Day 1 PM - SEC Rules Updates and Common SEC Findings PDF

SEC Rules, Updates and Common
SEC Findings
November 10, 2016
Objective
Objective:
► To improve knowledge on the financial statement
preparation
At the end of the seminar, the participants will be able to:

► Obtain knowledge of SEC Rules and updates involving
financial statement preparation
► Obtain knowledge of common SEC findings on the
financial statements
► Identify areas for improvement involving current financial
statement preparation process
Page 2
Agenda
► SECURITIES REGULATIONS CODE (SRC) Rule 68

► Financial Reporting Bulletin (FRB)
► SEC Memorandum Circulars
► SEC Announcements and Notices
► SEC Common FS Findings
Page 3
SRC Rule 68- Background and Covered
Entities
Page 4
SRC Rule 68 - Background
► Securities Regulations Code (SRC) (Republic Act 8799)

(Code)
► Chapter II, Section 4 – Creation of the Securities and
Exchange Commission as the “Administrative Body” to
administer the Code
► Chapter V, Section 17 – Periodic and Other Reports of
Issuers
► SRC Rule 68 – Rules and Regulation Covering the Form
and Content of Financial Statements (amended 2011)
► Part I – General Financial Reporting Requirements
► Part II – Additional Requirements for Issuers of Securities
to the Public
Page 5
SRC Rule 68, Part I. Covered Entities
(Part I, 1, A)
► (i)(a) Stock corporation – paid up capital of P50,000 or

more
► (i)(b) Non-stock corporation
► (1) Total assets of P500,000 or more, or
► (2) Gross annual receipts of P100,000 or more
► (i)(c ) Branch offices of foreign corporations – assigned
capital of P1,000,000 or more
► (i)(d) Branch offices of non-stock corporations – total
assets of P1,000,000 or more
► (i)(e) ROHQ of foreign corporation – total revenues of
P1,000,000 or more
Page 6
SRC Rule 68, Part II, 1. - Covered Entities
(Issuers of Securities to the Public)
A. Issuers that sold a class of securities pursuant to a

registration under Section 12 of the “Code”
B. Issuers with a class of securities listed for trading in an
exchange
C. Issuers with P50,000,000 in assets and has 200 or more
shareholders each holding at least 100 shares as of the
first day of the issuer’s fiscal year.
Page 7
Rule 68, Part I - Basic Reporting
Requirements
Page 8
Basic Reporting Requirements
(SRC Rule 68, Part I)
► Financial statements in accordance with the applicable

financial reporting framework (Part I,2,A) (Other than the
consolidated FS, must be stamped “Received” by the BIR)
(Part I,2,C,(vi)) – must be comparative (Part I,5)
► Statement of Management Responsibility (Part I,2,B)
► Auditor’s Report (Part I,2,D)
► Supplemental Written Statement of the Auditor (Part I,3,F)
(Sample Format in Annex 68-B)(For stock corporations
not covered by Part II of Rule 68)
► Other Documents/Reports as required by SEC
Page 9
Basic Financial Statements
(PAS 1, par. 8)
► Statement of Financial Position (Balance Sheet)
► Statement of Profit or Loss and Other Comprehensive
Income
► Statement of Changes in Equity
► Statement of Cash Flows
► Notes, comprising a summary of significant accounting
policies and other explanatory information (Additional
SEC disclosure requirements from applicable PFRS for
“issuers of securities to the Public [Annex 68-D] (Part II,6)
and for those filing consolidated FS, additional disclosure
requirements for subsidiaries not consolidated and 50% or
less owned persons (Part II,9,A)
Page 10
Additional requirements under Annex 68-D
for issuers of securities (Part II)
Balance sheet accounts:

► Trade and other receivables
► Inventories
► Other current assets
► Indebtedness of/or advances to unconsolidated

subsidiaries and related parties
► Trade and other payables
► Other current liabilities
► Other long-term liabilities
► Capital Stock
Page 11
Additional requirements under Annex 68-D
for issuers of securities (Part II)
Statement of comprehensive income:

► Revenues
► Costs
► Finance costs
► Other income
► Other expenses
► Net asset value per share – for mutual funds or

investment companies (disclosure in FS or notes)
Page 12
Basic Financial Statements
Requirement for Comparative Presentation
A. The financial statements to be filed with the Commission

shall be presented in comparative form (Part 1,5,A)
B. Statement of Financial Position (Balance Sheet) as at the
end of each of the two most recently completed fiscal
years
C. Statement of Comprehensive Income, Cash Flows and
Changes in Equity – for each of the two most recent
completed fiscal years
► For entities under Part II (Issuers of securities to the
public), Statement of Comprehensive Income, Cash Flows
and Changes in Equity shall be for each of the three most
recent completed fiscal years. (Part II,4,B)
Page 13
Common SEC Findings
Components of Basic FS
Account Comment
Statement of ► The Statement of Financial Position failed to present the
Financial Position current and non-current classifications of assets and
liabilities
Statement of ► The Statement of Comprehensive Income is not

Comprehensive presented in a three (3)-year comparative format
Income
Statement of ► The Statement of Changes in Equity is not attached to

Changes in Equity the Financial Statements
Statement of Cash ► Material items on the face of the Statement of Cash

Flows Flows are not cross-referenced to related Notes to FS
► The “Depreciation Expense” under the Operating
expense account is not consistent with the amount
reflected on the Statement of Cash Flows and in Note
under the “Property and Equipment – net”
Page 14
Rule 68 – Acceptable Financial Reporting
Framework
Page 15
Acceptable Reporting Frameworks
(SRC Rule 68, Part I,2,A)
i. Philippine Financial Reporting Standards (PFRS) (Large

and or Publicly Accountable Entities)
ii. Philippine Financial Reporting Standards for Small and
Medium-Sized Entities (PFRS for SMEs)
iii. Income Tax Basis or accounting standards in effect as of
December 31, 2004 (Micro-entities – can also opt to
apply PFRS for SMEs)
Page 16
Large or Publicly Accountable entities
(SRC Rule 68, Part I, 2,A (i))
► Total assets of P350M or more, or total liabilities of P250M

or more, or
► Covered by Part II of SRC Rule 68, or
► In process of filing for the purpose of issuing any class of
instruments in a public market, or
► Holders of secondary licenses issued by regulatory
agencies
Page 17
Common SEC Findings
Basis of Preparation
► The Company incorrectly used PFRS for SMEs/

GAAP/PAS 101 as its basis of preparation of the financial
statements. Considering that the Company is a holder of a
secondary license with the Commission, the financial
reporting framework adopted by the Company should
have been full PFRS
► The Notes to FS incorrectly adopted PFRS as its basis of

preparation of the financial statements. Considering its
assets and liabilities size, it should have adopted PFRS
for SMEs
Page 18
Common SEC Findings
Basis of Preparation
► The basis of preparation of the FS as stated in the SMR

and opinion paragraph is incorrect considering the size of
the Company
► The basis of opinion, i.e. PFRS for SMEs is not consistent

with the basis of preparation in Note 2 which is full PFRS
Page 19
Responsibility for the Company’s Financial
Statements
Page 20
Responsibility for Financial Statements
(SRC Rule 68, Part I,2,B,(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.
Page 21
Statement of Management Responsibility
(SMR) Template
Par. 1
“The management of (reporting entity) is responsible for the
preparation and presentation of the financial statements for
the year(s) ended (date), in accordance with the prescribed
financial reporting framework stated therein. This
responsibility includes designing and implementing internal
controls relevant to the preparation and fair presentation of
financial statements that are free from material
misstatement, whether due to fraud or error, selecting and
applying appropriate accounting policies, and making
accounting estimates that are reasonable in the
circumstances.”
Page 22
Statement of Management Responsibility
(Template)
Par. 2
“The Board of Directors or Trustees reviews and approves
the financial statements and submit the same to the
stockholders or members.”
Par.3
“(Auditors), the independent auditors, appointed by the
stockholders, has examined the financial statements of the
company in accordance with Philippine Standards of
Auditing, and in its report to the stockholders or members,
has expressed its opinion on the fairness of the presentation
upon completion of such examination.”
Page 23
SMR for FS
(SRC Rule 68,Part I,2,B (iii))
► Signatories of SMR
► Chairman of the Board
► Chief Executive Officer
► Chief Finance Officer
► If provided in the company’s by-laws, persons holding equivalent

position as that of the aforementioned signatories shall sign the
statement.
► The failure of any of the prescribed signatories to sign the SMR
constitutes a material deficiency in the financial statements.
► The SMR for entities covered under Part II of the Rule (Issuers of
Securities to the Public) are to be signed under oath (Part II,3)
Page 24
SMR for FS
(SRC Rule 68, Part I,2,B (iv)
► In case of branch 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 second paragraph of the Statement may be deleted since the
Philippine branch does not have any local Board of Directors or
stockholders.
► Amendments by FRB 07
► For issuers of securities to the public, the SMR shall be attached
to both the consolidated and parent FS for filing with the
Commission
► If the financial statements are comparative, the SMR has to be
comparative, even if the auditors for the comparative period are
different
Page 25
Common SEC Findings
Statement of Management’s Responsibility
Account Comment
Statement of ► The SMR is not in accordance with the prescribed
Management’s wordings
Responsibility ► The SMR is not signed by the prescribed signatories
(SMR) under SRC Rule 68, as amended
► The signatories indicated in the SMRs are not consistent
with those stated in General Information Sheets
► The basis of preparation of the financial statements as
stated in SMR is not consistent with that indicated in the
FS
► The SMR failed to cover comparative year
► The SMR is not notarized
Page 26
Proposed amendments – responsibility for
related party transactions
All corporations covered by Rule 68 shall:

► Establish a system that captures relevant information on
related party transactions
► Disclose in its financial statements all information on such
transactions as required under the applicable financial
reporting framework and guidelines by the SEC, including
approval requirements, limits and extent of related party
transactions.
Page 27
SMR for FS
(SRC Rule 68, Part I,2,B (v))
► 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
examined.
► For entities covered under Part II of the Rules (Issuers of securities

to the Public), an auditor’s opinion other than “unqualified” because
of (1) deviation” from the required financial reporting framework
and/or (2) due to scope limitation imposed by the Company, shall be
considered as violation of this Rule (SRC Rule 68).(Part II,2)
Page 28
Classification of Reporting Entities for
Accreditation of Auditors
► Group A – issuers of securities to the Public, except

timeshares, proprietary and nonproprietary membership
shares and public companies (total assets of P50M with
200 or more shareholders each holding at least 100
shares)
► Group B – issuers of timeshares and membership shares
and other entities holding special SEC licenses
► Group C – financing and lending companies and transfer
agents
► Group D – other entities required by other regulatory
agencies to have an accredited auditor by the SEC
Page 29
Group B Entities (other than issuers of
timeshares and membership shares)
► Investment houses
► Brokers and dealers of securities
► Investment companies
► Government securities eligible dealers
► Universal banks registered as underwriters of securities
► Investment company advisers
► Clearing agency and clearing agency as depository
► Stock and securities exchange
► Special purpose vehicles under SPV act of 2002
► Special purpose corporation under Securitization act of
2004
Page 30
Common SEC Findings - Auditor’s Report
and Supplemental Written Statement of Auditor
► The external auditor of the Company is not accredited by the
Commission under Group C Category
► The Auditor's Report failed to indicate the control number and the
expiration dates of the SEC accreditation of the auditing firm and
signing external auditor
► The BIR Accreditation Number and its validity period are not
indicated
► The auditor’s report was dated prior to the date for approval for
issuance by the Management
► There is no legal matter paragraph in the auditor's report to cover
the information required by Revenue Regulation 15-2010
► The Supplemental Written Statement of Auditor failed to indicate the
external auditor's SEC Certificate of Accreditation number and its
expiration date
► There is no Supplemental Written Statement of External Auditor
Page 31
Other Documents to be filed with the
Financial Statements
Page 32
Other Documents to be filed with the FS
(SRC Rule 68, Part I, 4)
(A) Non-stock, non-profit corporations
(as amended by SEC MC No. 4, series of 2013)
► Sworn Statement of the President and Treasurer on the accuracy
and completeness of the following schedules
► Schedule of Receipts or Income Other than Contributions and Donations
► Schedule of Contributions and Donations (Prescribed format in “Annex A”
of SEC MC No. 4)
► Schedule of Disbursements
► For purposes of the above requirements, contributions or donations

reportable on the Schedule per paragraph A(ii) and B(ii) shall be
grants, bequest, devises and gifts of money or property, amounting
to P100,000 or more from each contributor or donor.
Page 33
(B) Foundations
(as amended by SEC MC No.4, series of 2013)
► Sworn statement of the President and Treasurer on accuracy and
completeness of the following schedules (SS)
(Prescribed format under SEC Notice April 18, 2013 required to be
notarized)
► Schedule of Sources of Funds Other than Contributions and Donations
► Schedule of Contributions and Donations
(prescribed format in “Annex A” of SEC MC No. 4)
► Schedule of Disbursements
► Schedule of Application of Funds
► Certifications from Office of the Mayor, or Head of DSWD or DOH for
existence of Program (COEP) (SEC Notice April 18, 2013 clarified that
the COEP may be provided by Heads/Officers of private institutions
provided these are notarized.)
Page 34
(C) 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 (Annex 68-C of this SRC Rule 68)
► FRB 1 requires that the reconciliation be covered by a legal matter
paragraph in the Auditor’s report or a separate report of auditor
► FRB 14 clarified that:
► the amount of retained earnings should be based on the stand-alone
(parent) fs, and
► the reconciliation should be submitted with the consolidated FS
Page 35
(D) All secondary licensees of the Commission (financing
companies, broker dealer of securities and underwriters) and
public companies
► A schedule showing financial soundness indicators in two
comparative periods, as follows:
► current/liquidity ratios;
► solvency ratios, debt-to-equity ratios;
► asset-to-equity ratios;
► interest rate coverage ratios;
► profitability ratios;
► other relevant ratios as the Commission may consider necessary.
Page 36
(E) Financing companies
► A schedule showing the following information in two comparative
periods:
► ratio or percentage of total real estate investments to total assets;
► total receivables to total assets;
► total DOSRI receivables to net worth;
► amount of receivables from a single corporation to total receivables.
Page 37
(F) Mutual funds
► A schedule showing the following information in two comparative
periods:
► percentage of investment in a single enterprise to net asset value;
► total investment of the fund to the outstanding securities of an investee
company;
► total investments in liquid or semi-liquid assets to total assets;
► total operating expenses to total net worth;
► total asset to total borrowings.
Page 38
(G) Investment houses
► Schedules showing the following information:
Details (per issue) of underwriting activities for the year
► Name of the issuer-client;
► Nature of commitment;
► Amount of issue;
► Underwriting and other fees generated;
► Basis of computation for each.
Transactions with DOSRI

► Name of related party;
► Description of transaction;
► Total volume/amount of transaction for the year;
► Terms and conditions, such as maturity date, security, mode of

payment;
► If secured, carrying amount of asset used as collateral.
Page 39
(H) 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
► ultimate parent company
► middle parent
► subsidiaries or co-subsidiaries
► associates
► FRB 1 clarifies that the map should be covered by a legal matter

paragraph in the auditor’s report or a separate report of auditor
Page 40
(I) Listed companies that recently offered securities to the public
(either as initial or additional offering)
► A schedule showing the following amounts:
► Gross and net proceeds as disclosed in the final prospectus;
► Actual gross and net proceeds;
► Each expenditure item where the proceeds was used; and
► Balance of the proceeds as of end of reporting period.
Page 41
(J) Large and/or publicly-accountable entities
► A schedule, in table format, showing in the first column a list of all
the effective standards and interpretations under the PFRS as of
year-end, and an indication opposite each in the second column on
whether it is “Adopted”, “Not adopted” or “Not applicable”.
► FRB 1 clarifies that the schedule should be covered by a legal

matter paragraph in the Auditor’s report or a separate report of
auditor
► FRB 16 provided a prescribed format for the schedule and require

that the list be “audited” by the Company’s external auditor, and
submitted with annual financial statements.
Page 42
(SRC Rule 68, Part II, 6, D)
By Issuers of Securities to the Public
► Additional schedules as specified under Annex 68-E

► The schedules shall be filed as of the latest balance sheet date (not
comparative)
► The independent auditor’s report shall cover the schedules
accompanying the financial statements (FRB 1 reiterates that the
schedules should be covered by a legal matter paragraph in the
Auditor’s report or a separate report of auditor).
Page 43
Schedules Required under Annex 68-E
► A. Financial Assets – for each class of financial asset with

aggregate cost (or market value for FVPL) is 5% of total
current assets at end of reporting period
► B. Amounts receivable from directors, officers, employees
and principal stockholders (other than related parties) –
with balances of P100,000 or 1% of total assets (excludes
items arising in the ordinary course of business)
► C. Amounts receivable from Related Parties which are
eliminated during consolidation of financial statements
► D. Intangible assets
► E. Long-term debt
Page 44
Schedules Required under Annex 68-E
► F. Indebtedness to related parties – non-current balances.

May be omitted when balance does not exceed 5% of
total assets either at beginning or end of period, or when
there is no changes in information from last previously
reported.
► G. Guarantees of securities of other issuers
► H. Capital stock
Form and content of schedules are provided in Annex 68-E
Page 45
(SRC Rule 68, Part II, 9)
By Issuers of Securities to the Public
► For those required to submit consolidated financial statements;

► Copies of financial statements of significant foreign subsidiary or
subsidiaries (Part II,9,B)
► Separate audited financial statements stamped “Received” by the BIR or
authorized banks (Part II, 9,C)
Page 46
Common SEC Findings
Components of FS
Account Comment
Schedules ► The Schedules required under the SRC Rule 68, as
Required Under amended are not submitted
SRC Rule 68, as ► The following Schedules are not attached to the AFS:
amended ► Reconciliation of Retained Earnings Available for
dividend (Part I,4,C)
► Tabular schedule of standards (Part I,4,J)
► Conglomerate map (Part I,4,H)
► Financial soundness indicators(Part I,4,D)
Page 47
Common SEC Findings
Components of FS
Account Comment
Schedules ► The Foundation failed to have the Sworn Statement of

Required Under the organization’s President and Treasurer notarized
SRC Rule 68, as (Part I,4,B)
amended ► There is no Schedule of Disbursement according to
sources and activities (Part I,4,B)
► There is no Schedule of Contributions and Donations
(Part I,4,B)
► The auditor’s report failed to cover the schedule of

effective standards and interpretations as of year-end
(FRB 1)
Page 48
Material Violations of Rule 68
Page 49
Violations of SRC Rule 68 Warranting
Imposition of Penalties (Part II,10,A (ii))
► Material misrepresentation in the financial statements

