SEC requires auditor fees disclosure for listed firms

- Advertisement -

Publicly listed companies and other corporations are now required to disclose how much they are paying external auditors as part of new transparency rules, the Securities and Exchange Commission (SEC) said.

The new rule is part of SEC Memorandum Circular No. 18, Series of 2024, providing the guidelines on disclosure of fee-related information on external auditors by the listed firms when they report their financial and operational results, the SEC said in a statement yesterday. The corporate watchdog said it is also in line with requirements under the Code of Ethics for Professional Accountants. 

Companies that fail to comply with the guidelines will be penalized, the commission said.

- Advertisement -

“The guidelines shall apply to the annual financial statements of covered companies for the period ending December 31, 2024, and thereafter,” the SEC said in the statement.

Companies covered by the guidelines include public interest firms such as listed companies, as well as issuers that have sold a class of its securities under Section 12 of Republic Act No. 8799, or the Securities Regulation Code (SRC).

Also covered by the latest disclosure guidelines are:

• public companies or firms with assets of at least P50 million and have 200 or more holders of at least 100 shares of a class of equity securities each.

• companies in the process of filing their financial statements for the issuance of any class of instruments in a public market 

• holders of secondary licenses issued by the SEC, Bangko Sentral ng Pilipinas, and Insurance Commission

• other corporations that the SEC may consider in the future as public interest entities

All covered companies are required to present in two-year comparative format specific fee-related information as a supplement to their annual financial statement.

The disclosure must cover fees paid or payable to the external auditor or audit firms, and network firms auditing financial statements that carry the opinion of an external auditor. The disclosure must include the current year under audit, compared with the previous year’s auditing fees, especially if the company accounts for 15 percent of the fees received by the external auditor fees.

Covered companies are not required to disclose information related to a parent entity, or an entity directly or indirectly wholly-owned by another public interest entity that is also preparing its group or consolidated financial statements.

Author

- Advertisement -

Share post: