENTS
The management of (name of reporting company) is
responsible for the preparation and fair presentation of the
financial statements including the schedules attached therein,
for the year(s) ended (date), in accordance with the prescribed
financial reporting framework indicated therein, and for such
internal control as management determines is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
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 The Board of Directors (Trustees) is responsible for overseeing
the Company's financial reporting process.
The Board of Directors (Trustees) reviews and approves the
financial statements including the schedules attached therein
and submits the same to the stockholders or members.
(Name of auditing firm), the independent auditor appointed by
the stockholders, has audited the financial statements of the
company in accordance with Philippine Standards on Auditing,
and in its report to the stockholders or members, has expressed
its opinion on the fairness of presentation upon completion of
such audit.
Signature _______________________
Printed Name of the Chairman of the Board __________________
Signature _______________________
Printed Name of Chief Executive Officer _____________________
Signature _______________________
Printed Name of Chief Financial Officer _____________________
Signed this ___ day of ________________
(iii) The SMR shall cover the comparative financial statements and
shall indicate therein such periods.
(iv) The SMR shall be attached to the consolidated financial
statements, if applicable, and to the stand-alone financial
statements of the company.
(v) The Chairman of the Board, Chief Executive Officer and Chief
Finance Officer shall all sign the SMR as prescribed by this Rule. If
provided in the company's by-laws, persons holding equivalent
positions as that of the aforementioned signatories shall sign the
statement. Failure of any of the prescribed signatories to sign the
SMR constitutes a material deficiency in the financial statements.
(vi) In case of branch offices, representative offices or regional
operating headquarters of foreign corporations, the SMR shall be
signed by its local manager who is in charge of its operations
within the Philippines. The third and fourth paragraph of the SMR
may be deleted since the Philippine branch does not have any
local Board of Directors or Trustees.
(vii) The independent auditor's responsibility for the financial
statements required to be filed with the Commission is confined
to the expression of his opinion on such statements which he has
audited.
(viii) In the audit of the company's financial statements,
management shall provide the external auditor with the following
documents:
(a) Complete set of financial statements as prescribed under
the applicable financial reporting framework of the entity,
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 and if applicable, schedules and reconciliation forming part
of the financial statements required under the existing rules
of the Commission;
(b) All information, such as records and documentation, and
other matters that are relevant to the preparation and
presentation of the financial statements. These include
schedules, computations, projections, reconciliations,
reports, analyses and other financial information; and
(c) Any additional information that the auditor may request
from management and when appropriate, from those
tasked to perform governance.
(ix) Management shall provide unrestricted access to records and
personnel of the entity from whom the auditor deems it
necessary to obtain audit evidence.
(x) All publicly-listed companies, as recommended under the SEC
Code of Corporate Governance, shall establish a system that
captures relevant information on related party transactions. The
financial statements shall contain all information on such
transactions as required under the financial reporting framework
and under such guidelines as may be issued by the Commission.
It shall include a disclosure on whether or not the corporation has
an approval requirement and limits on the amount and extent of
related party transactions.
(xi) The Board of Directors or its Audit Committee, if applicable,
shall determine and ensure itself of the independence and
competence of the company's external auditor. For entities which
are covered under the SEC Code of Corporate Governance, the
scope, expenses of the audit, audit fees and non-audit services of
the external auditor shall be approved by the Board of Directors
or its Audit Committee, if applicable.
(xii) The company shall neither allow nor require its independent
auditor to prepare its financial statements and/or any of its
supporting documents. The independent auditor's duty is to
conduct an independent audit of the company's financial
statements and supporting documents pursuant to the prescribed
auditing standards.
(xiii) To determine compliance by the company's management with
its representations in the SMR, this Section and other relevant
provisions of this Rule, the Commission may examine the
company's books, records, systems and controls pursuant to the
guidelines set by the Commission. For this purpose, the following
requirements shall be observed:
(a) All corporations covered by this Rule shall retain copies of
all the records and documents supporting the preparation of
their financial statements, regardless of the form in which
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 they are stored, within a period of ten (10) years reckoned
from the day following the deadline in filing the financial
statements, or such longer time until the final closure or
judgment of a pending investigation or case against the
corporation, if any.
(b) The corporation shall inform its external auditor in writing
about an investigation or a case involving its financial
records and documents, within ten (10) working days from
the date of the notice to the corporation.
(c) If the records of the corporation are in electronic form, the
same shall be acceptable provided that there is compliance
with the requirements of the Electronic Commerce Act of
2000 [Republic Act (R.A.) No. 8792] and its IRR.
C. Form, Order and Terminology
(i) This Section shall be applicable to financial statements filed with
the Commission for all corporations covered by this Rule.
(ii) Financial statements shall be filed in such form and order and
shall use such generally accepted terminology as will best
indicate their significance and character in the light of the
provisions applicable thereto. The information required with
respect to any statement shall be furnished as a minimum
requirement to which shall be added such further material
information as is necessary to make the required statements, in
the light of the circumstances under which they are made, not
misleading.
(iii) All money amounts required to be shown in financial
statements may be expressed in whole currency units (e.g.,
Philippine Pesos) or multiples thereof, as appropriate: provided,
that when stated in other than whole currency units, an
indication to that effect is inserted immediately beneath the
caption of the statement or schedule, at the top of the money
columns, or at an appropriate point in narrative material.
(iv) Negative amounts shall be shown in a manner which clearly
distinguishes the negative attribute. When determining methods
of display, consideration shall be given to the limitations of
reproduction and scanning or microfilming processes.
(v) The chronological arrangement of data may be with the most
recent date to the right or to the left. However, the ordering used
shall be consistent in all financial statements, tabular data and
footnote data in the document.
(vi) The financial statements, other than the consolidated financial
statements, shall be duly received by the Bureau of Internal
Revenue (BIR) or its authorized banks, unless the BIR allows an
alternative proof of submission for its authorized banks (e.g.,
bank slips) or prohibits acceptance of the financial statements in
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 certain cases (e.g., on-going examination).
D. Presentation for Receipt of the Audited Financial
Statements
(i) Financial statements required to be submitted by corporations
shall be accompanied by an Auditor's Report issued by an
independent auditor and presented in accordance with the
requirements of this Rule. Failure to comply with any of the
formal requirements under this Rule including the prescribed
qualifications for independent auditors shall be considered a
sufficient ground for the denial of the receipt of the financial
statements or the imposition of applicable penalties under the
Scale of Fines or pertinent Memorandum Circulars (MCs) issued
by the Commission.
(ii) The acceptance and receipt by the Commission of the financial
statements shall be without prejudice to the fines that may be
imposed for any material deficiency or misstatement that may be
found upon evaluation of the specific contents thereof.
3. QUALIFICATIONS AND REPORTS OF INDEPENDENT AUDITORS
A. Audit of Financial Statements by Independent Auditors
All registered corporations covered by this Rule shall have independent
auditors who are duly registered and licensed with the Board of Accountancy
(BOA) of the Professional Regulation Commission (PRC) in accordance with
the rules and regulations of said professional regulatory bodies. A
corporation with financial statements audited by an independent auditor who
is not registered and licensed with the BOA shall be subject to appropriate
fines and shall be immediately referred to the PRC/BOA for the appropriate
penalties.
B. Additional Requirements for Independent Auditors of
SEC-Regulated Entities and Other Entities
(i) Accreditation Categories
The accreditation of independent auditors serves as a quality
control mechanism or quality assurance review by the
Commission on the work of the accredited external auditors.
The following entities shall have independent auditors accredited
by the Commission under the appropriate category:
(a) Group A
(1) Issuers of registered securities which have sold a
class of securities pursuant to a registration under
Section 12 of the SRC except those issuers of
registered timeshares, proprietary and non-
proprietary membership certificates which are
covered in Group B. This category shall also cover
corporations applying for the registration of their
securities;
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 (2) Issuers with a class of securities listed for trading
in an Exchange;
(3) Public companies or those which have total
assets of at least Fifty Million Pesos (P50 Million)
or such other amount as the Commission shall
prescribe, and having two hundred (200) or more
holders each holding at least one hundred (100)
shares of a class of its equity securities;
(4) Clearing agency and clearing agency as
depository; and
(5) Stock and securities exchange/s and other Self-
Regulatory Organizations.
(b) Group B
(1) Issuers of registered timeshares, proprietary and
non-proprietary membership certificates, and
corporations applying for the registration of such
securities;
(2) Investment houses;
(3) Brokers and dealers of securities;
(4) Investment companies that are not in the
process of registering securities or have no
registered securities yet;
(5) Government securities eligible dealers;
(6) Universal banks registered as underwriters of
securities;
(7) Investment company advisers;
(8) Special purpose corporations registered under
the Securitization Act of 2004 and its
implementing rules; and
(9) Such other corporations which may be required
by law to be supervised by the Commission.
(c) Group C
(1) Financing companies whose assets in the
preceding year are above Ten Million Pesos (P10
Million);
(2) Lending companies whose assets in the
preceding year are above Five Million Pesos (P5
Million);
(3) Transfer agents;
(4) Non-stock, non-profit corporations including
foundations which solicit or receive annual
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 donations or contributions and/or with fund
balance amounting to more than Twenty-Five
Million Pesos (P25 Million) and One Hundred
Million Pesos (P100 Million), respectively, over the
preceding three (3) years, or such higher amount
that the Commission may set through order or
guidelines.
A non-stock, non-profit corporation that is already
scoped in by the above requirement can only be
excluded if its annual donations or contributions
and/or fund balance fall below Twenty-Five Million
Pesos (P25 Million) and One Hundred Million Pesos
(P100 Million), respectively, over the preceding
three (3) years; and
(5) Such other corporations that the Commission
may consider as imbued with public interest
regardless of the lack of a requirement to obtain a
secondary license from the Commission.
(ii) Scope and Limitation of Accreditation
(a) The auditing firms including their respective signing
partners who shall be engaged by companies under Groups
A, B and C must be accredited by the Commission in
accordance with this Rule.
(b) Sole practitioners may be accredited by the Commission
and may be engaged by Group C companies provided that
such auditors have proven their capacity and resources for
establishing and implementing adequate audit quality
controls in accordance with applicable standards and such
other rules and regulations as the Commission may
prescribe.
Sole practitioners, however, are expected to convert from a
Sole Proprietorship to a Partnership structure by 30 June
2022 in order to continue being accredited by the
Commission.
(c) The Commission shall not be liable for any liability or loss
that may arise from the selection and engagement of the
said accredited independent auditor and/or auditing firm
engaged by a corporation for audit.
(d) The accreditation of an independent auditor and/or
auditing firm shall expire or be automatically delisted after
three (3) years (or such number of years as may later be
determined by the Commission) from the date of approval
of the accreditation, unless an application for its renewal is
filed not later than thirty (30) business days before its
expiration.
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 (e) The evaluation on the financial statements, which are
randomly selected using a risk-based approach, of the
applicant's corporate clients during the processing of his
application covers only the companies' compliance with the