► Material misstatement from material deviation from
applicable financial reporting framework such as:
1. Failure to adopt prescribed financial reporting framework or any
accounting standard
2. Failure to disclose required information and other relevant or
material information
3. Failure to submit any basic component of the financial statements
4. Failure to present the required comparative figures
Page 50
Violations of SRC Rule 68 Warranting
Imposition of Penalties (Part II,10,A (ii))
► Failure to submit financial statements audited by a

qualified independent certified public accountant
► Failure to submit a complete Statement of Management
Responsibility (SMR)
► Failure to comply with any other requirements under
Parts I and II of this Rule.
► The materiality of the deficiency, misrepresentation or
misstatement shall be based on the tests set by the
Commission in SEC Memo No. 8, series of 2009, Scale of
Fines for Non-compliance with Financial Reporting
Requirements of the Commission, or any amendments
thereto (Part II,10,B)
Page 51
SEC Memo 8-2009
Considered as Material Deficiency (III,A,(i))
► Any of the following is not submitted with the FS:
► Balance Sheet
► Income Statement or Statement of Receipts and
Disbursements
► Cash Flow Statement
► Statement of Changes in Equity or Fund Balance
► Notes to Financial Statements
► Statement of Management’s Responsibility
► Auditor’s Report
Page 52
SEC Memo 8-2009
Considered as Material Deficiency (III,A (ii))
► If a listed company, public company, mutual fund or issuer of
securities to the public, the auditor’s opinion is qualified due to a
deviation from the applicable financial reporting framework.
However, for listed banks, a qualified opinion of the external auditor
shall not be considered a non-compliance with SRC Rule 68 if the
qualification pertains to a deviation adopted by the Bangko Sentral
ng Pilipinas as part of its prudential reporting requirements;
► The auditor’s report is substantially not compliant with the wordings
prescribed by the Philippine Standards on Auditing (PSA) No. 700,
as revised and other applicable auditing standards and practices.
Page 53
SEC Memo 8-2009
Considered as a Material Deficiency (III,A(iii))
► The SMR is not signed by the prescribed signatories and/or not
notarized in the case of listed or public companies
Page 54
SEC Memo 8-2009
Considered as a Material Deficiency (III,A (iv))
► There is no accounting policy for a significant account:
For listed companies, public companies, mutual funds, other issuers of
securities to the public of which is equivalent, and pre-need companies
► 5% or more of Total Current assets, if it is one of the current asset items;
► 5% or more of Total Non-current Asset, if it is one of the non-current

asset items;
► 5% or more of Total Current Liabilities, if it is one of the current liabilities,
item.
► 5% or more of Total Long-Term Liabilities, if it is one of the long-term
liabilities, item.
► 5% or more of the Total Stockholders’ Equity, if it is one of the equity
items or the amount of Total Assets if there is capital deficiency
► 5% or more of the Gross Income, Cost of Sales/Service or the Total
Operating Expenses, as may be applicable.
► For all other corporations, the threshold shall be 10% or more of the items
mentioned above.
Page 55
SEC Memo 8-2009
Considered as Material Deficiency (III,A(iv))
► The required disclosures or presentations under the applicable
financial reporting framework and SRC Rule 68./68.1 (Part I/Part II)
for a significant account are not provided in the financial statements.
► In case however of disclosures on related party transactions as
required under PAS 24, any deficiency thereof shall be considered
significant regardless of the amount involved if the reporting
company is a public company, listed company, issuer of securities to
the public or secondary licensee of the Commission.
Page 56
SEC Memo 8-2009
Considered as Material Deficiency (III,A(v))
► Five (5) or more of the following minor deficiencies are noted:
► The financial statements are not presented in the prescribed
comparative format
► There is no distinction between the current and non-current portion of
assets or liabilities except in cases where PAS 1 allows non-
classification
► There are no cross-references to the notes to financial statements
► The number of disclosure items that are not provided for a significant
account does not exceed two
► The Statement of Management’s Responsibility is not in full conformity
with the prescribed wordings of SRC Rule 68 or 68.1
► Such other deficiencies as the Commission may consider minor
Page 57
SEC Memo 8-2009
Considered as Material Misstatement (III,B)
► An accounting policy for a significant account is not consistent with PFRS or
GAAP
► An accounting policy for a significant account is not consistently applied
between periods or to similar transactions and events
► The estimate or assumption used on a significant account is unreasonable
and resulted to material misstatement of the FS
► There is more than one (1) minor misstatement and the aggregate amount
involved for the said misstatements meets the test of materiality
► The financial statements of a corporation with a subsidiary or subsidiaries
are not presented on a consolidated basis in violation of PAS 27
► Such other misstatements in the financial statements, i.e., overstatement or
understatement of income, asset, liability or equity, that the Commission may
consider material
Page 58
SEC Memo 1-2011
Reckoning Date of Computation of Penalty
► The daily penalty shall be computed from the date of receipt of the
letter informing the company of its non-compliance with the reporting
requirements of Section 141 of the Corporation Code of the
Philippines, Section 68 of the Securities Regulation Code, the
Investment Company Act, Financing Company Act, the Lending
Company Act, and the Investments Houses Law, up to the time that
the company has submitted the following documents:
a) a sufficient explanation for the non-compliance;
b) an audit committee or a board resolution taking cognizance of the non
compliance;
c) corrective measures the company shall undertake to prevent future
violations of SEC Memorandum Circular No. 8, Series of 2009.
► The Commission may, in addition, require the company to submit
the revised financial statements or an addendum to the financial
statements.
Page 59
Financial Reporting Bulletin
(FRB)
Page 60
List of Financial Reporting Bulletin (FRB)
► FRB # 1 - Additional components of financial statements
► FRB # 2 - Emphasis of Matter paragraph for companies with capital deficiency - Part I, 3.B(iv)
► FRB # 3 - Disclosures of receivables/ payables with related parties eliminated during
consolidation (Annex 68-D)
► FRB # 4 - Companies not covered Under SRC Rule 68
► FRB # 5 - Companies with no operation but are covered under SRC Rule 68
► FRB # 6 - Deposits for Future Subscriptions
► FRB # 7 - Statement of Management’s Responsibility (SMR)
► FRB # 8 - Small and Medium-sized Entities (SMEs)
► FRB # 9 - Micro Entities
► FRB # 10 - Entities in the process of filing their financial statements for the purpose of issuing any
class of instruments (whether shares of stock or bonds) in a public market
► FRB # 11 - Non-stock and non-profit organizations
► FRB # 12 - Annex 68-E – Schedule A. Financial Assets (Issuers of Securities to the Public)
► FRB # 13 - Presentation of Related Party Disclosures
► FRB # 14 - Presentation Reconciliation of Retained Earnings
► FRB # 15 - Appropriation of Retained Earnings for Business Expansion
► FRB # 16 - List of Effective Standards and Interpretations (as of December 31, 2012)
► FRB # 17 - Newly-registered Corporations
► FRB # 18 - Age Requirement for Financial Statements
► FRB # 19 - Expectations of an Effective Audit Function
Page 61
FRB # 1 (Feb. 16, 2012)
Subject Matter Clarification / Details

SRC Rule 68, ► The additional components submitted with the
Part I,B (ii) Company’s financial statements, forming part thereof,
should be covered by the Statement of Management
Statement of Responsibility (SMR), Thus, the first paragraph of the
Management SMR must read:
Responsibility
“The management of the (reporting entity) is
responsible for the preparation and fair presentation of
the financial statements for the years ended (date),
including the additional components therein xxxx”
Page 62
FRB # 1 (Feb. 16, 2012)

SRC Rule 68, ► The following additional components, if applicable
Part I,4; Part II, 6 to the company, should be covered by a legal matter
paragraph in the Auditor’s Report or a separate
Additional report of auditor on each component:
Components of ► Schedule of receipts and disbursements of non-stock
Financial and non-profit organizations (Part 1, 4A);
Statements ► Reconciliation of Retained Earnings Available for
Dividend Declaration (Part 1, 4C);
► Tabular schedule of standards and interpretations as
of reporting date (for large and/or publicly-
accountable entities)(Part I,4,J)
► Supplementary schedules required by Annex 68-E
(for issuers of securities to the public)(Part II,6,D)
► A map of the conglomerate or group of companies
within which the reporting entity belongs (Part 1, 4,H)
(for listed companies and investment houses)
Page 63
FRB # 2 (Feb. 16, 2012)

SRC Rule 68, Where the auditor has invoked exemption “(d) Such other
Part I,3,E (iii) grounds that the Commission may consider as a valid
ground, for considering the Company as a going concern, “a
Emphasis of confirmation must be obtained from the commission through
Matter paragraph the submission by the auditor of a position paper.
for companies with
capital deficiency Where any of the exemptions (a to d) are availed, the notes
to financial statements should include a disclosure of the
basis for the exemptions.
Page 64
FRB # 2 (Feb. 16, 2012)

SRC Rule 68, SRC Rule 68, Part I,3,E(v) provided the required wordings
Part I,3,E (v) to be included in the auditor’s report (emphasis of a matter
paragraph), which required inclusion of :
Emphasis of
Matter paragraph (c) A statement that the auditor conducted sufficient audit
for companies with procedures to verify the validity of the aforementioned
capital deficiency plan.
► FRB 2 allows for the substitution of the wordings in “c”

with “A statement that the auditor performed audit
procedures to evaluate management’s plans for such
future actions as to likelihood to improve the situation and
as to feasibility under the circumstances” (which is taken
from PSA 570 provisions.)
Page 65
Common SEC Findings – Emphasis of a
Matter regarding going concern
Subject Matter SEC Finding
SRC Rule 68, ►There is no discussion of the Company’s concrete plan to
Part I,3,E (v) address its recognized capital deficiency
► There is no “emphasis of a matter” paragraph discussing
Emphasis of the going concern issue due to the capital deficiency of
Matter paragraph the Company
for companies with ► There is no “emphasis of a matter” paragraph discussing
capital deficiency the following:
a) The fact that the company has incurred a capital
deficiency
b) A brief discussion of a concrete plan of the company
to address the capital deficiency and reference to
the note to FS that provide a complete disclosure of
the said plan
c) A statement that the auditor conducted sufficient
audit procedures to verify the validity of the
aforementioned plan.
Page 66
FRB # 3 (Feb. 16, 2012)

SRC Rule 68 ► Information required for disclosure in the Notes to
financial statements under Annex 68-D, par. (1)(A)(ii)
Disclosures of and (1)(F)(ii) on receivables/payables with related
receivables/ parties that are eliminated during consolidation by
payables with “issuers of securities to the public, companies listed in
related parties the exchange and public companies, as provided in
eliminated during Part II of the Rule”, may be incorporated in the
consolidation applicable schedules under Annex 68-E of Part II
(Annex 68-D) (Schedule C – Amounts Receivable from Related
Parties which are Eliminated during the Consolidation of
the Financial Statements).
► FRB 3 also clarified that the subject information need

not be comparative. It shall also “cover only to those
transactions eliminated at the reporting entity’s
level.”
Page 67
FRB # 4 (Feb. 16, 2012)

Companies not ► Part I,A (i) identified the entities covered by the Rules
covered (SEC Rule 68) (Slide 6).
Under
SRC Rule 68, ► FRB 4 provides that the financial statements of
Part I,A (i) companies “not covered by SRC Rule 68” should:
► be accompanied by a certification under oath by the
company’s Treasurer or Chief Finance Officer.
► Such FS should have at least a Statement of
Financial Position (Balance Sheet) or a Statement
of Fund Balance, Income Statement (or a
Statement of Receipts and Disbursements) and
applicable explanatory notes.
Page 68
FRB # 5 (Feb. 16, 2012)

Companies with ► If no operation only for one (1) year: a complete set of
no operation but audited financial statements must be submitted by the
are covered under company despite its non-operation
SRC Rule 68, ► If no operation for the last two (2) years: The Income
Part I,A (i) and (ii) Statement need NOT be included in the audited financial
statements
Page 69
FRB # 6 (amended) – Jan. 24, 2013

Deposits for ► An entity shall classify a contract to deliver its own
Future equity instruments under equity as a separate account
Subscriptions (e.g., Deposit for Stock Subscription) from “Outstanding
Capital Stock” if and only if, all of the following elements
are present as of end of the reporting period:
(1) The unissued authorized capital stock of the entity
is insufficient to cover the amount of shares
indicated in the contract;
(2) There is Board of Directors’ approval on the
proposed increase in authorized capital stock (for
which a deposit was received by the corporation);
(3) There is stockholders’ approval of said proposed
increase; and
(4) The application for the approval of the proposed
increase has been filed with the Commission.
► Provides the minimum disclosure requirements
Page 70
FRB # 7 (April 3, 2012)

Statement of ► For issuers of securities to the public, the SMR shall be
Management’s attached to both the consolidated financial statements
Responsibility and the parent company’s financial statements for filing
(SMR) with the Commission
► Paragraph (iv) of Part I (2)(B)(iv) of the Rule is also

applicable to representative offices established in the
Philippines. Thus, the SMR shall be signed by its local
manager or chief representative in the Philippines
► If the financial statements for filing are comparative, the

SMR has to be comparative, even if the independent
auditors for the comparative periods are different
Page 71
FRB # 8 (April 3, 2012)

Small and ► Under Part I (2)(A)(ii)(b) of the Rule, certain types of
Medium-sized SMEs may be exempted from the mandatory adoption
Entities (SMEs) of the Philippine Financial Reporting Standard (PFRS)
for SMEs and may instead apply, at their option, full
PFRS. SMEs that availed of the exemption and applied
the full PFRS are not considered as large and/or
publicly-accountable entities, and therefore are not
required to file the tabular schedule of all effective
standards and interpretations under the PFRS as of
year-end, as required under Part I (4)(J) of the Rule.
Page 72
FRB # 9 (April 3, 2012)

Micro Entities ► Under SEC's Notice of Implementation Guidelines on
PFRS for SMEs dated February 9, 2010, micro entities
have the option to use any of these bases of accounting
in the preparation of their financial statements: (a) full
PFRS, (b) PFRS for SMEs, or (c) another acceptable
basis of accounting.
► Under Part I (2)(A)(iii) of the Rule, micro entities have the
option to use as their financial reporting framework the
income tax basis, accounting standards in effect as of
December 31, 2004 or PFRS for SMEs.
► Micro entities which have previously adopted full PFRSs in
accordance with SEC’s Notice of Implementation Guidelines
on PFRS for SMEs dated February 9, 2010 are allowed to
continue the use of full PFRS. Nevertheless, micro entities
may also choose to change their financial reporting
framework to one of the options made available under the
Rule. Such change should be accounted for in accordance
with PAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors.
Page 73
FRB # 9 (April 3, 2012)

Micro Entities ► Micro entities are not required to disclose in the notes to
the financial statements their rationale for choosing a
particular financial reporting framework available to
them.
► Micro entities that continue to use full PFRS are not
required to file the tabular schedule of all the effective
standards and interpretations under the PFRS as of
year-end as required under Part I (4)(J) of the Rule.
Page 74
FRB # 10 (April 3, 2012)

Entities in the ► Financial statements to be filed by entities for the
process of filing purpose of issuing any class of instruments (whether
their financial shares of stock or bonds) in a public market are required
statements for the to comply with the provisions of Part II of the Rule,
purpose of issuing including Annexes 68-D and 68-E. Likewise, the
any class of following documents are to be filed with the financial
instruments statements, as required by Part I, Section 4 of the Rule:
(whether shares of ► Issuers of securities to the public and stock corporations with unrestricted
stock or bonds) in retained earnings in excess of 100% of paid-in capital stock - A
Reconciliation of Retained Earnings Available for Dividend Declaration
a public market ► Listed companies and investment houses that are part of a conglomerate
or group of companies - A map showing the relationships between and
among the companies and its ultimate parent company, middle parent,
subsidiaries or co-subsidiaries, and associates.
► Large and/or publicly-accountable entities - A schedule, in table format,
showing in the first column a list of all the effective standards and
interpretations.
► The above components should be covered by an
auditor’s report.
Page 75
FRB # 11 (April 3, 2012)

Non-stock and ► The provisions of Part I (3)(iv)(v) of the Rule, regarding
non-profit capital deficiency, shall not be applicable to non-stock
organizations and non-profit organizations with negative fund balance.
Page 76
FRB # 12 (April 3, 2012)

Annex 68-E – ► The schedule shall be applicable for Available-For-Sale
Schedule A. (AFS), Fair Value through Profit or Loss (FVPL) and
Financial Assets Held-to-Maturity (HTM) investments. Loans and
Receivables shall be included in the schedule only if the
(Issuers of information requirements are applicable.
Securities to the ► For example, trade receivables of a reporting entity
Public) need not be included in this Schedule A but Long-term
Commercial Papers classified under Loans and
Receivables shall be included.
Page 77
FRB # 13 (Jan. 24, 2013)

Presentation of ► The required disclosures on transactions and
Related Party outstanding balances shall be made separately for each
Disclosures of the following categories:
► the parent;
► entities with joint control or significant influence over
the entity;
► subsidiaries;
► associates;
► joint ventures in which the entity is a venture;
► key management personnel of the entity or its
parent; and
► other related parties.
Page 78
FRB # 13 (Jan. 24, 2013)

Presentation of ► For each of said category, the following information shall
Related Party be provided:
Disclosures ► the amount of the transactions;
► the amount of outstanding balances and their terms
and conditions, including whether they are secured,
and the nature of the consideration to be provided
in settlement, and details of any guarantees given
or received;
► provisions for doubtful debts related to the
amount of outstanding balances;
► the expense recognized during the period in
respect of bad or doubtful debts due from
related parties.
► The presentation shall be made in columnar format
according to the above categories and disclosure items.
Page 79
FRB # 14 (Jan. 24, 2013)

Reconciliation of ► Rule 68, Part I,4 (c) required a Reconciliation of RE
Retained Earnings available for Dividend Declaration as additional
available for document for submission to SEC by issuers of securities
Dividend to the public and other stock corporations with
Declaration unrestricted RE in excess of 100% of paid up capital.
► FRB 14 clarified that the amount of retained earnings of

a company should be based on its separate (“stand
alone”) financial statements and not on its consolidated
financial statements if it is a parent company.
► FRB 14 also require that the reconciliation of retained

earnings of the parent company shall however, be
submitted with the consolidated financial statements
pursuant to SRC Rule 68, as amended.
Page 80
FRB # 15 (Jan. 24, 2013)

Appropriation of ► Pursuant to PAS 1, the following disclosures are
Retained Earnings relevant to provide an understanding on the impact
For Business of the retention of earnings on the financial statements
Expansion and thus, must be provided therein:
► Details of the expansion (e.g., description of the

project, timeline) to render the project definite;
► The date of the approval by the Board of Directors

of the project.
Page 81
FRB # 16 (Jan. 24, 2013)

List of Effective ► Under paragraph 4(J) of SRC Rule 68, as amended,
Standards and large and/or publicly-accountable entities are required to
Interpretations (as submit with their audited financial statements a
of December 31, schedule, in table format, showing in the first column a
2012) list of all the effective standards and interpretations
under the PFRS as of year-end, and an indication
opposite each in the second column on whether it is
“Adopted”, “Not adopted” or “Not applicable”.
► To comply with the said requirement, the following list
must be accomplished, audited by the company’s
external auditor and submitted with annual financial
statements:
Page 82
FRB # 17 (March 7, 2013)

