SRC Rule 68 outlines the financial reporting requirements for entities regulated by the Philippine Securities and Exchange Commission (SEC). It classifies reporting entities into large/publicly accountable, medium-sized, small, and micro based on asset/liability thresholds. Large entities use full PFRS/IFRS. Medium entities use PFRS/IFRS for SMEs, while small entities use PFRS for Small Entities. Micro entities can choose PFRS for Small Entities or a tax basis. The rule specifies financial statement components required for each classification.
SRC Rule 68 outlines the financial reporting requirements for entities regulated by the Philippine Securities and Exchange Commission (SEC). It classifies reporting entities into large/publicly accountable, medium-sized, small, and micro based on asset/liability thresholds. Large entities use full PFRS/IFRS. Medium entities use PFRS/IFRS for SMEs, while small entities use PFRS for Small Entities. Micro entities can choose PFRS for Small Entities or a tax basis. The rule specifies financial statement components required for each classification.
SRC Rule 68 outlines the financial reporting requirements for entities regulated by the Philippine Securities and Exchange Commission (SEC). It classifies reporting entities into large/publicly accountable, medium-sized, small, and micro based on asset/liability thresholds. Large entities use full PFRS/IFRS. Medium entities use PFRS/IFRS for SMEs, while small entities use PFRS for Small Entities. Micro entities can choose PFRS for Small Entities or a tax basis. The rule specifies financial statement components required for each classification.
SRC Rule 68 outlines the financial reporting requirements for entities regulated by the Philippine Securities and Exchange Commission (SEC). It classifies reporting entities into large/publicly accountable, medium-sized, small, and micro based on asset/liability thresholds. Large entities use full PFRS/IFRS. Medium entities use PFRS/IFRS for SMEs, while small entities use PFRS for Small Entities. Micro entities can choose PFRS for Small Entities or a tax basis. The rule specifies financial statement components required for each classification.
Regulation Code (SRC) Rule 68 Securities and Exchange Commission The Philippine Securities and Exchange Commission (SEC) is the regulatory agency charged with the supervision of the corporate sector. Its function expands to the following:
• Regulation and registration of securities • Development and regulation of the corporate and capital market toward good corporate governance, protection of investors, widest participation of ownership and decentralization of wealth What’s in SRC Rule 68? This Rule (together with other official pronouncements, interpretations and rulings on accounting and reporting matters) states the requirements applicable to the form and content of financial statements required to be filed with the SEC meeting the threshold: What’s in SRC Rule 68? a. Stock & non‐stock corporations with total assets and liabilities of P 600,000 or more b. Branch offices/representative offices of stock & non‐stock foreign corporations with assigned capital of P 1,000,000 or more c. Regional operating headquarters of foreign corporations with total revenues of P 1,000,000 or more. The Reporting Entities under SRC Rule 68 Under SRC Rule 68, the following are the classifications of the reporting entities: a) large and/or publicly accountable entities b) medium‐sized entities; c) small entities; and d) micro entities The Reporting Entities under SRC Rule 68 Large and/or publicly‐accountable entities are those that meet any of the following criteria: a) total assets of more than P350 million or total liabilities of more than P250 million; b) are required to file financial statements under Part II of SRC Rule 68; c) are in the process of filing their financial statements for the purpose of issuing any class of instruments in public market; d) are holders of secondary licenses issued by regulatory agencies. The Reporting Entities under SRC Rule 68 Medium‐sized entities are those that meet all the following criteria: a) total assets of more than P100 million to P350 million or b) liabilities of more than P100 million to P250 million (for a parent reporting entity, the amounts are consolidated figures); c) are not required to file financial statements under Part Il of Rule 68; The Reporting Entities under SRC Rule 68 Medium‐sized entities are those that meet all the following criteria: d) are not in the process of fling their financial statement for the purpose of issuing any class of instrument in the public market; and e) are not holders of secondary licenses issued by regulatory agencies. The Reporting Entities under SRC Rule 68 Small entities are those that meet all the following criteria., a) total assets of between P3 million and P100 million or liabilities of between P3 million and P100 million (for a parent reporting entity, the amounts are based on consolidated figures); b) are not required to file financial statements under Part Il of Rule 68; The Reporting Entities under SRC Rule 68 Small entities