applicable financial reporting framework and such is made
only on the face of the financial statements and attached
schedules and not its supporting documents. The
Commission, however, is not precluded from obtaining
copies of the audit work papers to support the auditor's
responses to the comments on the evaluated AFS.
(f) The Commission shall subject to SOAR Inspection Program
the accredited auditing firms engaged by companies with
equity or debt securities listed in an Exchange and review
portions of these firms' audit work for the listed companies.
The Commission, however, is not precluded from subjecting
the Independent Auditors of other companies for inspection
as the circumstances would warrant.
(g) The accreditation of an auditing firm, partner or sole
practitioner shall be effective unless any of the following
occurs:
(1) the auditing firm or auditor's request for
withdrawal of accreditation is approved by the
Commission;
(2) the accreditation is suspended or revoked by the
Commission, after due notice and hearing, for
failure to comply with the SOAR requirements or
for such other grounds as provided in this Rule; or
(3) the BOA registration and license have expired
and no application for renewal has been filed with
the BOA.
(h) Accreditation under Group A shall be considered a general
accreditation which shall allow the independent auditor to
also audit companies under Groups B and C. Independent
auditors with Group B accreditation can likewise audit
companies under Group C. Only accredited partners, with
accreditation under the appropriate group category, are
allowed to certify financial statements of the firm's clients
with secondary licenses.
Independent auditors granted with Groups A and B
accreditation are expected to handle audit of entities
belonging to these categories to serve the purposes of their
Groups A or B accreditation. Independent auditors granted
with Group A accreditation and with no audit clients listed in
an Exchange shall be distinguished from those with audit
clients listed in an Exchange.
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 (iii) Accreditation Requirements for Individual Independent
Auditors or Signing Partners
(a) General Requirements
(1) The applicant shall be registered and licensed
with the BOA;
(2) At the time of application, the applicant shall
have at least five (5) years of experience in
external audit. The audit experience shall have
been acquired as a manager or partner or its
equivalent;
(3) The applicant shall have adequate policies and
procedures related to the elements of a system of
quality control provided for under PSA No. 220
(Quality Control for an Audit of Financial
Statements), Philippine Standard on Quality
Control (PSQC) No. 1 (Quality Controls for Firms
that Perform Audits and Reviews of Financial
Statements, Other Assurance and Related
Services Engagements), and their amendments.
These shall be reflected in his Quality Assurance
Manual (QAM). The submitted QAM is subject to
the evaluation by the Commission.
(4) An application for accreditation of an external
auditor shall not be recommended for approval, if
after due notice and hearing, it could be
established that:
(i) The auditor allowed the perpetuation of any
violation of the requirements of the Revised
SRC Rule 68 by issuing a report with
unqualified opinion on the relevant financial
statements despite discovery of the violation
during the audit, or if not discovered, the
same should have been identified if
appropriate audit procedures were
performed; and
(ii) The violation subject of this paragraph shall
pertain to a decision or judgment that has
attained finality.
(b) Specific Requirements
(1) The applicant shall have sufficient knowledge on
the regulatory requirements, operations and
functions of companies under Groups A, B or C for
which he is applying for accreditation;
(2) The applicant shall have a total of thirty (30)
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 units of training and seminars (or such number of
units as may later be determined by the
Commission) on the following topics within the
last three (3) years: ten (10) units on PFRS, ten
(10) units on PSA, and ten (10) units on laws and
regulations being implemented by the
Commission. The said training should have been
approved by the PRC Continuing Professional
Development Council (CPDC), or organized or
approved by the Commission;
(3) The quality of audit work based on the
evaluation of the financial statements of clients
shall meet the prescribed level under Annex 68-A
of this Rule;
(4) At the time of application, the applicant shall
have the following track record:
(i) For Group A applicant, he shall have had a
minimum of five (5) corporate clients with
total assets of at least Fifty Million Pesos
(P50 Million) each, or such amount as may
be prescribed by the Commission;
(ii) For Group B, he shall have had a minimum
of three (3) corporate clients with total
assets of at least Twenty Million Pesos (P20
Million) each, or such amount as may be
prescribed by the Commission;
(iii) For Group C, he shall have had a minimum
of three (3) corporate clients with total
assets of at least Five Million Pesos (P5
Million) each, or such amount as may be
prescribed by the Commission.
(c) Application Documents
1. For the initial accreditation, a notarized
application form (SEC Form ExA-001) shall be
submitted by the applicant to the Commission,
together with the prescribed supporting
documents.
In cases where the applicant previously served as
a manager for the audit of the selected AFS for
evaluation, the applicant shall also submit a
certification from the signing partner of the
selected AFS that the applicant was part of the
audit engagement team.
2. The accreditation may be renewed by filing a
notarized renewal application form (SEC Form
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 ExA-001-R) together with the prescribed
supporting documents. In addition to the said
documents, the applicant must show proof that he
is engaged or had been engaged for the audit of a
company under the category that he was
previously accredited for and under which he is
applying for renewal.
In case the applicant renewing his accreditation
was not engaged in the audit of a company under
the category that he was previously accredited,
the applicant should show proof of continuing
compliance with all the requirements enumerated
in Section 3 (B) (iii) (a) and (b) of Part I of this
Rule.
3. Applications for initial or renewal of external
auditors or partners of auditing firms shall be
assessed with the appropriate filing fee as
indicated in SEC MC No. 3, Series of 2017 or
subsequent circulars issued by the Commission.
(iv) Accreditation Requirements for Auditing Firms
(a) The auditing firm shall be accredited with the BOA;
(b) At the time of application and during the effectivity of its
accreditation, it shall have at least two (2) signing
independent auditors who are accredited under the same
category as the auditing firm is applying for;
(c) It shall have adequate policies and procedures related to
the elements of a system of quality control provided for
under PSA No. 220, PSQC No. 1, and their amendments.
These shall be reflected in the QAM of the auditing firm.
The submitted QAM is subject to the evaluation by the
Commission.
For Groups A or B, the highest level of quality assurance
procedures within the auditing firm are required in order to
ensure that matters like proper consultation policies,
concurring reviews and independence monitoring are in
place.
The auditing firm shall submit a certification on the number
of all of its personnel or staff.
(d) The auditing firm shall submit a disclosure under oath
attesting to its independence (SEC MC No. 2, Series of
2016);
(e) Application documents:
(1) For initial accreditation, a notarized application
form (SEC Form AuF-002) shall be signed by the
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 managing partner of the auditing firm and shall be
submitted to the Commission, together with the
supporting documents prescribed in SEC Form
AuF-002.
(2) The accreditation may be renewed by filing a
notarized renewal application form (SEC Form
AuF-002-R) together with the prescribed
supporting documents. In addition to the said
documents, the firm must show proof that it is
engaged or had been engaged for the audit of a
company under the category that it was
previously accredited for and under which it is
applying for renewal.
In case the firm renewing its accreditation was not
engaged in the audit of a company under the
category that the firm was previously accredited,
the firm should show proof of continuing
compliance with all the requirements enumerated
in Section 3 (B) (iv) (a) to (d) of Part I of this Rule.
(3) Applications for initial or renewal accreditation of
auditing firms shall be assessed with the
appropriate filing fee as indicated in SEC MC No.
3, Series of 2017 or subsequent circulars issued
by the Commission.
(v) Other Qualification Requirements
In addition to the above-stated accreditation requirements, the
Commission may prescribe through subsequent issuances, other
qualification requirements and supporting documents as it may
consider necessary to provide higher assurance on the
competence and independence of auditors accredited by the
Commission.
(vi) Mutual Recognition Policy
(a) The mutual recognition policy, as prescribed in the
Memorandum of Agreement between and among the
Commission, BOA, BSP and IC and any of its subsequent
amendments, covering auditors of Group C companies is
subject to the BSP restriction that for banks and their
subsidiaries and affiliate banks; quasi-banks; trust entities;
non-stock savings and loan associations and their
subsidiaries and affiliates engaged in allied activities; and
other financial institutions which, under special laws, are
subject to the BSP's consolidated supervision, only one (1)
independent auditor or auditing firm shall audit their
individual and consolidated financial statements.
(b) The existing mutual recognition policy between and among
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 financial regulators is limited to compliance by applicants
with the basic qualification and documentary requirements.
Special requirements of each agency must still be observed
by applicant-external auditors. This is without prejudice,
however, to any subsequent agreement between and
among the Commission and other financial regulators to
centralize into one unit all of their accreditation processes
and requirements.
(vii) Operational Requirements
All auditing firms and sole practitioners holding a certificate of
accreditation from the Commission shall comply with the
following requirements:
(a) They shall strictly observe the Code of Ethics for
Professional Accountants as adopted by the BOA and PRC
and such other standards as may be adopted by the
Commission.
(b) They shall comply with the following:
(1) Terms of the engagement letter and its
undertakings;
(2) The PSA and other issuances of the Auditing and
Assurance Standards Council (AASC) and the
Commission;
(3) Applicable provisions of this Rule and other
relevant regulations and circulars of the
Commission; and
(4) Other pertinent laws, rules and regulations.
(c) In case of auditing firms, they shall maintain the number of
partners necessary to comply with the rotation policy of this
Rule.
(d) They shall comply with the reportorial requirements as set
forth under this Rule.
(e) They shall maintain the prescribed quality of audit work
under Annex 68-A of this Rule.
(f) They shall implement their respective QAM that is in
accordance with the requirements of existing auditing
standards.
(g) They shall retain copies of their working papers, audit
evidences and other audit related records for a period of
ten (10) years reckoned from the day following the
completion of the audit, or such longer time until the final
closure or judgment of a pending investigation or case
against the client, if any.
They shall inquire with the management as to whether
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 there is an ongoing investigation or case against the
company and require the client corporation to inform them,
in writing, about an investigation or a case against the
company within ten (10) working days from the date of
notice to the corporation.
If the records of the auditing firm are in electronic form, the
same shall be acceptable provided that there is compliance
with the requirements of the Electronic Commerce Act of
2000 (R.A. No. 8792) and its IRR.
(h) In relation to an on-going investigation of SEC-registered
entity, accredited independent auditors and auditing firms
shall, upon order of the Commission, present their working
papers, audit evidence and other audit related records. This
is to ensure that the quality of their respective audits has
not been compromised.
(i) Auditing firms with listed company-clients shall allow the
Commission through its reviewers who hold a written
authority, to conduct an on-site examination in accordance
with the SOAR Inspection Program.
(j) They shall comply with such orders and guidelines as may
be issued by the Commission pursuant to its powers and
authority under existing laws.
Failure to comply with any of the foregoing requirements
shall be a sufficient ground for the imposition of fines, as
indicated in SEC MC No. 13, Series of 2009 or subsequent
circulars issued by the Commission, and/or suspension or
revocation of the accreditation of the auditing firm or
auditor and/or non-renewal thereof.
(viii) Reportorial Requirements
(a) The Audit Committee of entities classified under Groups A,
B and C shall report to the Commission its action on a
report of its independent auditor pertaining to any item
enumerated under item (c) in the next page within five (5)
business days from the date the report is submitted by the
independent auditor. For companies under Group A, the
report shall be in SEC Form 17-C: Current Report that shall
be signed by the Chairman of the Audit Committee. For
companies under Groups B and C, the report shall be in the
form of a letter signed by the Chairman of the Audit
Committee or if there is no such committee, by the
company's Chairman of the Board.
(b) In case the Audit Committee fails to submit the report
required above, the independent auditor shall, within thirty
(30) business days from the submission of his findings to
the entity, file a report (SEC Form Au-Rep) to the
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 Commission.
(c) The following findings on the entity shall be disclosed by
the Audit Committee, or if there is no such committee, by
the company's Chairman of the Board, to the Commission:
(1) Any finding of: (i) violation of SRC Rule 68; (ii)
offering of securities without prior registration
with the Commission under the SRC; or (iii)
engaging in the business of financing or lending
without a secondary license;
(2) Any material finding involving fraud or error;
(3) Losses or potential losses the aggregate of which
amounts to at least ten per cent (10%) of the
consolidated total assets of the company;
(4) Any finding to the effect that the consolidated
assets of the company, on a going concern basis,
are no longer adequate to cover the total claims
of creditors; and
(5) Material weaknesses in internal control which
may lead to financial reporting problems.
(d) The independent auditor shall submit his findings to the
client-company's Audit Committee or Board of Directors, as
applicable. The adverse findings shall be discussed by the
independent auditor with the said body in order to preserve
the concerns of the supervisory authority and independent
auditors regarding the confidentiality of the information.
(e) The independent auditor shall document management's
explanation and/or corrective action taken regarding his
adverse findings. The same shall be included in the report
mentioned under item (b) in the previous page.
(f) The engagement contract between the company and the
independent auditor shall contain a provision that the
disclosure of information by the independent auditor to the
Commission shall not constitute a breach of confidentiality
nor shall it be ground for civil, criminal or disciplinary
proceedings against the independent auditor.
(ix) Rotation of External Auditors
The independent auditors or in the case of an auditing firm, key
audit partners, as defined under Section 1 (B) (viii) of Part I of this
Rule, of the aforementioned SEC-regulated entities under Groups
A to C, except for non-stock, non-profit corporations, shall comply
with the provisions on long association of personnel (including
partner rotation) with an audit client as prescribed in the Code of
Ethics for Professional Accountants in the Philippines as adopted
by the BOA and PRC and such other standards as may be
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 adopted by the Commission.
(x) Other Obligations of Accredited External Auditors
In addition to the requirements in the preceding provisions, the
Commission, through subsequent issuances, may prescribe other
obligations of accredited external auditors as it may consider
necessary to improve transparency, audit quality and
independence of external auditors.
C. Independence of Auditors
The term independent auditor or external auditor refers to an auditor
who fully meets the requirements of independence as provided for in the
Code of Ethics for Professional Accountants in the Philippines and in this
Rule.
D. Engagement of Independent Auditors
(i) The company through its Board of Directors or Audit Committee,
if applicable, shall conduct due diligence in confirming the
personal identification and professional qualifications of the
independent auditor whose services it will engage.
(ii) Prior to engagement, the company shall require the
independent auditor to present a copy of his/her professional
license from the PRC and the Certificate of Accreditation issued to
him/her by the BOA as sole independent auditor and to the
auditing firm if he is a partner thereof.
(iii) The company shall confirm the authenticity of the BOA
Certificate of Accreditation by checking the latest list of
accredited practitioners issued by the BOA.
(iv) In addition to the above, regulated entities shall observe the
following procedures prior to the engagement of an independent
auditor:
(a) The company shall require the presentation of the
Commission's Certificate of Accreditation issued to the
independent auditor and its auditing firm, if applicable. The
level of accreditation (Groups A to C) indicated in the said
certificate shall be at least equivalent to the company's
classification under this Rule;
(b) The authenticity of the said certificate shall be verified
against the official list of accredited auditors and auditing
firms.
(v) Preliminary meetings with the management and the exit
conference shall be attended to personally by the independent
auditor or by the handling partner or engagement manager, in
case of an auditing firm.
(vi) A complete documentation of the foregoing requirements shall
be retained by the company. The independent auditor's file with
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 the company shall include a copy of his/her PRC license, BOA
Accreditation Certificate, Commission's Certificate of
Accreditation (if applicable), engagement contract and minutes of
conference with the auditors, among others.
E. Audit Reports of Independent Auditors
(i) The Auditor's Report shall: (a) be dated; (b) be signed by the
certifying independent auditor; (c) identify the financial
statements covered by the report; (d) state the signing
accountant's License, Tax Identification and Professional Tax
Receipt numbers, and registration number with the BOA including
its expiration date; (e) state the complete mailing address of the
client and the auditor; and (f) in the case of an auditing firm, the
certifying partner shall sign his own signature and shall indicate
that he is signing for the auditing firm, the name of which is
printed in the report.
(ii) The Auditor's Report of a company mentioned under Section 3
(B) (i) of Part I of this Rule shall likewise indicate the signing
auditor/partner's accreditation number, category and expiration
of accreditation. In case of an auditing firm, the same information
with respect to the accreditation of the auditing firm shall be
indicated.
(iii) The Auditor's Report shall state whether the audit was made in
accordance with the PSA.
(iv) The Auditor's Report shall state clearly the opinion of the
independent auditor on the fairness of presentation in conformity
with the prescribed financial reporting framework for the
company. It shall discuss the basis of the opinion and shall
contain all information as required under the applicable PSAs.
(v) Unless exempted under sub-paragraph (vi) in the next page, the
external auditor of a company which has incurred a capital
deficiency, shall provide in the Audit Report a Material
Uncertainty Related to Going Concern section pursuant to the
auditing standards which includes a reference to the Note to
Financial Statements. Such note shall discuss the concrete plan
of the company to address the capital deficiency.
(vi) The requirement under sub-paragraph (E) (v) in the previous
page shall not apply to a company that incurred a capital
deficiency due to any of the following reasons:
(1) The company 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;
(2) Significant losses were incurred in prior years but the
company has generated positive results (net income) from
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 operations over the current period due to developments in
the business or regularization of its operation;
(3) The company has incurred capital deficiency during the
current period only due to a significant adjustment arising
from the adoption of a new financial reporting framework or
occurrence of a non-recurring transaction for the period; or
(4) Such other cases which the Commission may consider as
valid ground for considering the company as a going
concern.
(vii) Any company covered by any of above exemptions shall
provide in Note 1 of its AFS a discussion on the reason for its
capital deficiency and a concrete plan to address the same.
F. Supplemental Written Statement of Auditor
(i) For stock corporations filing under Part I of this Rule (and
therefore not covered by Part II), their independent auditors shall
issue a supplemental written statement as prescribed under
Annex 68-B of this Rule.
(ii) To support the above statement, the auditor may undertake the
audit procedures he deems necessary, such as the following:
(a) Obtain a certification from the issuer's Corporate
Secretary on the number of stockholders and their
corresponding shareholdings;
(b) Inspect the Stock and Transfer Book and conduct the tests
needed to validate their entries and balances.
4. COMPARATIVE FINANCIAL STATEMENTS
A. The financial statements to be filed with the Commission shall be
presented in comparative form. The figures for the most recently ended
fiscal year may be presented at the right portion immediately after the
accounts name, followed by the figures for the last preceding year.
B. Statement of Financial Position
The audited Statements of Financial Position shall be as of the end of
each of the two (2) most recently completed fiscal years.
C. Statement of Comprehensive Income, Statement of Cash Flows
and Statement of Changes in Equity
If practicable, these statements shall be for each of the two (2) most
recently completed fiscal years or such shorter period as the company
(including predecessors) has been in existence.
D. An explanation through a note or otherwise shall be made
explaining the reasons for filing a single-period statement, e.g., it is the first
(1st) period of a new company.
E. When financial statements are presented on a comparative basis
for more than the periods required, the Auditors Report need not extend to
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 prior periods for which the financial statements are not required to be
audited.
(i) If the financial statements of the prior year were not audited,
such statements shall be marked prominently as "UNAUDITED."
In addition, the auditor shall disclose this in an "other matter"
paragraph in the Auditor's Report.
(ii) If the financial statements of a prior period have been audited
by another independent certified public accountant whose report
is not presented, the statements shall be marked to disclose
prominently that they are not being reported upon by the current
auditor. If the auditor of the financial statements for such periods
did not give an unqualified opinion on such statements, the
auditor for the current year shall indicate in an "other matter"
paragraph of his report (i) that the financial statements of the
prior period were audited by other auditors, (ii) the date of their
report, (iii) the type of opinion expressed by the predecessor
auditor, and (iv) the substantive reasons it was qualified.
5. OTHER DOCUMENTS TO BE FILED WITH THE FINANCIAL
STATEMENTS
The following documents shall be filed with the annual AFS and in the
interim financial statements, if required herein:
A. Non-Stock and Non-Profit Organizations (NSPO) Including
Foundations
The forms as provided in Annex 68-C of this Rule must be
accomplished and submitted with the AFS by non-stock and non-profit
organizations including foundations.
NSPO Form-1, NSPO Form-2 and NSPO Form-3 must be submitted by all
registered non-stock and non-profit organizations. For those with annual
contributions or donations of Five Hundred Thousand Pesos (P500,000) or
more, NSPO Form-4, NSPO Form-5 and NSPO Form-6 must also be submitted
with the AFS.
These schedules need not be covered by an Auditor's Report.
B. Issuers of Securities to the Public, and Stock
Corporations with Unrestricted Retained Earnings in Excess of 100%
of Paid-In Capital Stock
A Reconciliation of Retained Earnings Available for Dividend
Declaration, which shall present the prescribed adjustments in the
prescribed Form per Annex 68-D of this Rule, must be presented. This
reconciliation must be covered by an Auditor's Report.
C. Regulated Entities Enumerated in Section 3 (B) (i) of Part
I of this Rule
A schedule showing financial soundness indicators in two (2)
comparative periods, as follows: (i) current/liquidity ratios; (ii) solvency
ratios, debt-to-equity ratios; (iii) asset-to-equity ratios; (iv) interest rate
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 coverage ratios; (v) profitability ratios; and (vi) other relevant ratios as the
Commission may consider necessary.
This schedule, in the prescribed Form per Annex 68-E of this Rule, shall
be submitted with the AFS and if applicable, with the company's interim
financial statements. For listed companies, this schedule should be covered
by an Auditor's Report.
D. Financing Companies
A schedule showing the following information for two (2) comparative
periods: (i) ratio or percentage of total real estate investments to total
assets; (ii) total receivables to total assets; (iii) total Directors, Officers,
Stockholders and Related Interests (DOSRI)'s receivables to net worth; and
(iv) amount of receivables from a single corporation to total receivables. This
schedule, in the prescribed Form per Annex 68-F of this Rule, shall be
submitted with the annual AFS and if applicable, with the company's interim
financial statements. This schedule need not be covered by an Auditor's
Report.
E. Mutual Funds
A schedule showing the following information for two (2) comparative
periods: (i) percentage of investment in a single enterprise to net asset
value; (ii) total investment of the fund to the outstanding securities of an
investee company; (iii) total investments in liquid or semi-liquid assets to
total assets; (iv) total operating expenses to net worth; and (v) total assets to
total borrowings, shall be submitted with the annual AFS and if applicable,
with the company's interim financial statements.
This schedule, in the prescribed Form per Annex 68-G of this Rule, shall
be submitted with the annual AFS and if applicable, with the company's
interim financial statements. This schedule need not be covered by an
Auditor's Report.
F. Investment Houses
A schedule, in the prescribed Form per Annex 68-H of this Rule,
showing the following information, shall be submitted with the annual AFS
and if applicable, with the company's interim financial statements:
Details (per issue) of underwriting activities for the year:
(i) Name of the issuer-client;
(ii) Nature of commitment;
(iii) Amount of issue;
(iv) Underwriting and other fees generated; and
(v) Basis of computation for each.
Transactions with DOSRI:
(i) Name of related party;
(ii) Description of transaction;

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 (iii) Total volume/amount of transaction for the year;
(iv) Terms and conditions, such as maturity date, security, and
mode of payment; and
(v) If secured, carrying amount of asset used as collateral.
This schedule need not be covered by an Auditor's Report.
G. Listed Companies and Investment Houses that are Part
of a Conglomerate or Group of Companies
A map showing the relationships between and among the company and
its ultimate parent company, middle parent, subsidiaries or co-subsidiaries,
and associates, wherever located or registered, shall be submitted with the
annual AFS. The map must be covered by an Auditor's Report.
H. Listed Companies that Recently Offered Securities to the
Public (Either as Initial or Additional Offering)
A schedule, in the prescribed Form per Annex 68-I of this Rule, showing
the following amounts, shall be submitted with the annual AFS and if
applicable, with the company's interim financial statements up to such
period when all the proceeds from the offering have been utilized:
a) Gross and net proceeds as disclosed in the final prospectus;
b) Actual gross and net proceeds;
c) Each expenditure item where the proceeds were used; and
d) Balance of the proceeds as of end of reporting period.
This schedule need not be covered by an Auditor's Report.
I. Such other schedules or components that the Commission
may require through subsequent pronouncements.
PART II
Additional Requirements for Issuers of Securities to the Public
1. APPLICATION
In addition to the requirements set forth under Part I of this Rule, this
Part II (together with subsequent official pronouncements, interpretations
and rulings on accounting and reporting matters, which may be issued by
the Commission from time to time) provides for the special requirements on
the financial statements required to be filed with the Commission by
corporations which filed registration statements under Section 12 of the SRC
or which meet the following criteria with respect to the requirements to file
reports:
A. Issuer which has sold a class of its securities pursuant to a
registration under Section 12 of the SRC;
B. Issuer with a class of securities listed for trading on an Exchange;
and
C. Issuer with assets of at least Fifty Million Pesos (P50 Million) or
such other amount as the Commission shall prescribe and has
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 Two Hundred (200) or more holders each holding at least one
hundred (100) shares of a class of its equity securities as of the
first (1st) day of the issuer's fiscal year.
2. REGISTRATION OF SECURITIES PURSUANT TO THE ASEAN
CAPITAL MARKET INTEGRATION
The registration of securities pursuant to the ASEAN Capital Market
Integration Framework shall be in accordance with this Rule, subject to the
following specific requirements and such other issuances as the Commission
may hereinafter release:
A. Adoption of the IFRS as the basis of financial statements of
foreign companies that will undergo cross border offerings or
listings in the Philippines.
B. Submission by the foreign issuer's financial statements that are
audited by a foreign audit firm are subject to the following
requirements:
(i) The foreign audit firm should be accredited or licensed
and/or recognized in its home jurisdiction as qualified to
audit issuers of securities to the public;
(ii) The foreign audit firm should be affiliated with a local firm
that is accredited by the Commission under Group A
category; and
(iii) The SMR, schedules and other attachments required
under SRC Rule 68 should be submitted with the financial
statements.
C. Modification of financial statement requirements in cases where
the subject of a registration statement is asset-backed securities
in order to align with those in other ASEAN countries.
3. AUDITOR'S OPINION ON FINANCIAL STATEMENTS
A. The AFS of companies covered by Part II of this Rule with an
auditor's opinion other than unqualified because of deviation(s) from the
required financial reporting framework or due to a scope limitation imposed
by the company, shall be considered a violation of this Rule.
B. For listed banks, a qualified opinion from their independent
auditors shall not be considered a non-compliance with this Rule if the
qualification pertains to a deviation from PFRS, when such deviation has
been approved by the BSP as part of its prudential reporting requirements.
C. The company shall, if warranted, after due notice and hearing,
be subject to the applicable penalties and shall be required to submit its
amended financial statements to address the modification or limitation.
4. RESPONSIBILITY FOR FINANCIAL STATEMENTS
The SMR of companies covered under Part II of this Rule shall, in
addition to the requirements under Section 2 (B) of Part I of this Rule, be
signed under oath.
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 For registrants of securities, the SMR shall be attached to both audited
annual financial statements and reviewed interim financial statements.
5. PERIODIC PRESENTATION
The periodic presentation and coverage of financial statements
accompanying the registration statements (SEC Form 12-1), annual reports
(SEC Form 17-A) and management reports attached to the information
statements (SEC Form 20-IS) shall be made in accordance with the
requirements of this Section.
A. Registration Statements
(i) Consolidated Statements of Financial Position
(a) If the registrant has been in existence for less than one (1)
fiscal year, there shall be filed an audited Statement of
Financial Position as of a date within one hundred eighty
(180) days of the date of filing the registration statement.
(b) If a filing on SEC Form 12-1 is made within one hundred
eighty (180) days after the end of the most recently ended
fiscal year, the filing shall include Audited Consolidated
Statements of Financial Position as of the end of each of the
two (2) most recently ended fiscal years.
(c) If a filing on SEC Form 12-1 is made more than one
hundred eighty (180) days but not more than two hundred
seventy-four (274) days after the end of the most recently
ended fiscal year, the filing shall include Audited
Consolidated Statements of Financial Position as of the end
of each of the two (2) most recently ended fiscal years and
a separate Interim Statement of Financial Position as of the
end of the first (1st) fiscal quarter subsequent to the most
recent fiscal year end.
(d) If a filing on Form 12-1 is made more than two hundred
seventy-four (274) days after the end of the most recently
ended fiscal year, the filing shall include Audited
Consolidated Statements of Financial Position as of the end
of each of the two (2) most recently ended fiscal years and
a separate Interim Statement of Financial Position as of the
end of the second (2nd) fiscal quarter subsequent to the
most recent fiscal year end.
(ii) Consolidated Statements of Comprehensive Income
(a) There shall be filed for the registrant and its consolidated
subsidiaries and its predecessors Audited Statements of
Comprehensive Income in a comparative format for each of
the three (3) most recent completed fiscal years or such
shorter period as the registrant (including predecessors)
has been in existence.
(b) In addition, a Statement of Comprehensive Income shall
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 be provided for any interim period between the latest
Audited Statement of Financial Position and the date of the
most recent Interim Statement of Financial Position being
filed, and for the corresponding period of the preceding
year.
(iii) Consolidated Statements of Changes in Equity
(a) There shall be filed for the registrant and its consolidated
subsidiaries and its predecessors, Audited Statements of
Changes in Equity in comparative format for each of the
three (3) most recent completed fiscal years or such shorter
period as the registrant (including predecessors) has been
in existence.
(b) In addition, Statements of Changes in Equity shall be
provided for any interim period between the latest Audited
Statement of Financial Position and the date of the most
recent Interim Statement of Financial Position being filed,
and for the corresponding period of the preceding year.
(iv) Consolidated Statements of Cash Flows
(a) There shall be filed for the registrant and its consolidated
subsidiaries and its predecessors, Audited Statements of
Cash Flows in comparative format for each of the three (3)
most recent completed fiscal years or such shorter period
as the registrant (including predecessors) has been in
existence.
(b) In addition, a consolidated Statement of Cash Flows shall
be provided for any interim period between the latest
Audited Statement of Financial Position and the date of the
most recent Interim Statement of Financial Position being
filed, and for the corresponding period of the preceding
year.
The above financial statements shall be audited by an
independent auditor accredited by the Commission under the
category prescribed per Section 3 (B) (i) of Part I of this Rule.
(v) Interim Financial Statements
The interim financial statements mentioned in the preceding
subparagraphs need not be audited. However, in case of an initial
public offering of securities by a company, such interim financial
statements shall be audited by an independent auditor
accredited by the Commission under the prescribed category and
shall be complete in details as in a full fiscal year financial report.
Reviewed Interim Financial Statements may be accepted by the
Commission provided that the registrant submits a written
justification citing its constraints for having the interim financial
statements audited and a certification that there has been no
material event or transactions during the interim period that
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 would necessitate the conduct of audit procedures.
The review by an independent auditor of the financial statements
shall be in accordance with the applicable standards.
(vi) Age Requirement for Financial Statements
(a) At the time a registration statement on SEC Form 12-1 is
to become effective, the financial information therein shall
be as of a date within one hundred eighty (180) days from
effective date.
(b) Except as required under sub-paragraph (v) above, the
interim financial statements which are necessary to keep
the registration statement current, need not be audited but
shall comply with the required form and contents under
Philippine Accounting Standards 34 (Interim Financial
Reporting or any of its amendments).
B. Annual Reports (SEC Form 17-A)
(i) There shall be filed consolidated Audited Statements of Financial
Position (except if not applicable), in comparative format, as of
the end of each of the two (2) most recently completed fiscal
years.
(ii) The Statements of Comprehensive Income, Statements of Cash
Flows and Statements of Changes in Equity shall be in
comparative format for the three (3) most recently completed
fiscal years or such shorter period as the company (including
predecessors) has been in existence.
C. Information Statements (SEC Form 20-IS)
(i) There shall be filed consolidated Audited Statements of Financial
Position (except if not applicable), in comparative format, as of
the end of each of the two (2) most recently completed fiscal
years. If the meeting date is beyond one hundred thirty-five (135)
days from the company's fiscal year end, a separate Interim
Unaudited Statement of Financial Position as of the end of the
most recent quarter with comparative figures as of the end of the
preceding fiscal year shall likewise be filed.
(ii) The Statements of Comprehensive Income, Statements of Cash
Flows and Statements of Changes in Equity shall be in
comparative format for the three (3) most recently completed
fiscal years or such shorter period as the company (including
predecessors) has been in existence. If the meeting date is
beyond one hundred thirty-five (135) days from the company's
fiscal year end, separate interim unaudited statements for the
most recent quarter with comparative figures for period ending of
the same quarter of the preceding year shall likewise be filed.
6. APPLICABILITY WITH OTHER REPORTS
The schedules provided under Annex 68-J (Schedules) are not required
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 in management reports to be distributed to shareholders as part of the
information statement.
7. ADDITIONAL DISCLOSURE REQUIREMENTS
A. Statements of Financial Position
In addition to the disclosures required under the PFRSs and except as
otherwise permitted by the Commission, the various line items and certain
additional disclosures set forth in Annex 68-K if applicable, shall appear on
the face of the Statements of Financial Position or related Notes to the
Financial Statements filed by the persons to whom this Rule pertains.
B. Statements of Comprehensive Income
In addition to the disclosures required under the PFRSs and except as
otherwise permitted by the Commission, the various line items and certain
additional disclosures set forth in Annex 68-K, if applicable, shall appear on
the face of the Statements of Comprehensive Income in the financial
statements or related notes filed by the persons to whom this Rule pertains.
C. General Notes to Financial Statements
In addition to the disclosures required under the PFRSs and except as
otherwise permitted by the Commission, the various line items and certain
additional disclosures set forth in Annex 68-K, if applicable, shall appear on
the face of the financial statements or related notes to the financial
statements filed by the persons to whom this Rule pertains.
D. Schedules
Please see Annex 68-J for the required form and content.
8. INTERIM FINANCIAL STATEMENTS
The following additional instructions shall be applicable for purposes of
preparing Interim Financial Statements:
A. If appropriate, the Statement of Comprehensive Income shall
show earnings per share and dividends declared per share
applicable to common stock. The basis of the earnings per share
computation shall be stated together with the number of shares
used in the computation. For mutual funds or investment
companies, the amount of Net Asset Value per Share and the
basis for its computation shall likewise be disclosed in the
Statement of Financial Position or the Notes to Financial
Statements.
B. If, during the most recent interim period presented, the
registrant or any of its consolidated subsidiaries entered into a
business combination treated for accounting purposes as a
pooling of interests, the Interim Financial Statements for both the
current year and the preceding year shall reflect the combined
results of the pooled businesses, as appropriate. Supplemental
disclosure of the separate results of the combined entities for the
periods prior to the combination shall be given, with appropriate
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 explanations.
C. Where a material business combination accounted for as a
purchase has occurred during the current fiscal year, pro forma
disclosure shall be made of the results of operations for the
current year up to the date of the most recent Interim Statement
of Financial Position provided (and for the corresponding period in
the preceding year) as though the companies had combined at
the beginning of the period being reported on. This pro forma
information shall, as minimum, show revenues, and the
cumulative effect of accounting changes, including such income
on a per share basis, and net income per share.
D. In addition to meeting the reporting requirements specified by
existing standards for accounting changes, the registrant shall
state the date of any material accounting change and the reasons
for making it.
E. Any unaudited interim financial statements furnished shall reflect
all adjustments which are, in the opinion of management,
necessary for a fair statement of the results for the interim
periods presented. A statement to that effect shall be included.
Such adjustments shall include, for example, appropriate
estimated provisions for bonus and profit sharing arrangements
normally determined or settled at year end. If all such
adjustments are of a normal recurring nature, a statement to that
effect shall be made; otherwise, there shall be furnished
information describing in appropriate detail the nature and
amount of any adjustments other than normal recurring
adjustments entering into the determination of the results shown.
F. Periods for which interim financial statements are to be provided
in registration forms are stated in Section 5 of Part II of this Rule.
For filings on Form 17-Q: Quarterly Report, financial statements
shall be provided in accordance with the financial reporting
framework.
G. Filing of other interim financial information in certain cases —
The Commission may, upon written request of the registrant, and
where consistent with the protection of investors, permit the
omission of any of the interim financial information herein
required or the filing in substitution therefor of appropriate
information of comparable character. The Commission may also
by written notice require the filing of other information in
addition to, or in substitution for, the interim information herein
required in any case where such information is necessary or
appropriate for an adequate presentation of the financial
condition of any entity for which interim financial information is
required, or whose financial information is otherwise necessary
for the protection of investors.
9. PRO FORMA FINANCIAL INFORMATION
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 A. Applicability
(i) This Section prescribes the requirements in a report of an issuer
or in a registration statement for the registration of debt and
equity securities.
(ii) In addition to the AFS of business acquired, the pro forma
financial information shall be submitted with the report or with
the registration statement if any of the following transactions
occurs after the date of the most recent Statement of Financial
Position or during the interim period:
(a) Significant business combination accounted for as a
purchase has occurred (for purposes of this Rule, the term
"purchase" encompasses the purchase of an interest in a
business accounted for by applying the acquisition method);
(b) Consummation of a significant business combination that
has occurred or is probable;
(c) Securities being registered by the registrant are to be
offered to the security holders of a significant business to be
acquired or the proceeds from the offered securities will be
applied directly or indirectly to the purchase of a specific
significant business;
(d) The disposition of a significant portion of a business either
by sale, abandonment or distribution to shareholders by
means of a spin-off, split-up or split-off has occurred or is
probable and such disposition is not fully reflected in the
financial statements of the registrant included in the filing;
(e) Acquisition of one or more real estate operations or
properties which in the aggregate is significant, or when
there is an acquisition or proposal to acquire one (1) or
more operation or properties which in the aggregate is
significant;
(f) The registrant previously was a part of another entity and
such presentation is necessary to reflect operations and
financial position of the registrant as an autonomous entity;
or
(g) Consummation of other events or transactions has
occurred or is probable for which disclosure of pro forma
financial information would be material to investors.
(iii) A business combination or disposition of a business shall be
considered significant if:
(a) A comparison of the most recent annual financial
statements of the business acquired or to be acquired and
the registrant's most recent annual consolidated financial
statements filed at or prior to the date of acquisition
indicates that the business would be a significant subsidiary
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 pursuant to the definition specified in Section 1 (B) (x) of
Part I of this Rule.
(b) The business to be disposed of meets the definition of a
significant subsidiary in Section 1 (B) (x) of Part I of this
Rule.
(iv) The requirement under paragraph (A) (ii) in the previous page
shall not apply in those circumstances when, for purposes of a
more meaningful presentation, a transaction consummated after
the balance-sheet date is reflected in the historical financial
statements.
(v) When consummation of more than one (1) transaction has
occurred or is probable during a fiscal year, the tests of
significance in (iii) above shall be applied to the cumulative effect
of those transactions. If the cumulative effect of the transactions
is significant, pro forma financial information shall be presented.
(vi) For purposes of this Rule, the term business shall be evaluated
in light of the facts and circumstances involved and whether
there is sufficient continuity of the acquired entity's operations
prior to and after the transactions so that disclosure of prior
financial information is material to an understanding of future
operations. A presumption exists that a separate entity, a
subsidiary, or a division is a business. However, a lesser
component of an entity may also constitute a business.
(vii) This Rule does not apply to transactions between a parent
company and its wholly-owned subsidiary.
B. Prescribed Presentation
(i) Objective
Pro forma financial information shall provide investors with
information about the continuing impact of a particular
transaction by showing how it might have affected historical
financial statements if the transaction had been consummated at
an earlier time. Such statements shall assist investors in
analyzing the future prospects of the registrant because they
illustrate the possible scope of the change in the registrant's
historical financial position and results of operations caused by
the transaction.
(ii) Form and Content
(a) Pro forma financial information shall consist of a pro forma
Condensed Statements of Financial Position, pro forma
Condensed Statements of Income, Statements of Cash
Flows, Statements of Changes in Equity and accompanying
explanatory notes. In certain circumstances (i.e., where a
limited number of pro forma adjustments are required and
those adjustments are easily understood), a narrative
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 description of the pro forma effects of the transactions may
be furnished in lieu of the statements described herein.
(b) The pro forma financial information shall be accompanied
by an introductory paragraph which briefly sets forth a
description of (i) the transaction, (ii) the entities involved,
and (iii) the periods for which the pro forma information is
presented. In addition, an explanation of what the pro
forma presentation shows shall be set forth.
(c) The pro forma condensed financial information need only
include major captions (i.e., the numbered captions)
prescribed by the applicable paragraphs of this Rule. Where
any major Statement of Financial Position caption is less
than ten per cent (10%) of total assets, the caption may be
combined with others. When any major Income Statement
caption is less than fifteen percent (15%) of average net
income of the registrant for the most recent three (3) fiscal
years, the caption may be combined with others. In
calculating average net income, a loss year shall be
excluded unless losses were incurred in each of the most
recent three (3) years, in which case the average loss shall
be used for purposes of this test. Notwithstanding these
tests, "minimal" amounts need not be shown separately.
(d) Pro forma statements shall ordinarily be in columnar form
showing condensed historical statements, pro forma
adjustments, and the pro forma results.
(e) The pro forma condensed Statements of Comprehensive
Income shall disclose income (loss) from continuing
operations before nonrecurring charges or credits directly
attributable to the transaction. Material nonrecurring
charges or credits and related tax effects which result
directly from the transaction and which will be included in
the income of the registrant within the twelve (12) months
succeeding the transaction shall be disclosed separately. It
shall be clearly indicated that such charges or credits were
not considered in the pro forma condensed Statements of
Comprehensive Income. If the transaction for which pro
forma financial information is presented relates to the
disposition of a business, the pro forma results shall give
effect to the disposition and be presented under an
appropriate caption.
(f) Pro forma adjustments related to the pro forma condensed
Statements of Comprehensive Income shall be computed
assuming the transaction was consummated at the
beginning of the fiscal year presented and shall include
adjustments which give effect to events that are (i) directly
attributable to the transaction, (ii) expected to have a
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 continuing impact on the registrant, and (iii) factually
supportable. Pro forma adjustments to the pro forma
Condensed Statements of Financial Position shall be
computed assuming the transaction was consummated at
the end of the most recent period for which a Statement of
Financial Position is required by Section 5 of Part II of this
Rule and shall include adjustments which give effect to
events that are directly attributable to the transaction and
factually supportable regardless of whether they have a
continuing impact or are nonrecurring. All adjustments shall
be referenced to notes which clearly explain the
assumptions involved.
(g) Historical primary and fully diluted per share data based
on continuing operations (or net income if the registrant
does not report either discontinued operations, or the
cumulative effect of accounting changes) for the registrant,
and primary and fully diluted pro forma per share data
based on continuing operations before nonrecurring
charges or credits directly attributable to the transaction
shall be presented on the face of the pro forma condensed
Statements of Comprehensive Income together with the
number of shares used to compute the per share data. For
transactions involving the issuance of securities, the
number of shares used in the calculation of the pro forma
per share data shall be based on the weighted average
number of shares outstanding during the period adjusted to
give effect to shares subsequently issued or assumed to be
issued had the particular transaction or event taken place at
the beginning of the period presented. If a convertible
security is being issued in the transaction, consideration
shall be given to the possible dilution of the pro forma per
share data.
(h) If the transaction is structured in such a manner that
significantly different results may occur, additional pro
forma presentations shall be made that show range of
possible results.
*Instructions*
(1) The historical Statements of Income used in the pro
forma financial information shall not report
operations of a segment that has been discontinued,
or the cumulative effects of accounting changes. If
the historical Statements of Income include such
items, only the portion of the Statements of
Comprehensive Income through "Income from
Continuing Operations" (or the appropriate
modification thereof) shall be used in preparing pro
forma results.