Newly-registered ► Under Section 141 of the Corporation Code, every
Corporations corporation, domestic or foreign, lawfully doing business
in the Philippines shall submit to the Securities and
Exchange Commission an annual report of its
operations, together with a financial statement of its
assets and liabilities, certified by any independent
certified public accountant in appropriate cases,
covering the preceding fiscal year and such other
requirements as the Securities and Exchange
Commission may require. Such report shall be
submitted within such period as may be prescribed by
the Securities and Exchange Commission
Page 83
FRB # 17 (March 7, 2013)
(cont…)
Newly-registered ► If the paid-up capital of the corporation is less than
Corporations P50,000.00 the financial statements may be certified
under oath by the treasurer or any responsible officer of
the corporation.
► Except for the above limitation on the coverage of
entities whose financial report must be audited, the
provisions of the Corporation Code do not grant any
exemption from the required submission of annual
financial statements (AFS). The filing requirement is
applicable to all corporations and organizations
registered with the Commission as of the fiscal year end
including those newly incorporated during the said year.
Page 84
FRB # 18 (Dec. 22, 2015)

Age Requirement ► It has been noted that several corporations applying for
for Financial registration of their securities have requested for
Statements exemptive relief from the adoption of the above-cited
provisions, particularly on the extension of the effectivity
of financial statements from 135 days to 180 days. While
the proposed amendments to SRC Rule 68, as Amended,
to consider the matter are still pending consideration by
the Commission, and in line with its preparation for the
capital market integration and for consistency with the
adopted ASEAN Framework, companies are hereby
informed that the following proposed amendments to
Part II Section 4 of SRC Rule 68 can already be adopted:
► 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 180 days from effective date.
► The SEC shall no longer grant further request for
extension of said period.
Page 85
FRB # 19 (May 3, 2016)

Expectations of an ► FRB contains the responsibilities of the external auditor
Effective Audit which are covered by the requirements under Philippine
Function Standards on Auditing (PSA).
► The PSAs are the standards that the external auditors are
required to apply when they conduct a financial statement
audit.
► Provide guidelines on how external auditors are expected
to carry out audit engagements to obtain the overall
objective of an audit of financial statements, i.e.,
expression of an opinion on the fairness of the financial
statements.
Page 86
SEC Memorandum Circular
Page 87
List of SEC Memorandum issued in 2016
► SEC Memorandum 1-2016 – 2016 Filing of Annual Financial Statements

and General Information Sheet
► SEC Memorandum 2-2016 - Additional Requirement for Accreditation as
Auditing Firm/Sole Practitioner
► SEC Memorandum 3-2016 – Enforcement of Republic Act 9510 over
Financing Companies
► SEC Memorandum 4-2016 – Guidelines to be Observed by Hearing
Officers in Handling Petitions pursuant to the Provisions of the Judicial
Affidavit Rule
► SEC Memorandum 5-2016 – Removing the Periods for Filing of Petitions
to set aside Orders of Revocation or Orders Suspension of Corporations for
Failure to Comply with the Reportorial Requirements
► SEC Memorandum 6-2016 – Omnibus Guidelines on Principal Office
Address; Address of Each Incorporator, Director, Trustee or Partner
► SEC Memorandum 7-2016 – Compliance with Republic Act 9510
► SEC Memorandum 8-2016 – Exemption from the 5% Liquidity
Requirement of Mutual Fund Index Trackers
Page 88
List of SEC Memorandum issued in 2016
► SEC Memorandum 9-2016 – Guidelines on the Submission of Monthly

Complaint Report
► SEC Memorandum 10-2016 – Guidelines on the Issuance of Certification
on the Nationality of Non-Stock Corporation
► SEC Memorandum 11-2016 – Subscriptions Contracts
► SEC Memorandum 12-2016 – Consolidated Schedules of Fees and
Charges
► SEC Memorandum 13-2016 – Guidelines on the Issuance of Certification
of Paid Up Capital
► SEC Memorandum 14-2016 – General Information Sheet and Notification
Update Form
► SEC Memorandum 15-2016 – Submission of the Sworn Statement and
COEP
► SEC Memorandum 16-2016 – Revision of the General Information Sheet
and Notification Form
► SEC Memorandum 17-2016 – Guidelines on the Applications for Payment
of Annual Fees of Capital Market Participants (Institution and Professionals)
Page 89
SEC Memorandum 2-2016 (Feb. 11, 2016)
Additional Requirement for Accreditation as Auditing Firm/Sole

Practitioner
► To ensure the SEC accredited auditing firms/sole practitioner’s
adherence to the Code of Ethics for Professional Accountants in the
Philippines (Code), all accredited auditing firms/sole practitioners
and prospective applicant-firms/sole practitioners are required to
submit a Disclosure under oath attesting their adherence to the
fundamental principles under the Code as well as the principles
applicable to the professional accountants in public practice
particularly in the areas involving conflict of interest and
independence.
Page 90
SEC Memorandum 3-2016 (April 5, 2016)
Enforcement of RA 9510 over Financing Companies

► Financing companies are hereby required to submit to the Credit
Information Corporation (CIC) their basic credit data namely: (1) 5
year historical data and (2) current data on or before August 31,
2016 and enjoined to attend the orientations/road shows.
Page 91
SEC Memorandum 4-2016 (May 5, 2016)
Guidelines to be Observed by Hearing Officers in Handling Petitions

pursuant to the Provisions of the Judicial Affidavit Rule (A.M. No. 12-8-8-
SC, September 4, 2012)
► Section 1. Purpose - Provide guidelines to be observed by Hearing
Officers in all actions, proceedings and incidents requiring the
reception of evidence pursuant to the provisions of the Judicial
Affidavit Rule, in order to simplify and expedite proceedings before
the Commission.
► Section 2. Issuance of order for preliminary conference/or scheduled

hearing with respect to motions and incidents.
► Section 3. Issuance of warning to the parties.
► For strict and immediate compliance
Page 92
SEC Memorandum 5-2016 (June 9, 2016)
Removing the Periods for Filing of Petitions to set aside Orders of

Revocation or Orders Suspension of Corporations for Failure to Comply
with the Reportorial Requirements
► This formalizes the issuance of the Commission by way of En Banc
Resolution removing the periods within which to file a petition to lift
the Order of Revocation as well as repealing and consolidating all
other issuances of the Commission on the filing of a petition to lift
the Order of Revocation and Suspension for violation of the
reportorial requirements of the Commission.
Page 93
Omnibus Guidelines on Principal Office Address; Address of Each

Incorporator, Director, Trustee or Partner
► Provides guidelines on principal office address and addresses of
incorporators, directors, trustees or partners.
► This Circular was signed last June 9, 2016 and shall take effect
immediately after its publication in a newspaper of general
circulation.
Page 94
Compliance with Republic Act 9510

► Financing companies, lending companies and micro-finance NGOs
are hereby required to submit to the Commission a certification
stating that the corporation has fully complied with the requirements
of the Credit Information Corporation (CIC) within fifteen (15) days
from the date of its compliance.
► Further, financing companies, lending companies and micro-finance

NGOs who have not yet sent their representatives to attend
orientations conducted by the CIC may directly contact the later for
the schedules through the following:
Office Address: CIC Office, 6F Exchange Corner Building
VA Rufino Street corner Esteban and Bolanos Sts.
Legaspi Village, Makati City
Email Address: events@creditinfo.gov.ph
Telephone No:. (02) 839 1971
Page 95
Exemption from the 5% Liquidity Requirement of Mutual Fund Index

Trackers
Page 96
SEC Memorandum 9-2016 (July 18, 2016)
Guidelines on the Submission of Monthly Complaint Report

► In order to effectively implement Rule 52.1.9.3 of 2015 Implementing
Rules and Regulations of the Securities Regulation code (2015 SRC
IRR) which requires every Broker Dealer to notify in writing the Self-
Regulatory Organization (SRO) and the Commission of any written
complaints received from the client and the actions taken thereon by
the Broker Dealer with respect thereto every 15th day of the month,
the Commission resolve to issue the following guidelines:
► Section 1. Signatory to the Monthly Complaint Report
► Section 2. Coverage of the Report
► Section 3. Information required to be disclosed in the monthly
complaint report
► Section 4. Report in case of no complaint received
► Section 5. Template of the Monthly Complaint Report
► Section 6. Penalty
► Section 7. Effectivity
Page 97
SEC Memorandum 10-2016 (July 28, 2016)
Guidelines on the Issuance of Certification on the Nationality of Non-

Stock Corporation
► “Non-stock” corporation registered with the Commission is a
Philippine National:
a. If all its members are citizens of the Philippines, or
b. If at least 60% of its members entitled to vote are citizens of the Philippines; or
c. If at least 60% of its members total number of votes as broadened in the By-
Laws are held by citizens of the Philippines; or
d. If all members of a foreign non-stock corporation licensed to do business by the
Commission are citizens of the Philippines
► A certification on the nationality of a non-stock corporation shall be
issued to the Commission’s CRMD for a fee in the amount of P5,000
► The Corporate Secretary shall submit the following documents:
a. Membership Book duly registered with the SEC
b. Sworn certified list of members indicating thereon their nationalities and
c. Sworn certification executed by the Corporate Secretary in voting power of the
members
Page 98
SEC Memorandum 11-2016 (August 5, 2016)
Subscriptions Contracts
► Following are the amendments to Memorandum Circular 6-2012