are those that meet all the following criteria., c) are not in the process of filing their financial statements for the purpose of issuing any class of instruments in the public market; and d) are not holders of secondary licenses issued by regulatory agencies. The Reporting Entities under SRC Rule 68 Micro entities are those that meet all the following criteria: a) total assets and total liabilities of less than P3 million; b) are not required to file financial statements under Part lI of Rule 68; c) are not in the process of filing their financial statements for the purpose of issuing any class of instruments in a public market; and d) are not holders of secondary licenses issued by regulatory agencies Applicability of Philippine Financial Reporting Frameworks There are 4 financial reporting frameworks widely used in practice. The use of these frameworks will vary depending on the classification of the reporting entity. a) Large and or publicly accountable entities shall prepare their financial statements using the full PRFS/IFRS. b) Medium‐sized entities shall use the PFRS/IFRS for SMEs as their framework. Applicability of Philippine Financial Reporting Frameworks The following medium‐sized entities may choose to prepare their financial statements using either the full PFRS/IFRS or PRFS/IFRS for SMEs (Sec Memorandum Circular No. 5, s. 2018): a) a subsidiary of a parent reporting under the full PFRS/IFRS b) a subsidiary of a foreign parent that will move towards the full PFRS/IFRS c) a significant joint venture or associate that is part of a group that is reporting under Full PFRS/IFRS; Applicability of Philippine Financial Reporting Frameworks d) branch office or regional operating headquarter of a foreign company reporting under Full PFRS/IFRS; e) An SME which has subsidiary that is mandated to report under Full PFRS/IFRS; f) an entity that has a short‐term projection that it will breach the quantitative threshold set in the criteria for a medium‐sized entity, provided that the event that caused the change in classification is considered "significant and continuing"; Applicability of Philippine Financial Reporting Frameworks g) an entity that has a concrete plan to conduct an initial public offering within the next two years; h) an entity that has been preparing financial statement under Full PFRS/IFRS and decided to liquidate; and i) and other entities that the SEC may consider as valid exceptions from mandatory adoption of PFRS for SMEs. Applicability of Philippine Financial Reporting Frameworks Reporting entities classified as small entities that meet criteria shall use the PFRS for Small Entities as adopted by the Securities and Exchange Commission.
Small entities that have operations or investments in another country with a different functional currency shall apply instead the PFRS/IFRS for SMEs or the Full IFRS/PFRS. Applicability of Philippine Financial Reporting Frameworks However, small entities falling under any of the following, may at their option apply the PFRS/IFRS for SMEs or Full PFRS/IFRS, instead of PFRS for Small Entities (SEC Memorandum Circular No. 5, s. 2018): a) a subsidiary of a parent reporting under Full PFRS/IFRS or PFRS/IFRS for SMEs; b) a subsidiary of a foreign parent that will move towards Full IFRS or IFRS for SMEs; c) a significant joint venture or associate that is part of a group that d) is reporting under full PFRS/IFRS or PFRS/IFRS for SMEs; Applicability of Philippine Financial Reporting Frameworks However, small entities falling under any of the following, may at their option apply the PPRS/IRRS for SMEs or Full PFRS/IFRS, instead of PFRS for Small Entities (SEC Memorandum Circular No. 5, s. 2018): e) a branch office or regional operating headquarter of a foreign company reporting under Full PFRS/IFRS PFRS/IFRS for SMEs; f) an entity that has a short‐term projection that it will breach the quantitative threshold set in the criteria for a small entity, provided that the event that caused the change in classification is considered significant and “continuing”; Applicability of Philippine Financial Reporting Frameworks However, small entities falling under any of the following, may at their option apply the PPRS/IRRS for SMEs or Full PFRS/IFRS, instead of PFRS for Small Entities (SEC Memorandum Circular No. 5, s. 2018): g) an entity that has a concrete plan to conduct an initial public offering within the next two years; h) an entity that has been preparing financial statement under Full PFRS or PFRS for SMEs and has decided to liquidate; and i) and other entities that the SEC may consider as valid exceptions from mandatory adoption of PFRS for Small Entities. Applicability of Philippine Financial Reporting Frameworks Micro entities have the option of adopting either the PFRS for Small Entities or the income tax basis. The following, at a minimum, shall consist the micro entities' financial statements: a) Statement of Management's Responsibility, b) Auditor's Report, c) Statement of Financial Position, d) Statement of Income; and e) Notes to Financial Statements All these components must cover two‐year comparative periods.