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 (2) For a purchase transaction, pro forma adjustments
for the Statements of Comprehensive Income shall
include depreciation and other adjustments based on
the allocated purchase price of net assets acquired.
In some transactions, such as in financial institution
acquisitions, the purchase adjustments may include
significant discounts of the historical cost of the
acquired assets to their fair value at the acquisition
date. When such adjustments will result in a
significant effect on earnings (losses) in periods
immediately subsequent to the acquisition which will
be progressively eliminated over a relatively short
period, the effect of the purchase adjustments on the
reported results of operations for each of the next
five (5) years shall be disclosed in a note.
(3) For a disposition transaction, the pro forma financial
information shall begin with the historical financial
statements of the existing entity and show the
deletion of the business to be divested along with the
pro forma adjustments necessary to arrive at the
remainder of the existing entity. For example, pro
forma adjustments would include adjustments of
interest expense arising from revised debt structures
and expenses which will be or have been incurred on
behalf of the business to be divested such as
advertising costs, executive salaries and other costs.
(4) For entities which were previously a component of
another entity, pro forma adjustments shall include
adjustments similar in nature to those referred to in
Instruction 3 in the previous page. Adjustments may
also be necessary when charges for corporate
overhead, interest, or income taxes have been
allocated to the entity on a basis other than one
deemed reasonable by management.
(5) Adjustments to reflect the acquisition of real estate
operations or properties for the pro forma
Statements of Comprehensive Income shall include a
depreciation charge based on the new accounting
basis for the assets, interest financing on any
additional or refinanced debt, and other appropriate
adjustments that can be factually supported. See
also Instruction 4 above.
(6) When consummation of more than one (1)
transaction has occurred or is probable during a
fiscal year, the pro forma financial information may
be presented on a combined basis; however, in some
circumstances (e.g., depending upon the
combination of probable and consummated
transactions, and the nature of the filing) it may be
more useful to present the pro forma financial
information on a disaggregated basis even though
some or all of the transactions would not meet the
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 tests of significance individually. For combination
presentations, a note shall explain the various
transactions and disclose the maximum variances in
the pro forma financial information which would
occur for any of the possible combinations. If the pro
forma financial information is presented in a proxy or
information statement for purposes of obtaining
shareholder approval of one of the transactions, the
effects of that transaction shall be clearly set forth.
(7) The tax effect, if any, of pro forma adjustments
normally shall be calculated at the statutory rate in
effect during the periods for which pro forma
condensed Statements of Comprehensive Income is
presented and shall be reflected as a separate pro
forma adjustment.
xxx xxx xxx
(iii) Periods to be Presented
(a) A pro forma Condensed Statement of Financial Position as
of the end of the most recent period for which a
Consolidated Statements of Financial Position of the
registrant is required shall be filed unless the transaction is
already reflected in such Statements of Financial Position.
(b) Pro forma Condensed Statements of Income shall be filed
for only the most recent fiscal year and for the period from
the most recent fiscal year end to the most recent interim
date for which a Statements of Financial Position is
required. A pro forma condensed Statements of
Comprehensive Income may be filed for the corresponding
interim period of the preceding fiscal year. A pro forma
condensed Statements of Comprehensive Income shall not
be filed when the historical Statement of Comprehensive
Income reflects the transaction for the entire period.
(c) For a business combination accounted for as a pooling of
interests, the pro forma Statements of Comprehensive
Income (which is in effect a restatement of the historical
Statement of Comprehensive Income as if the combination
had been consummated) shall be filed for all periods for
which a historical Statement of Comprehensive Income of
the registrant is required.
(d) Pro forma Condensed Statements of Income shall be
presented using the registrant's fiscal year end. If the most
recent fiscal year end of any other entity involved in the
transaction differs from the registrant's most recent fiscal
year end by more than ninety-three (93) days, the other
entity's Statements of Comprehensive Income shall be
brought up to within ninety-three (93) days of the
registrant's most recent fiscal year end, if practicable. This
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 updating shall be accomplished by adding subsequent
interim period results to the most recent fiscal year-end
information and deducting the comparable preceding year
interim period results. Disclosure shall be made of the
periods combined and of the sales and revenues and
income for any periods that were excluded from or included
more than once in the condensed pro forma Statements of
Comprehensive Income.
(e) Whenever unusual events enter into the determination of
the results shown for the most recently completed fiscal
year, the effect of such unusual events shall be disclosed
and consideration shall be given to presenting a pro forma
condensed Statements of Comprehensive Income for the
most recent twelve (12)-month period in addition to those
required in sub-paragraph (d) above if the most recent
twelve (12)-month period is more representative of normal
operations.
(f) Pro forma information shall be prepared primarily by
applying pro forma adjustments to historical financial
information. Pro forma adjustments shall be based on
management's assumptions and shall recognize all
significant effects directly attributable to the transaction (or
event).
(g) Pro forma financial information shall be labeled as such to
distinguish it from historical financial information. This
presentation shall describe the transaction (or event) that is
reflected in the pro forma financial information, the source
of the historical financial information on which it is based,
the significant assumptions used in developing the pro
forma adjustments, and any significant uncertainties about
those assumptions. The presentation also shall indicate that
t h e pro forma financial information shall be read in
conjunction with related historical financial information and
that the pro forma financial information is not necessarily
indicative of the results (such as financial position and
results of operations, as applicable) that would have been
attained had the transaction (or event) actually taken place
earlier.
(iv) Report of Independent Auditor
The pro forma financial information that shall be submitted with
the registration statement shall be accompanied by a report of
an independent auditor accredited by the Commission under
Group A category. The said auditor shall comply with the
requirements under Philippine Standard on Assurance
Engagements No. 3420 (Assurance Engagements to Report on
the Compilation of Pro Forma Financial Information Included in
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 the Prospectus).
10. CONSOLIDATED FINANCIAL STATEMENTS
In addition to those required under the applicable financial reporting
framework, the following requirements shall be complied with by companies
covered by Part II of this Rule:
A. A company covered by Part II of this Rule that has a significant
foreign subsidiary or subsidiaries shall submit to the Commission
copies of the financial statements of said subsidiaries.
B. A parent company covered by Part II of this Rule shall submit
consolidated AFS accompanied by its separate AFS that is duly
received by the BIR or its authorized banks, unless the BIR allows
an alternative proof of submission for its authorized banks (e.g.,
bank slips) or prohibits acceptance of the financial statements in
certain cases (e.g., on-going examination).
PART III
Penalties and Other General Implementing Provisions
1. PENALTIES
A. All financial statements submitted to the Commission by entities
covered by this Rule shall adhere strictly to the provisions hereof.
B. Penalties, as may be prescribed by the Commission, shall be
imposed on the erring company due to any of the following violations:
(i) Material misrepresentation in the financial statements;
(ii) Any material misstatement in the financial statements for failure
to comply with the applicable financial reporting framework, such
as:
(a) Failure to adopt the prescribed financial reporting
framework or any accounting standard resulting in a
material misstatement; and
(b) Failure to disclose required information and other relevant
or material information.
(iii) Failure to submit any basic component of the financial
statements;
(iv) Failure to submit financial statements audited by a qualified
independent certified public accountant;
(v) Failure to submit a complete SMR; and
(vi) Failure to comply with any other requirements under Part I or II
of this Rule.
B. n The penalties imposable on an erring company for the violation of
this Rule shall be in addition to the fine imposable due to late or incomplete
filing of other parts of any report to which the financial statements are
required to be attached.
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 C. In addition to those provided in Part I and Annex 68-A of this
Rule, penalties, as may be prescribed by the Commission, shall be imposed
on the independent auditor or auditing firm, as the case may be, due to any
of the following violations:
(i) Failure to submit any of the reports required under this Rule;
(ii) Any material misrepresentation in the following information or
documents:
(a) Application for accreditation;
(b) Certifications submitted with the application; or
(c) Any of the reports required under Part I of this Rule.
(iii) Refusal for no valid reason, upon lawful order of the
Commission to submit requested documents (e.g., audit work
papers) in connection with an ongoing investigation. The
independent auditor shall, however, be made aware of such
investigation;
(iv) Gross negligence in the conduct of the audit or failure to comply
with any of the PSA and such other issuances of the AASC and/or
the Commission;
(v) Issuance of an unqualified opinion which is not supported by full
compliance by the auditee with the applicable financial reporting
framework due to a material deficiency or misstatement in the
financial statements;
(vi) Conduct of an audit despite the lack or eventual loss of
independence as provided for under the Code of Ethics for
Professional Accountants in the Philippines;
(vii) Conduct of any non-audit services for his statutory audit
clients, if he has not undertaken the safeguards to reduce the
threat to his independence;
(viii) Failure to comply with any of the operational requirements for
accredited auditing firms or sole practitioners under Part I of this
Rule; or
(ix) Failure to obtain from the Commission an accreditation
appropriate to the company-client's category under this Rule prior
to engagement or during the period of audit and signing of the
Auditor's Report.
2. TEST OF MATERIALITY
A. General Guidelines
Omissions or misstatements of items shall be material if they could
individually or collectively, influence the economic decisions that users make
on the basis of the financial statements. Materiality depends on the size and
nature of the omission or misstatement judged in the surrounding
circumstances. The size or nature of the item, or a combination of both,
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 could be the determining factor.
Materiality is determined for the financial statements as a whole.
Therefore, where there is an identified misstatement or error, the
determination as to whether the financial statements are materially
misstated is based on an evaluation of such findings taking the financial
statements as a whole. Such evaluation shall not be driven by the number or
by the size of misstatements or errors alone, but by the overall impact on
the financial statements, taking into account both the quantitative and
qualitative factors.
B. For this purpose, the following quantitative test shall be
applied by the Commission:
(1) Deficiency or Inconsistency
(i) Failure to submit any component of the financial
statements prescribed under this Rule shall be considered a
material deficiency.
(ii) A disclosure deficiency or inconsistency in the disclosures
within the financial statements shall be material if the
information involves a transaction, amount or account that
represents ten per cent (10%) or more of the total of
related accounts or transactions. For issuers of securities to
the public and public companies as identified under Section
3 (B) (i) (a) (1), (2) and (3) of Part I of this Rule, the test to
be used shall be five percent (5%). Based on the
circumstances identified by the Commission, materiality of
the deficiency or inconsistency in relation to the total assets
or total liabilities may be considered.
In resolving the issue of violation, due regard shall be given
to the written explanation of the external auditor as to his
basis in determining materiality and the exercise of
professional judgment in issuing his audit opinion on the
questioned financial statements.
(2) Misstatement
(i) A misstatement of the financial statements may result from
a deviation from prescribed policy, misrepresentation, fraud
or error.
(ii) A misstatement shall be material if it represents ten per
cent (10%) or more of the total of related accounts or
transactions.
For issuers of securities to the public and public companies
as identified under Section 3 (B) (i) (a) (1), (2) and (3) of
Part I of this Rule, a misstatement shall be material if it
represents five per cent (5%) or more of the total of the
related accounts or transactions. Based on the
circumstances identified by the Commission, materiality of
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 the misstatement in relation to the total assets or total
liabilities may be considered.
(iii) In resolving the issue of violation, due regard shall be
given to the written explanation of the external auditor as
to his basis in determining materiality and the exercise of
professional judgment in issuing his audit opinion on the
questioned financial statements.
C. Qualitative Considerations
In addition to the quantitative considerations identifying material
misstatement or error, qualitative factors shall be considered. These include
whether the misstatement or error:
(i) Affects compliance with debt covenants or other contractual
requirements;
(ii) Relates to the incorrect selection or application of an accounting
policy that has an immaterial effect on the current period's
financial statements but is likely to have a material effect on
future periods' financial statements;
(iii) Masks a change in earnings or other trends, especially in the
context of general economic and industry conditions;
(iv) Affects ratios used to evaluate the entity's financial position,
results of operations or cash flows;
(v) Affects segment information presented in the financial
statements (for example, the significance of the matter to a
segment or other portion of the entity's business that has been
identified as playing a significant role in the entity's operations or
profitability);
(vi) Has the effect of increasing management compensation, for
example, by ensuring that the requirements for the award of
bonuses or other incentives are satisfied;
(vii) Is significant having regard to the auditor's understanding of
known previous communications to users, for example, in relation
to forecast earnings;
(viii) Affects compliance with regulatory requirements (including
BIR, BSP and other government agencies);
(ix) Relates to items involving particular parties (for example,
whether external parties to the transaction are related to
members of the entity's management);
(x) Is an omission of information not specifically required by the
applicable financial reporting framework but which, in the
judgment of the auditor, is important to the users' understanding
of the financial position, financial performance or cash flows of
the entity; or
(xi) Affects other information that will be communicated in
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 documents containing the AFS (for example, information to be
included in a "Management Discussion and Analysis" or an
"Operating and Financial Review" ) that may reasonably be
expected to influence the economic decisions of the users of the
financial statements.
3. RE-ISSUANCE OF FINANCIAL STATEMENTS
A. Corporations whose financial statements will be found by the
Commission to be materially deficient, erroneous and/or misstated shall be
imposed with appropriate penalties. Except for banks, the Commission shall
make a determination whether such misstatement or incompleteness is
significantly material that it would necessitate the re-issuance of such
financial statements. Any re-issuance shall be required within forty-five (45)
calendar days from receipt of the order of the Commission. Such amendment
shall comply with the re-issuance requirements under applicable auditing
standards. The issue on whether or not the financial statements of a bank
and an insurance company should be re-issued shall be endorsed by the
Commission to the BSP and the IC, respectively, for appropriate action.
B. For corporations not covered by the above provisions, they may
re-issue their financial statements subject to compliance with the
requirements under existing standards. However, issuers of securities to the
public shall not re-issue their AFS without prior request from and approval by
the Commission, BSP and IC, as applicable.
C. A corporation covered by SRC Rule 68 Part II and re-issuing its
AFS shall notify all concerned parties, such as its stockholders, creditors and
investors of such amendment through publication of a notice in a newspaper
of general circulation indicating the reason for the amendment and the fact
that the financial statements have been submitted to the Commission.
D. An amendment or re-issuance of the financial statements shall
not exonerate the company and the auditors from the penalty that may be
assessed by the Commission against a corporation due to the material
deficiency or misstatement of the original financial statements.
4. REPEALING CLAUSE
All other rules and regulations, circulars, or memoranda or any part
thereof, in conflict with or contrary to this Rule or any portion hereof, are
hereby repealed or modified accordingly.
5. EFFECTIVITY AND TRANSITION
A. Unless otherwise specified, the Revised SRC Rule 68, shall
become effective for AFS covering periods ending 31 December 2019 and
onwards, and for interim financial statements starting the first quarter of
2020, and thereafter.
B. The financial statement requirements for registration of
securities under Part II of this Rule shall be effective starting 1 January 2020
unless an earlier application for pending registration statements is requested
and approved by the Commission.
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 C. Compliance with the Two (2)-Partner Requirement
Auditing firms which have less than two (2) partners as of the date of
the effectivity of this Rule shall be given until 30 June 2022 within which to
comply with the new two (2)-partner requirement.
D. Compliance with the Transition from Sole Proprietorship to
Partnership
Sole practitioners as of the date of the effectivity of this Rule shall be
given until 30 June 2022 within which to comply with the requirements to
convert to a Partnership structure from Sole Proprietorship in order to
continue being accredited by the Commission.
E. All other requirements shall be effective for all applicable reports
or activities after fifteen (15) days from the date of publication of this Rule.
F. Subsequent Amendments
1. Any proposed amendment of any part of this Rule shall be
exposed for comments for a period of sixty (60) days reckoned
from the date of notice of the Commission, unless the immediate
issuance of the guidelines or circular amending a portion of the
Rule is necessary in order to prevent a material
misrepresentation, disclosure deficiency or misstatement in the
financial reports of corporations.
2. Within thirty (30) days from the last day of submission of
comments, a public consultation shall be conducted. The revised
draft guideline or Rule shall be posted in the SEC website after
thirty (30) days from the date of public consultation.
3. After thirty (30) days from posting of the revised draft, the
matter shall be submitted for decision of the Commission en
banc.
4. A transition clause that shall allow sufficient period of intervals
for applicability to financial reports of the new requirements shall
be provided in the revised guidelines or Rule.
August 19, 2019, Pasay City, Philippines.