► Bank Certificate of Deposit
► Special Audit Report – for applications to increase the

authorized capital stock of the corporations where the
subscription to the increase is paid in cash except (a) listed
companies, (b) public companies defined in the SRC, (c)
companies that offer or sell securities to the public, (d) where
payment to the subscription to the increase is more than
P50,000,000
► In lieu of such report, a notarized Subscription Contract among
the stockholder/s, treasurer and president for the corporation
stating the number of additional shares subscribed to and paid
for shall be submitted by the corporation.
► Primary Entry
Page 99
Consolidated Schedules of Fees and Charges
► Provides a list of all the fees and charges to be imposed and

collected by the SEC.
► Registration and Filing fees
► Accreditation and Other Related Fees
► Other Fees
► Circular shall be effective 15 days from publication in a newspaper

of general circulation.
Page 100
Guidelines on the Issuance of Certification of Paid Up Capital
► A certificate of paid up capital shall be issued upon request to be

files at the CRMD and Extension Offices of the Commission;
► Certification may be based on the documents filed with SEC
► The corporation shall submit the following:
a. Duly accomplished request form stating the basis of certification
b. Audited Financial Statements as of the last fiscal year stamped received by
BIR and SEC
c. Audited Interim Financial Statements duly received by the Commission, in
case there is/are payments to unpaid subscription(s) after the issuance of the
AFS as of the last fiscal year
d. Notarized Secretary’s Certificate on No Pending Intra-Corporate Dispute; and
e. Monitoring Clearance
► Filing fee in the amount of P1,000
► Circular shall take effect immediately after its publication in a
newspaper of general circulation.
Page 101
General Information Sheet and Notification Update Form
► Revisions in the form for General Information Sheet (GIS) and

Notification Update Form (NUF):
a. GIS – the column for the Tax Identification Number (TIN) of the Board of
Directors/Trustees, Officers, Stockholders/Members of domestic
corporations and Resident Agent and officers in the Philippines of foreign
corporations shall be accomplished in a separate sheet denoted as TIN
page
b. NUF – for foreign corporations the column for the TIN of Officers shall be
accomplished in a separate sheet denoted s TIN page
► A template of secretary’s certification page of the GIS for stock and
non stock corporation is provided.
► The GIS and NUF shall be available in the SEC website for
downloading and shall be used by corporations in January 2017.
Page 102
SEC Memorandum 15-2016 (Sept. 9, 2016)
Submission of the Sworn Statement and COEP
► Provide the revised guidelines on Foundation or SEC Memorandum Circular 8,

Series of 2006, where all Foundations are required to submit a Sworn
Statement of the President and Treasurer indicating the Source, Amount and
Application of Funds and Program/Activity Planned, Ongoing and Accomplished
(SS) and Certificate of Existence of Program/Activity (COEP).
► Foundations or those who receive donations/grants/contributions in the amount

of at least Php 500,000 in one or aggregate transaction per
donor/grantor/contributor, are required to submit the SS and COEP.
► Foundations not receiving funds within the threshold are required to submit a
Certification stating they have not received government funds nor received
donations/grants/contributions for their operations. The Certification shall also
include a statement that there is no action or proceeding which has been filed or
pending before any Court.
Page 103
SEC Memorandum 16-2016 (Sept. 28, 2016)
Revision of the General Information Sheet (GIS) and Notification Update

Form (NUF)
► Provides for the revisions to the GIS and NUF. All corporations are directed to
use the Revised GIS and NUF starting January 2017.
► The following information shall be indicated in the separate sheet designated as

TIN Page:
► The TIN of BOD/Trustees, Officers and Stockholders of Domestic Corporations
and Resident Agent and Officers in the Philippines of foreign corporations
► The NUF for foreign corporations, the TIN of Officers
► The residential address of the Directors/Trustees, Officers and Stockholders for
stock and non-stock corporations and Resident Agent and Officers in the NUF
for foreign corporation
► The template for Corporate Secretary’s Certification of the GIS for stock and
non-sock corporation was provided.
Page 104
SEC Memorandum 17-2016 (Oct. 13, 2016)
Guidelines on the Applications for Payment of Annual Fees of Capital

Market Participants (Institutions and Professionals)
► Payment of annual fees shall be in November of each year.
► Application for Payment filed in December – surcharged of 50%
► Application for Payment filed after December – surcharge of 100%
► Failure to pay – suspension or revocation of the registration/license
► Applications for payment of Annual fees shall be filed with the CRMD-LU. Only
applications whose documentary requirements are complete and in order shall
be accepted for processing.
► Mere issuance of the Payment Assessment Form does not constitute filing; only
applications which have paid the corresponding annual fees shall be considered
filed
► All documentary requirements shall be submitted in two (2) hard copies with at
least one (1) original copy and in soft copy via email at cmannualfees@sec.gov.ph
► Applicable for the payment of annual fees in 2016 onwards.
► This Circular shall take effect after fifteen (15) days from publication in a
newspaper of general circulation. The Circular was published in Philippine Daily
Inquirer and Manila Standard on October 20, 2016
Page 105
SEC Announcements and Notices
► SEC Advisory
► Submission of ACGR together with Annual Report
► SEC Announcement
► SEC Express Nationwide Express (SENS)
► SEC Notice
► Transactions of Corporate Governance and Finance Department (CGFD)
► Adoption of Standards and Interpretations
Page 106
SEC Advisory (March 16, 2016)
Submission of ACGR together with Annual Report

► All publicly-listed companies (PLCs) are directed to submit their
2015 Annual Corporate Governance Report (ACGR) together with
their 2015 Annual Report (SEC Form 17-A) to the Commission and
to the Philippine Stock Exchange (PSE).
► The ACGR is intended to take the place of the Corporate
Governance section of the Annual Report.
► The ACGR is to be attached to the Annual Report with proper
reference, i.e., “Please refer to attached ACGR”, in Item 13. Part IV
– Corporate Governance portion of the Annual Report.
► Without the ACGR, the Company’s Annual Report shall be deemed
an incomplete filing.
Page 107
SEC Announcement (March 21, 2016)
SEC Express Nationwide Express (SENS)

► Introduced an innovative and integrated solution to address the
increasing volume of Annual Report submission
► Soft-launched the new system on March 18, 2016
www.secexpress.ph/sens
► Filers can send documents through a designated courier or courier

of their choice instead of submitting these personally to the SEC
office and/or Satellite offices.
► SEC Express system Hotline is available to answer questions
regarding SENS. Hotline is available from 8am to 5pm.
► Contract number: 737 8888
Page 108
SEC Notice (August 24, 2016)
Adoption of Standards and Interpretations

► The SEC has adopted the following new accounting standards,
amendments to the existing standards, and interpretations, which
have been adopted by the Philippine Financial Reporting Standards
Council and Philippine Interpretations Committee and approved by
the Board of Accountancy and Professional Regulation Commission
on various dates, as part of SEC’s rules and regulations on financial
reporting.
► Amendments to PAS 16 and PAS 38, Clarification of Acceptable Methods of
Depreciation and Amortization
► Amendments to PAS 16 and PAS 41, Agriculture: Bearing Plants
► Amendments to PAS 19, Defined Benefit Plans: Employee Contributions
► Amendments to PAS 27, Equity Method in Separate Financial Statements
► PFRS 9, Financial Instruments
► PFRS 9, Financial Instruments (Hedge Accounting and amendments to PFRS 9,
PFRS 7, and PAS 39)
Page 109
SEC Notice (August 24, 2016)
Adoption of Standards and Interpretations (cont…)

► Amendments to PFRS 10 and PAS 28, Sale or contribution of Assets between
an Investor and its Associate or Joint Venture
► Amendments to PFRS 11, Accounting for Acquisitions of Interest in Joint
Operations
► PFRS 14, Regulatory Deferral Accounts
► Annual Improvements to PFRSs 2010-2012 Cycle
► 2015 Amendments to the PFRS for SMEs
► Philippine Interpretations Committee (PIC) Q&A
Page 110
Other Common SEC Findings
Notes to Financial Statements
Page 111
Common SEC Findings
Notes to the FS
Account Comment
Corporate ► There is no disclosure of the date when the Board of
Information directors authorized the issuance of the financial
statements
► There is no discussion on the company’s concrete plan
to address its recognized capital deficiency
► Incomplete disclosure on the description of the nature of
the company's operation and principal activity
► The address of the company’s registered office is not
indicated
► There is no discussion on the parent company
► Note 2 states that the financial statements prepared are
consolidated financial statements. There is however, no
disclosure of any subsidiary company
Page 112
Common SEC Findings
Notes to the FS
Account Comment
Significant ► There is no discussion on significant accounting
Accounting judgments and estimates used by the Company's
Estimates and management in the preparation of the financial
Judgments statements
► There are no discussions on estimates used on
impairment of financial assets, determination of net
realizable value of inventories, measurement of
revenue, cost and estimated liabilities from construction
contracts
Page 113
Common SEC Findings
Notes to the FS
Account Comment
Capital ► There is no accounting policies and disclosures on
Management capital management
► There is no or incomplete discussion in the notes to FS
of the externally-imposed capital requirement and how it
is incorporated into the Company’s management of
capital
► A note disclosure incorrectly stated that "The Company
is not subject to externally-imposed capital
requirements". As a lending company, it is subject to the
minimum capital requirement under the Lending
Company Act and its IRR (Lending Company)
► The Company failed to comply with the minimum paid-
up capital of P1 million (Lending Company)
Page 114
Common SEC Findings
Notes to the FS
Account Comment
Financial Risk ► There are no or incomplete discussion of accounting
Management policy and disclosures on financial risk management
► There are no qualitative and quantitative disclosures on
managing each financial risk
► Incomplete disclosures on liquidity risk, i.e., specific
management plans to address the company’s negative
liquidity
► There is no discussion on sensitivity analysis on equity
risk
► Considering the adopted financial framework, the
disclosure in Note 4 on financial risk management is not
necessary
► There are no qualitative and quantitative analysis on
each financial risk
Page 115
Common SEC Findings
Notes to the FS
Account Comment
Related Party ► There is no accounting policy on related party
Transactions transactions
► The nature of relationship between related parties was
not disclosed
► There are no or incomplete disclosures on related party
transactions, i.e., key management personnel
compensation, terms and conditions including the
collateral or security given, nature of the consideration
provided for settlement, details of any guarantees given
or received, provision for doubtful debts and the
expense recognized during the period
► Incomplete disclosures on related party transactions,
i.e., required disclosures on company’s retirement fund
Page 116
Common SEC Findings
Notes to the FS
Account Comment
Related Party ► Incomplete disclosures on related party transactions,
Transactions i.e., volume of transactions, mode of settlement, assets
used as collaterals and its carrying amount, key
management personnel compensation
► There is no explanatory note on “Advances from
stockholders of a subsidiary” under Note 17 on “Other
Non-current Assets” despite materiality of amount
► Note 6.3 indicates “Due from related parties” amounting
to P19.7 Million. Note 18 however, only shows an
outstanding balance of P18.8 Million or a difference of
P0.9 Million
Page 117
Common SEC Findings
Notes to the FS
Account Comment
Revenue ► There is no specific revenue recognition policy on
interest income, dividend income, financing income,
rental income, commissions, currency trading income,
service fees, miscellaneous/other income and charges
► There is no breakdown of the amount and nature of
each item of revenue sources
► There is no disclosure of the nature and amount of each
item comprising "sale of goods-net"
► There are no disclosures on “Gain on Sale of Property”
despite materiality of amount
► The Company's underwriting income is below 25%.
This is not in accordance with Section 12 of the
Omnibus Rules and Regulations for Investment Houses
and Universal Banks registered as underwriters which
requires that income from underwriting activities shall be
at least 25% of annual gross income (Investment House)
Page 118
Common SEC Findings
Notes to the FS
Account Comment
Cost and ► There is no accounting policy on recognition of cost and
expenses expenses
► The amount of Administrative Expenses on Statement of
Comprehensive Income is inconsistent with that stated
in the Notes to FS
► There is no disclosure of the nature and amount of each
item comprising “Cost of Real Estate Sales”
► There are no disclosures on "Direct Cost" despite
materiality of the amount
► There is no explanatory note on “Others – Operating
Expenses/Miscellaneous Expense”
► There is no breakdown of the nature and amount of
each item comprising Cost of Sales
► The recognition of pre-operating expenses in not in
accordance with Section 4 of PFRS for SMEs
Page 119
Common SEC Findings
Notes to the FS
Account Comment
Leases ► There are no specific accounting policy and disclosures
on leases
► Incomplete disclosures on leases, i.e., general leasing
agreements, minimum lease payments
► There is no general description of the lessor’s significant
leasing arrangement, including information about
contingent rent, renewal or purchase options and
escalation clauses and restrictions imposed by the lease
arrangements
► The Company's accounting policy on leases is not in
accordance with PAS 17
Page 120
Common SEC Findings
Notes to the FS
Account Comment
Employee Benefits ► There are no accounting policy and disclosures on
employee benefits
► AFS states that the Company has yet to provide for the
estimated benefits required to be paid under Republic
Act 7641. There is neither a disclosure if the Company
is exempted from the said Act or an assessment impact
on the said non-adoption
► Page 7 on “Employee Benefits” (b) states that “the
corporation does not have funded employee’s retirement
benefit plan. It has not recognized liability for service
and annual cost of earned retirement benefits due to its
employees, a departure from PAS 19.
► Based on Note 18, the company recognized a
retirement benefit cost. This is however not supported in
the Statement of Financial Position which do not show
any recognized retirement benefit liability.
Page 121
Common SEC Findings
Notes to the FS
Account Comment
Financial Assets / ► There is no explanatory note on the agreements
Liabilities covering the Corporate Notes restrictions and
requirements. There should have been a disclosure on
the information that is not presented elsewhere in the
financial statements, but is relevant to an understanding
to any of them. The disclosure should have included
details of the financial ratios that the company is
required to maintain.
► Note to the AFS indicates that the loan agreements
provide certain restrictions and requirements principally
with respect to maintenance of required financial ratios
and material change in ownership and controls. The
said restrictions and financial ratios requirements are
not disclosed.
► There is no explanatory note on “Due to Shang Grand
Tower Corp.” despite materiality of the amount
Page 122
Common SEC Findings
Notes to the FS
Account Comment
Financial Assets / ► There is no breakdown of the nature/description and
Liabilities amount of each item comprising “Accrued expenses”
► There are no or incomplete disclosure on loans and
receivables, i.e., accounting policy on impairment and
derecognition, initial measurement, subsequent
measurement, terms and condition, interest rate, nature of
assets held as collateral and its terms and conditions
relative to its use, repayment schedule and restrictions.
► Note 2 states that “Trade receivables are carried at original
invoice price less any allowance for doubtful accounts”.
This is not in accordance with Sec.11.14 which requires
debt instruments to be measured at amortized cost using
the effective interest method.
► Note 2.3, Trade receivables are stated initially at nominal
value. This is not in accordance with PAS 39, which
requires that loans and receivables shall be measured at its
fair value plus transaction cost except for financial assets
classified at fair value through profit or loss
Page 123
Common SEC Findings
Notes to the FS
Account Comment
Financial Assets / ► There is no aging analysis on receivables
Liabilities ► There is no disclosure showing that the following
conditions were considered in the provisioning for
probable losses as required (Financing Company):
a. Clean loans and advances past due for a period of more than six (6)
months;
b. Past due loans secured by collateral such as inventories,
receivables, equipment and other chattels that have declined in
value by more than 50% without the borrower offering additional
collateral for the loans;
c. Past due loans secured by real estate mortgage title to which is
subject to an adverse claim rendering settlement through foreclosure
doubtful;
d. When the borrower, and his co-maker or guarantor, is insolvent or
where their whereabouts is unknown, or their earning power is
permanently impaired;
e. Accrued interest receivable that remain uncollected after six
(6) months from maturity date of such loans to which it accrues; and
f. Accounts receivable past due for 361 days and more.
Page 124
Common SEC Findings
Notes to the FS
Account Comment
Available-for-Sale ► There is no accounting policy on the initial measurement
(AFS) financial of available-for-sale financial assets
Assets ► The following relevant disclosures were not provided:
► Description and terms and conditions of government
securities
► The facts that would establish the “rare circumstances” that
warranted the reclassification
► A Note indicates that “unquoted equity shares are
carried at cost less impairment”. This is not consistent
with the fair value hierarchy which indicates that the AFS
financial assets are fair valued at Level 2.
► Page 13 of the notes to financial statements, available-
for-sale financial assets are carried at fair value. Note 8
however, shows that the company's available-for-sale
financial assets include “Club share securities” that are
not traded in a formal exchange, thus, said securities
should have been carried at cost less impairment.
Page 125
Common SEC Findings
Notes to the FS
Account Comment
Cash and Cash ► There is no accounting policy on cash
Equivalents ► The cash beginning balance is not in conformity with the
cash ending balance per 2010 AFS
► There is no breakdown of items comprising the "Cash
and Cash Equivalents"
► There is no or incomplete disclosures on cash and cash
equivalents, i.e., amount, nature terms and conditions of
cash in bank
► There is no disclosure of any legal restriction which may
hinder its availability of "Cash in banks"
► There is no explanatory note on marketable securities
Page 126
Common SEC Findings
Notes to the FS
Account Comment
Inventories ► There are no accounting policy and disclosures on
“inventories”
► The accounting policy on measurement of inventories,
i.e., cost, is not in accordance with the prescribed
measurement basis of “lower of cost and NRV”
► There are no disclosure and recognition of the
inventories’ impairment loss which is the difference
between cost and net realizable value
► There is no disclosure of the amount of inventories
recognized as expense or reversed in profit or loss
► There is no disclosure on the total carrying amount of
inventories pledged as security for liabilities
► Note 17 indicates “other inventory adjustments” on raw
materials and finished goods amounting to P151,780
and P1,348,120, respectively, however, there is no
explanatory note on such adjustments
Page 127
Common SEC Findings
Notes to the FS
Account Comment
Business ► Incomplete disclosures on business combination, i.e.,
combination and the acquisition-date fair value of each major class of
disposal of consideration and the acquisition-date fair value of the
Subsidiary total consideration transferred, the amounts recognized
as of the acquisition date for each major class of assets
acquired and liabilities assumed.
► The basis and regulatory approval of the share-for-share
transaction are not disclosed
► The basis of determining the values of identified assets
was not disclosed, i.e., valuation technique used,
whether conducted by a qualified and accredited
appraiser
Page 128
Common SEC Findings
Notes to the FS
Account Comment
Investment in ► The entity's accounting in subsidiaries in separate
Subsidiaries financial statements is not disclosed
► Incomplete disclosures on Investment in subsidiaries,
i.e., date of approval of the Commission on the deposit
for future stock subscription; and basis for the allowance
on impairment losses
Page 129
Common SEC Findings
Notes to the FS
Account Comment
Investments in ► There is no disclosure of the company’s basis for
Associates classifying as investments with equity ownership of the
less than the threshold of 20% or equity ownership of
more than 50% as Investment in Associates
► A verification of the separate financial statements of
associates show that there are no disclosures on any
proposed increase in capital stock, i.e., Board and
stockholders approval, amount of increase on said
capital stock whether an application for said increase is
to be filed or already filed with SEC, and reason for the
delay of approval of the said increase with SEC (PAS 1,
as revised). The said disclosures should have justified
the recognition of the "Deposits for future stock
subscriptions" as additional investments in associates
instead of "Advances to associates“
Page 130
Common SEC Findings
Notes to the FS
Account Comment
Property and ► There is no accounting policies of initial recognition,
equipment subsequent measurement, derecognition and
impairment of property and equipment
► There are no disclosures on useful lives of property and
equipment
► The following disclosures are not provided:
► Description of the project
► Timeline of completion of the project; and
► Percentage of completion of the project
► There is no disclosure of the existence of restrictions on
title and carrying amounts of property and equipment
used as collateral for liabilities
► There are no or incomplete disclosures on ROPOA, i.e.,
nature, the description methods used, the useful lives or
the depreciation rate used, reconciling schedule for
2010 figures (Financing Company)
Page 131
Common SEC Findings
Notes to the FS
Account Comment
Property and ► Based in Note 8, major repairs were capitalized which is
equipment in contrary to the accounting policy adopted per Note 2
which states that expenditures for repairs and
maintenance are charged to expense as incurred.
► Based on page 6, PPE are subsequently measured at
“cost less accumulated depreciation, amortization and
any impairment in value”. This is inconsistent with the
recognition of “Revaluation surplus” which shows that
the company used the revaluation model (PAS 16).
► Note 15 (c) indicates that revaluation surplus of land
was based on bank’s appraisal and increases of values
by the Assessor’s Office. While that of the building was
revalued in 2005 in the amount of P60.092 Million due to
the increases in the value of construction materials.
Both methods are not acceptable basis of fair value
pursuant to PAS 16.
Page 132
Common SEC Findings
Notes to the FS
Account Comment
Property and ► Incomplete disclosures on the following with regards to
equipment the revaluation of PPE:
a. The methods and significant assumptions applied in estimating the
items’ fair value;
b. The extent to which the items’ fair values were determined directly
by reference to observable prices in an active market or recent
market transactions on arm’s length terms or were estimated using
other valuation techniques;
c. For each revalued class of PPE, the carrying amount that would
have been recognized had the assets been carried under the cost
model; and
d. The revaluation surplus, indicating the change for the period and any
restrictions on the distribution of the balance to shareholders“
► Note 10 states that “the amount of the land and building
approximately their fair value based on the recent
comparative price index level of similar properties within
the same area of location”. This is inconsistent with the
PPE schedule on the same Note which do not include
such properties
Page 133
Common SEC Findings
Notes to the FS
Account Comment
Investment ► There are no accounting policies and disclosures in
Property Investment Property
► Incomplete disclosures on "Investment Properties" i.e.,
depreciation methods used and useful lives or the
depreciation rate used; the basis of fair value of the
appraisal report; and reconciliation of carrying amounts
of investment property at the beginning and end of the
period
► Incomplete disclosures, i.e., methods and significant
assumptions applied in determining the fair value of
investment property, direct operating expenses arising
from investment property that did not generate rental
income during the period
► The Company incorrectly used the zonal value of its
investment properties as its basis of fair value
Page 134
Common SEC Findings
Notes to the FS
Account Comment
Other Non-Current ► There are no specific disclosures on “Advances” that
Assets would provide information that is not presented
elsewhere in the financial statements, but is relevant to
an understanding of any of them.
► A Note on accounting policy indicates that “Other
assets, if any, are carried at cost, and may include
current portion of non-trade receivables, such as loans
receivables, VAT input, accrued investment income,
prepayments and refundable/creditable income tax, if
any.” Said accounting policy however, incorrectly
includes “loans receivables” which should have been
measured at “amortized cost
It further indicates that "Non-current portion of loans
receivables are carried at cost or amortized cost using
effective interest method." There is, however, no
disclosure on the receivables that are being measured
using “cost” and those at amortised cost
Page 135
Common SEC Findings
Notes to the FS
Account Comment
Income Taxes ► There is no disclosure of the numerical reconciliation of
beginning and ending balance of deferred tax liability in
Note 12
Page 136
Common SEC Findings
Notes to the FS
Account Comment
Equity ► There are no disclosure and accounting policy on equity
► There are no disclosures on number of shares
authorized, issued and fully paid. Par value per share;
reconciliation of number of shares outstanding at the
beginning and at the end of the period
► There are no disclosures on "Subscription receivable"
which has been recorded as such for the last three
years
Page 137
Common SEC Findings
Notes to the FS
Account Comment
Equity ► Incomplete disclosures on Deposit for future
subscription, i.e., date of approval of increase in
capitalization by the Board of Directors and
Stockholders, date of filing with the Commission and the
status thereof
► The recognition of "Deposit for Future Stock
Subscription" under Equity section is not supported by
the following disclosures:
► Corporate's BOD and stockholders approvals for a
proposed increase in capital stock
► An application for the approval of the increase in
capital stock has been presented for filing or filed
with the Commission; and
► There is lack or insufficiency of authorized unissued
shares of stock to cover the deposit
Page 138
Common SEC Findings
Notes to the FS
Account Comment
Equity ► The Company’s Retained Earnings exceeds its paid-in
capital by 100%. There is however, no disclosure of any
appropriation of retained earnings to comply with
Section 43 of the Corporation Code.
► Incomplete disclosures on Reserves/Appropriated
Retained Earnings, i.e., date of approval of Board of
Directors and Stockholders, details of appropriation and
timeline of implementation/usage.
► The Statement of Income and Retained Earnings show
that the company declared a cash dividend in 2012
amounting to P2.7 million. There are however, no
disclosures whether said dividend declaration has been
approved by the Board of Directors.
Page 139
Common SEC Findings
Notes to the FS
Account Comment
Equity ► There is no summary discussion of the company's track
record of registration of securities that indicates the
number of shares registered, issue/offer price, date of
approval of registration statement and the number of
holders as of year end (Issuers of Unlisted Securities)
► The discussion of the Company’s plan to address capital
deficiency is incomplete and does not appear to be
concrete. There should be a disclosure on the
additional projects in which the management is planning
to enter into and the source of funding for such projects
Page 140
Common SEC Findings
Notes to the FS
Account Comment
Deposit for Future ► The recognition of "Deposit for Future Stock
Stock Subscription Subscription" as a separate line item under Equity
section is not correct considering that the Company has
enough unissued shares to cover the amount of deposit
Page 141
Common SEC Findings
Notes to the FS
Account Comment
RA No. 8556 (The ► The Company’s net worth is less than the required
Financing minimum paid up capital of P10M
Company Act of ► Investment in real estate and in shares of stocks in a
1998 and its real estate development corporation and other real
Implementing estate based projects exceeded 25% limit of the
Rules and Company’s net worth.
Regulations) ► The Company failed to use or invest more than 50% of
(Financing its fund in financing activities
Company)
► Total credit extended to the Company’s directors,
officers and stockholders exceeded the fifteen (15%)
limit of its net worth
Page 142
Thank you
SGV & Co. | Assurance | Tax | Transactions | Advisory
About SGV & Co.