(SGD.) EMILIO B. AQUINO

Chairperson

(SGD.) ANTONIETA F. IBE

Commissioner

(SGD.) EPHYRO LUIS B. AMATONG

Commissioner

(SGD.) JAVEY PAUL D. FRANCISCO

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 Commissioner

(SGD.) KELVIN LESTER K. LEE

Commissioner

ANNEX 68-A
Quality of Audit Work of Applicants for Accreditation and Accredited Independent
Auditors
1. The latest Audited Financial Statements (AFS) of at least two (2)
clients of the applicant to be selected randomly, using a risk-based approach, by
the Commission from the certified list of clients provided by the applicant, shall
be submitted for review.
In case the applicant is an Engagement Qualify Control Reviewer (EQCR), 1
the Commission shall review the latest AFS of at least two (2) clients, where he is
the EQCR to be selected randomly from the certified list of clients submitted by
the applicant. If there are noted deficiencies in the AFS subjected for evaluation,
in relation to an EQCR's application, the Commission is not precluded from re-
evaluating the existing accreditation of the related signing partner of the
evaluated AFS since he is primarily responsible for the audit of the financial
statements on which he expressed an opinion.
The Commission shall likewise consider in the evaluation the findings on
the financial statements of the applicant's clients or the accredited auditors'
clients that were reviewed in relation to regulatory monitoring or processing of an
application of the company-client. Results of the engagement level review under
the SOAR Inspection Program shall likewise be considered.
2. The following instances are considerations for denial of the
application for accreditation:
(i) Gross negligence in the conduct of the audit or failure to comply with
any of the PSA and such other issuances of the AASC and/or the
Commission;
(ii) Issuance of an unqualified opinion which is not supported by full
compliance by the auditee with the applicable financial reporting
framework due to a material deficiency or misstatement in the
financial statements;
(iii) Auditor's report substantially not in accordance with the prescribed
wordings under PSA and any related subsequent issuances;
(iv) Conduct of an audit despite the lack or eventual loss of
independence as provided for under the Code of Ethics for
Professional Accountants in the Philippines;
(v) Conduct of any non-audit services for his statutory audit clients, if he
has not undertaken the safeguards to reduce the threat to his
independence.
3. Groups A and B Applications
A. For Group A or B applications, the audit work of an applicant shall be
acceptable only if there is no material disclosure deficiency or
material misstatement in the AFS of each of the applicant's clients.
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 B. In case there is a material deficiency or misstatement in the financial
statements of the company-clients or regulated entities, the applicant
shall be recommended only for conditional Group A or B or C
accreditation, depending on the level of deficiency or misstatement.
The conditional accreditation shall be subject to the following
conditions:
(i) In case of renewal applications and the findings on the clients'
AFS include material deficiency or misstatement, the applicant-
independent auditor shall be assessed a penalty;
(ii) The conditional accreditation shall be effective for a period of
four (4) months only from the date of grant;
(iii) A copy of the two (2) clients' AFS, to be selected randomly
using a risk-based approach, signed by the independent auditor
during the said period shall be submitted to the Commission at
least 15 business days before the lapse of the four (4)-month
period. The Commission will still review the AFS as of the next
reporting period of the same client that was originally
inspected. This is to check whether the findings that were
originally noted have been addressed or remediated
accordingly;
(iv) In cases where there are still material findings noted in the
submitted AFS of the auditor with conditional accreditation or
where the findings that were originally noted have not been
addressed or remediated, this shall be a sufficient ground for
the downgrading of the applicant's accreditation, denial of the
application or disqualification from future accreditation,
depending on the magnitude of the findings.
(v) In cases where there are no material findings noted in the
submitted AFS of the auditor with conditional accreditation, the
final approval of the accreditation, which shall be effective for
three (3) years, shall be granted.
Provided, however, that an applicant can avail or be granted
conditional accreditation on the same level up to three (3)
times only. Compliance with Condition (iii) shall be strictly
followed.
C. The list of findings on the clients' AFS resulting from the foregoing
procedures shall be referred to the operating department of the
Commission which monitors the compliance by the said company-
clients for imposition of appropriate penalties under existing rules.
4. Group C Applications
An application for accreditation under Group C shall be denied if upon
evaluation, the AFS of company-clients show that there are material deficiencies
or misstatements therein as follows:
(i) Any of the basic components of the financial statements as
prescribed by the applicable financial reporting framework, or any of
the following required documents is not presented:
(a) Supplemental Written Statement of Auditor (for stock
corporations not covered by Part II of this Rule);

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 (b) Any of SEC supplementary schedules covered by the Auditor's
Report.
(ii) The Auditor's Report does not substantially comply with the PSA,
SRC Rule 68 and other relevant regulations;
(iii) The Notes to Financial Statements are substantially incomplete due
to the absence of more than five (5) disclosure items on significant
accounts;
(iv) More than three (3) accounting policies on significant accounts, as
defined under paragraph III of SEC MC No. 8, Series of 2009, or any of
its amendments, are not in accordance with the applicable financial
reporting framework, or there are material misstatements involving
the said accounts.
A combination of more than one (1) material finding under items (iii) and
(iv) even if below the limit per each category, would constitute a ground for
denial of the application.
5. The foregoing requirements for the level of quality of audit work may
be changed by the Commission as circumstances may warrant through
appropriate issuances.
A. The materiality of a deficiency, misrepresentation or misstatement
shall be determined based on the tests set by the Commission in Part
III of this Rule or any amendments thereto.
B. As a remedy on the denial of application due to any of the foregoing
deficiencies, the applicant may be granted, upon request, a
conditional accreditation subject to the following conditions:
(i) In case of renewal application for Group C category and the
findings on the clients' AFS include material deficiency or
misstatement, the applicant-independent auditor shall be
assessed a penalty based on Section 12 of MC No. 13, Series of
2009 or subsequent circulars issued by the Commission;
(ii) The conditional accreditation shall be effective for a period of
four (4) months only from the date of grant;
(iii) A copy of the clients' AFS, to be selected randomly using a
risk-based approach, signed during the said period shall be
submitted to the Commission at least 15 business days before
the lapse of the four (4)-month period;
(iv) The final approval of the accreditation, which shall be
effective for three (3) years, shall not be granted unless the
said AFS are compliant with the effective accounting standards
and SRC Rule 68;
(v) In cases where there are still material findings noted in the
submitted AFS of the auditor with conditional accreditation or
where the findings that were originally noted have not been
addressed or remediated, this shall be a sufficient ground for
the downgrading of the applicant's accreditation, denial of the
application or disqualification from future accreditation,
depending on the magnitude of the findings;
(vi) In cases where there are no material findings noted in the
submitted AFS of the auditor with conditional accreditation, the
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 final approval of the accreditation, which shall be effective for
three (3) years, shall be granted.
Provided, however, that applicant can only avail or be granted
conditional accreditation on the same level up to three (3)
times only. Compliance with Condition (iii) shall be strictly
followed.
C. The list of findings on the clients' AFS resulting from the foregoing
procedures shall be referred to the operating department of the
Commission which monitors the compliance by the said company-
clients for imposition of appropriate penalties under existing rules.
6. In the event that the application for accreditation is denied due to
applicant's failure to meet the required audit quality, such applicant can only
reapply for accreditation after six (6) months from said denial for the same
category.
7. Existing accredited external auditors under Group B or C can only
apply for upgrading of accreditation after one (1) year from the grant of their
accreditation.
8. The Commission is not precluded from re-evaluating an existing
accreditation of an external auditor, regardless of the validity of its accreditation
period, if the circumstances would warrant further re-evaluation.

ANNEX 68-B
Supplemental Written Statement of Auditor
To the Stockholders and the Board of Directors

Name of Company
Address
I/We have audited the financial statements of ______________________ Name
of Company for the year ended _______________, on which I/we have rendered the
attached report dated ______________.
In compliance with the Revised Securities Regulation Code Rule 68, I/we are
stating that the said company has a total number of _____________ stockholders
owning one hundred (100) or more shares each.
(Name of the Firm, as applicable)
Name and Signature of the Independent Auditor
BOA Accreditation No. ___________________
PRC License No. ________________________
SEC Accreditation (if any) ________________
PTR No., issue date and place ______________
Date __________________________________

ANNEX 68-C
Schedules for Non-Stock, Non-Profit Organizations

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 ANNEX 68-D
Reconciliation of Retained Earnings Available for Dividend Declaration

ANNEX 68-E
Schedule of Financial Soundness Indicators

ANNEX 68-F
Schedule for Financing Companies

ANNEX 68-G
Schedule for Mutual Funds

ANNEX 68-H
Schedule for Investment Houses

ANNEX 68-I
Schedule for Listed Companies with a Recent Offering of Securities to
the Public