SGV is the largest professional services firm in the Philippines that provides assurance, tax, transaction and advisory services. The
insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We
develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in
building a better working world for our people, for our clients and for our communities. SGV & Co. is a member firm of Ernst & Young
Global Limited.
For more information, please visit www.ey.com/ph.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst &
Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
© 2016 EYGM Limited.

All Rights Reserved.
This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional
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of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.
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SEC Rules, Updates and Common

At the end of the seminar, the participants will be able to:

► SECURITIES REGULATIONS CODE (SRC) Rule 68

► Securities Regulations Code (SRC) (Republic Act 8799)

► (i)(a) Stock corporation – paid up capital of P50,000 or

A. Issuers that sold a class of securities pursuant to a

► Financial statements in accordance with the applicable

Balance sheet accounts:

► Other current assets

► Indebtedness of/or advances to unconsolidated

► Other current liabilities

► Other long-term liabilities

Statement of comprehensive income:

► Net asset value per share – for mutual funds or

A. The financial statements to be filed with the Commission

Statement of ► The Statement of Comprehensive Income is not

Statement of ► The Statement of Changes in Equity is not attached to

Statement of Cash ► Material items on the face of the Statement of Cash

i. Philippine Financial Reporting Standards (PFRS) (Large

► Total assets of P350M or more, or total liabilities of P250M

► The Company incorrectly used PFRS for SMEs/

► The Notes to FS incorrectly adopted PFRS as its basis of

► The basis of preparation of the FS as stated in the SMR

► The basis of opinion, i.e. PFRS for SMEs is not consistent

► The Board of Directors, in discharging its responsibilities, reviews

► Chief Executive Officer

► Chief Finance Officer

► If provided in the company’s by-laws, persons holding equivalent

► In case of branch offices or regional operating headquarters of

All corporations covered by Rule 68 shall:

► The independent auditor’s responsibility for the financial statements

► For entities covered under Part II of the Rules (Issuers of securities

► Group A – issuers of securities to the Public, except

► For purposes of the above requirements, contributions or donations

► Underwriting and other fees generated;

► Basis of computation for each.

Transactions with DOSRI

► Total volume/amount of transaction for the year;

► Terms and conditions, such as maturity date, security, mode of

► FRB 1 clarifies that the map should be covered by a legal matter

► FRB 1 clarifies that the schedule should be covered by a legal

► FRB 16 provided a prescribed format for the schedule and require

► Additional schedules as specified under Annex 68-E

► A. Financial Assets – for each class of financial asset with

► F. Indebtedness to related parties – non-current balances.

Form and content of schedules are provided in Annex 68-E

► For those required to submit consolidated financial statements;

Schedules ► The Foundation failed to have the Sworn Statement of

► The auditor’s report failed to cover the schedule of

► Material misrepresentation in the financial statements

► Failure to submit financial statements audited by a

► 5% or more of Total Non-current Asset, if it is one of the non-current

Subject Matter Clarification / Details

Subject Matter Clarification / Details

Subject Matter Clarification / Details

Subject Matter Clarification / Details

► FRB 2 allows for the substitution of the wordings in “c”

Subject Matter Clarification / Details

► FRB 3 also clarified that the subject information need

Subject Matter Clarification / Details

Subject Matter Clarification / Details

Subject Matter Clarification / Details

Subject Matter Clarification / Details