ANNEX 68-J
Schedules
This Annex prescribes the disclosure requirements including the form and
content of the schedules required by Section 6 of Part II of this Rule.
1. Except as expressly provided otherwise, the schedules specified
below shall be filed as of the latest Statement of Financial Position date.
2. The independent auditor's report shall cover the schedules
accompanying the financial statements filed.
3. In a registration statement filed on SEC Form 12-1, the Schedules
need not be included in Part I — Information Required in Prospectus but may be
included in Part II — Information Not Required in Prospectus.
4. INSTRUCTIONS
Schedule A. Financial Assets [e.g., Loans and Receivables, Fair Value
through Profit or Loss (FVPL), Held to Maturity Investments, Available for Sale
Securities]
This schedule shall be filed in support of the caption of each class of
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 "Financial Assets" if the greater of the aggregate cost or the aggregate market
value of FVPL as of the end of reporting period constitutes five per cent (5%) or
more of total current assets.
Schedule B. Amounts Receivable from Directors, Officers,
Employees, Related Parties, and Principal Stockholders (Other than
Related Parties)
This schedule shall be filed with respect to each person among the
directors, officers, employees, and principal stockholders (other than related
parties) from whom an aggregate indebtedness of more than One Million Pesos
(P1 Million) or one percent (1%) of total assets, whichever is less, is owed. For the
purposes of this schedule, exclude in the determination of the amount of
indebtedness all amounts receivable from such persons for purchases subject to
usual terms, for ordinary travel and expense advances and for other such items
arising in the ordinary course of business.
Schedule C. Amounts Receivable from Related Parties which are
Eliminated during the Consolidation of Financial Statements
This schedule shall be filed with respect to each Related Party ( e.g.,
subsidiary) the balances of receivable from which are eliminated during the
consolidation of the financial statements.
Schedule D. Long-Term Debt — This schedule shall be filed in support of
the caption Long-Term Debt in the Statements of Financial Position.
Schedule E. Indebtedness to Related Parties — This schedule shall be
filed to list the total of all noncurrent Indebtedness to Related Parties included in
the Statements of Financial Position. This schedule may be omitted if:
(i) The total Indebtedness to Related Parties included in such
Statements of Financial Position does not exceed five per cent (5%) of
total assets as shown in the related Statements of Financial Position
at either the beginning or end of the period; or
(ii) There have been no changes in the information required to be filed
from that last previously reported.
Schedule F. Guarantees of Securities of Other Issuers. — This
schedule shall be filed with respect to any guarantees of securities of other
issuing entities by the issuer for which the statement is filed.
Schedule G. Capital Stock — This schedule shall be filed in support of
caption Capital Stock in the Statements of Financial Position.
5. FORM AND CONTENTS
Schedule A. Financial Assets

Name of Number of Amount Value based Income

Issuing Shares or shown in the on Market Received and
Entity and Principal Statement of Quotation at Accrued
Association Amount of Financial End of
of Each Bonds and Position (ii) Reporting
Issue (i) Notes Period (iii)

(i) Each issue shall be stated separately, except that reasonable

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 grouping, without enumeration may be made of (a) securities issued
or guaranteed by the Philippine Government or its agencies and (b)
securities issued by others for which the amounts in the aggregate
are not more than two per cent of total assets.
(ii) State the basis of determining the amounts shown in the column.
This column shall be totaled to correspond to the respective
Statements of Financial Position caption or captions.
(iii) This column may be omitted if all amounts that would be shown are
the same as those in the immediately preceding column.
Schedule B. Amounts Receivable from Directors, Officers,
Employees, Related Parties and Principal Stockholders (Other than
Related Parties)

Deductions

Name and Balance Additions Amounts Amounts Current Not Balance

Designation at Collected Written Current at End
of Debtor Beginning (ii) Off (iii) of
(i) of Period Period

(i) Show separately accounts receivables and notes receivable. In case

of notes receivable, indicate pertinent information such as the due
date, interest rate, terms of repayment and collateral, if any.
(ii) If collection was other than in cash, explain.
(iii) Give reasons for write off.
Schedule C. Amounts Receivable from Related Parties which are
eliminated during the consolidation of financial statements

Deductions

Name and Balance Additions Amounts Amounts Current Not Balance

Designation at Collected Written Current at End
of Debtor Beginning (i) Off (ii) of
of Period Period

(i) If collection was other than in cash, explain.

(ii) Give reasons for write off.
Schedule D. Long Term Debt

Title of Issue and Amount Amount shown Amount shown

Type of Obligation Authorized by under Caption under Caption
(i) Indenture "Current Portion of "Long-Term Debt"
Long-term Debt" in in related
related Statement Statement of
of Financial Position Financial Position
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 (ii) (iii)

(i) Include in this column each type of obligation authorized.

(ii) This column is to be totaled to correspond to the related Statements
of Financial Position caption.
(iii) Include in this column details as to interest rates, amounts or
number of periodic installments, and maturity dates.
Schedule E. Indebtedness to Related Parties (Long-Term Loans
from Related Companies)

Name of related Balance at Beginning of Balance at End of Period

party (i) Period (ii)

(i) The related parties named shall be grouped as in Schedule C. The

information called for shall be stated separately for any persons
whose investments were shown separately in such related schedule.
(ii) For each affiliate named in the first column, explain in a note hereto
the nature and purpose of any material increase during the period
that is in excess of ten per cent (10%) of the related balance at either
the beginning or end of the period.
Schedule F. Guarantees of Securities of Other Issuers

Name of Title of Issue Total Amount Amount Nature of

Issuing Entity of each Class Guaranteed Owned by Guarantee
of Securities of Securities and Person for (ii)
Guaranteed Guaranteed Outstanding which
by the (i) Statement is
Company for Filed
which this
Statement is
Filed

(i) Indicate in a note any significant changes since the date of the last
Statements of Financial Position filed. If this schedule is filed in
support of Consolidated Financial Statements, there shall be set forth
guarantees by any person included in the consolidation except such
guarantees of securities which are included in the Consolidated
Statements of Financial Position.
(ii) There must be a brief statement of the nature of the guarantee, such
as "Guarantee of principal and interest," "Guarantee of Interest," or
"Guarantee of dividends." If the guarantee is of interest, dividends, or
both, state the annual aggregate amount of interest or dividends so
guaranteed.
Schedule G. Capital Stock

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 Title of Number of Number of Number of Number Directors, Others
Issue Shares Shares Issued Shares of Shares Officers (iii)
(i) Authorized and Reserved for Held by and
Outstanding at Options, Related Employees
shown under Warrants, Parties
related Conversion (ii)
Statement of and other
Financial Rights
Position
Caption

(i) Include in this column each type of issue authorized.

(ii) Related Parties referred to include persons for which separate
financial statements are filed and those included in consolidated
financial statements, other than the issuer of the particular security.
(iii) Indicate in a note any significant changes since the date of the last
Statements of Financial Position filed.

ANNEX 68-K
Additional Disclosures in the Notes to Financial Statements
In addition to the requirements under the applicable PFRS, corporations
covered by Part II of this Rule shall comply with the disclosure requirements of
this Annex.
1. STATEMENTS OF FINANCIAL POSITION
A registrant shall disclose, either on the face of the Statements of Financial
Position or in the Notes to the Financial Statements, further sub-classifications of
the line items presented in accordance with this Annex and in a manner
appropriate to the registrant's operations and the nature and function of amount
involved.
A. Trade and Other Receivables
(i) State separately receivable from:
(a) customers (trade);
(b) related parties;
(c) other than trade debtors such as loans or advances
to officers and employees.
(ii) Disclose the amount of balances, volume during the period and
specific terms of the receivables from each related party which
are eliminated during consolidation.
(ii) If significant in amount, other receivables shall be segregated
by type, otherwise, they may be grouped in one figure
captioned as Accounts Receivables-Others, or other equivalent
title.
B. Inventories. Disclose any unusual purchase commitments and
accrued net losses, if any, on such commitments. Losses which are
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 expected to arise from firm and uncancellable commitments for the
future purchase of inventory items shall, if material, be recognized in
the accounts and separately disclosed in the Statement of
Comprehensive Income.
C. Other Current Assets. State separately any amounts in excess of
five per cent (5%) of total current assets. The remaining items may
be shown in one amount.
D. Indebtedness of or Advances to Related parties. Show
separately under this caption non-current advances to related parties.
Include also the disclosure on whether or not the corporation has an
approval requirement and limits on the amount and extent of related
party transactions.
E. Other Assets. State separately any item which is in excess of five
per cent (5%) of total non-current assets.
F. Trade and Other Payables
(i) The following payables shall be stated separately in the Notes
to Financial Statements:
(a) Trade Payables;
(b) Payables to related parties;
(c) Advances from Directors, officers, employees and
principal stockholders and related parties of the
company or its related parties (exclude from this
item amounts for purchases subject to usual trade
terms, for ordinary travel expenses, and for other
items arising in the ordinary course of business).
(ii) Disclose the amount of balances, volume during the period and
specific terms of the payables to each related party which are
eliminated during consolidation.
(iii) Accruals (Show separately significant accruals for payrolls,
taxes other than income taxes, interest, and any other material
items).
(iv) The following information shall also be disclosed:
(a) Any current liability guaranteed by others;
(b) Assets pledged against secured liabilities.
G. Other Current Liabilities. If material, state separately in amount
the following in the Notes to Financial Statements:
(i) Dividends declared and not paid at end of the reporting period
(ii) Acceptances payable
(iii) Liabilities under trust receipts
(iv) Portion of long-term debt due within one year
(v) Deferred Income
(vi) Any other current liability in excess of 5% of total current
liabilities
H. Other Long-Term Liabilities. State separately, in the Statements
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 of Financial Position or in a note thereto, any item not properly
classified in one of the preceding liability captions (such as deferred
income taxes and other long-term deferred credits) which is in excess
of five per cent (5%) of total long-term liabilities.
I. Capital Stock. Provide a summarized discussion of the company's
track record of registration of securities under the Securities
Regulation Code (formerly Revises Securities Act) by indicating the
number of shares registered, issue/offer price, date of approval or
date when the registration statement covering such securities was
rendered effective by the Commission, and the number of holders of
such securities as of year-end.
2. STATEMENT OF COMPREHENSIVE INCOME
A. Revenues
State separately on the face of the Statement of Comprehensive Income
revenues from each of the following:
(i) Revenue from sale of goods;
(ii) Revenue from rendering of services;
(iii) Share of the profit or loss of associates and joint ventures
accounted for using the equity method;
(iv) Other income.
B. Costs
State separately on the face of the Statement of Comprehensive Income
costs as follows:
(i) Cost of sales;
(ii) Cost of rendering services;
(iii) Operating expenses;
(iv) Other expenses.
C. Finance Costs
State separately in the Notes to Financial Statements the amount of
interest expense and amortization of debt discount and expenses for each of the
following:
(i) Short-term promissory notes;
(ii) Long-term promissory notes;
(iii) Bonds, mortgages and other similar long-term debt;
(iv) Amortization of debt discount, expense or premium;
(v) Other interest.
D. Other Income
(i) State separately in a note to financial statements, the items and
nature of each material other income including a disclosure on
whether or not it is a result of a related party transaction;
(ii) Gain (loss) on Sale of Asset — State separately gain or loss from sale
of each class of asset;
(iii) Miscellaneous Income — State separately any material amounts of
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 miscellaneous income indicating clearly the nature of the transactions
out of which the items arose.
E. Other Expenses. State separately expenditures with material
amount or that which constitutes five per cent (5%) or more of the total revenue
of the registrant.
F. Specific Disclosures on the Face of the Statement or in the
Notes
Net Asset Value Per Share, in case of mutual funds or investment
companies n

Footnotes
1. Engagement Quality Control Reviewer is a partner, other person in the firm,
suitably qualified external person, or a team made up of such individuals,
with sufficient and appropriate experience and authority to objectively
evaluate, before the report is issued, the significant judgments the
engagement team made and the conclusions they reached in formulating the
report.
n Note from the Publisher. Copied verbatim from the official document. Irregular
alphabetical sequence.
n Note from the Publisher: Copied verbatim from the official document.
Published in the Manila Bulletin and Manila Standard on October 3,
2019.

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