Philippines services
The Filing of the Audited Financial Statement is just around the corner for many businesses in the Philippines! From engaging an Auditor to submitting the AFS, here’s all you need to know!
Last updated on March 9, 2026
The filing of the Audited Financial Statement in the Philippines is just around the corner for many PH businesses! Time to consider your company’s financial reporting obligations.
Unless your business is an exempt business under Philippine law, you will be required to prepare, audit, and file audited financials, in the form of an Annual Financial Statement, with both the BIR and the SEC every year.
The deadline for filing the 2025 Financial Statement for many PH businesses falls around April 2026. This means that “audit season” in the Philippines has well and truly started!
Is your PH business audit-ready?
Below, we provide an in-depth explainer of the Audited Financial Statement for Philippine companies, explore what “Audit Season” actually means, and identify some of the key items that PH businesses must be aware of to ensure that their Audited Financial Statement is filed by the April BIR deadline.
An audited financial statement (AFS) is any financial statement that has been audited by a Certified Public Accountant (CPA).
The CPA verifies that the statement adheres to accounting principles and auditing standards, guaranteeing its accuracy. Having gone through additional verification, an AFS helps banks and government agencies like the BIR establish trust and legitimacy in a company’s financials.
These are the four types of financial statements that may be audited to become an AFS:
Provides a snapshot of a company’s assets, liabilities, and shareholders’ equity at any point in time. It shows the company’s overall financial performance.
Tracks the cash that flows in and out of a company. This financial statement is useful in monitoring liquidity and ensuring there is sufficient funds for their obligations and investments.
Shows a company’s revenues, expenses, and profits over a specific period. This provides insight into a company’s operational efficiency and profitability.
Outlines changes in the equity portion of a company’s balance sheet. It shows changes to a company’s value to shareholders during a specific period.
Every year in the Philippines, most non-exempt businesses are required to prepare and submit key financial documents to both the BIR and the SEC. One of these documents is the Audited Financial Statement (AFS).
The period leading up to the deadline for submitting the AFS is commonly referred to as “Audit Season”.
The audit process is a mandatory statutory requirement under Philippine law and is monitored by the Bureau of Internal Revenue (BIR) and the Securities and Exchange Commission (SEC). Through the statutory audit process, regulators are able to verify whether companies are maintaining proper financial records and complying with local financial reporting and tax regulations.
Statutory audits are a common regulatory practice used by governments around the world to promote transparency, strengthen corporate governance, and improve tax compliance among businesses.
The audit season in the Philippines generally begins after the close of a company’s fiscal year. For companies following the standard calendar fiscal year of January 1 to December 31, audit season typically begins early in the following year and continues until the BIR filing deadline in April.
Why is it a ‘Season’?
Because of this, companies are encouraged to begin preparing early by organizing financial records, compiling supporting documents, and coordinating with their auditor well before the filing deadline. Maintaining well-managed books throughout the year can significantly simplify the audit process once the audit season begins.
During the audit season, businesses in the Philippines are required to submit the following finance-related documents:
The submission of the AFS is required by the BIR and SEC to ensure that PH businesses provide a clear and accurate picture of their companies’ financial and compliance activities. The practice allows these regulators to verify each company’s financials.
Both the BIR and SEC require financial statements in the Philippines to be audited, or independently certified, by an independent party – such as, an auditor or audit firm – to ascertain the accuracy and clarity of the company’s financials.
The process starts with the company preparing their yearly financial statements. This often involves internal processes to ensure the completeness and accuracy of the document.
The company then submits their financial statements to an independent auditing firm or auditor. The auditor reviews the financial statements to ensure that it has been prepared in accordance with local Philippine tax and compliance requirements.
Once the auditor verifies that the financial statements accurately reflect the company’s financial activities and comply with reporting standards, they sign the audit report. The financial statements can now be referred to as audited financial statements (AFS).
When people speak about “Audit Season” in the Philippines, it is usually safe to assume that they are referring to the statutory requirement to submit an Audited Financial Statement – which comes around 120 days after the close of their fiscal year, every year.
However, a reference to a “BIR Audit” generally means something quite different.
The BIR, as the tax-collecting body of the Philippines, can use its discretion to examine or investigate the financial and tax compliance practices of a company in the country at any point. They investigate a business’s bookkeeping, financial, and tax compliance activities.
Businesses to be audited are selected at random to ensure continuous adherence to taxation regulations. More importantly, this means that not all companies go through a BIR Audit yearly.
Audit Season and a BIR Audit are two different processes with specific, though similar, requirements. Make sure your business and your team is prepared for either. Work with an experienced accountant or bookkeeper in the Philippines to make sure you are always compliant with taxation laws and regulations.
Finally, if you receive a Letter of Authority (LOA) from the BIR, inform your accountant immediately.
Audit and financial reporting requirements can differ depending on a number of matters. This might include the size of a business, the value of the assets/liabilities of a business and even the type of corporate entity operating a business (e.g. foreign corporations, company branches, representative offices, partnerships, etc).
Below are the general requirements regarding which PH businesses need to submit an Audited Financial Statement. However, as each case might differ, you should always speak with your accountant to understand your company’s obligations when it comes to the preparation and submission of the AFS.
Unless exempt, corporations, partnerships or individuals with gross annual sales of more than PHP 3 million (₱3,000,000) are required to submit an AFS to the BIR each year.
The AFS will be filed as an attachment to the company’s annual income tax return, or AITR.
The SEC also has specific thresholds defining which companies are required to file an AFS with the SEC. Again, each company will have different circumstances and requirements. However, below are the companies required to submit an AFS to the SEC in accordance with Revised SRC Rule 68:
| Corporation Type | Threshold for Mandatory AAFS |
|---|---|
| Stock Corporations | Total assets or liabilities > ₱3,000,000 |
| Non-stock Corporations | Total assets or liabilities > ₱3,000,000 |
| Branch / Representative Offices of Stock Foreign Corporations | Assigned capital ≥ ₱1,000,000 |
| Branch / Representative Offices of Non-stock Foreign Corporations | Total assets ≥ ₱1,000,000 |
| Regional Operating Headquarters (ROHQ) | Total revenues ≥ ₱1,000,000 |
In light of the above, there may be cases wherein a taxpayer may not be required to file an AFS with the BIR (based on the filing threshold), but may actually still have to file an AFS with the BIR if they are required to file an AFS with the SEC (as the SEC requires that an AFS be stamped as filed by the BIR prior to submission with the SEC).
The deadline for filing Annual Financial Statements (AFS) depends on your company’s registered fiscal year end. For 2026, the SEC has updated its filing schedule and granted an extension, setting the deadline for most corporations to June 15, 2026 for the filing of 2025 AFS.
Fiscal Year Ending March 31, 2025
If your company’s fiscal year ended on March 31, 2025, you must file your Annual Income Tax Return (AITR) with the BIR by July 15, 2025, together with your Audited Financial Statements (AFS).
Standard Calendar Year End (December 31, 2025)
For most Philippine businesses following the calendar year (ending December 31, 2025):
Failure to submit your Audited Financial Statement in the Philippines leads to penalties from both the BIR and the SEC.
The BIR imposes a surcharge of 25% on the tax due and an additional penalty of 12% interest per annum for late filing of tax returns. Non-submission results in a penalty ranging from Php 10,000 to Php 50,000, as well as potential imprisonment if the BIR deems non-submission as willful neglect or fraud.
The SEC imposes fines ranging from Php 5,000 to Php 18,000 for late submission of AFS. Corporations incur an additional Php 1,000 for every month they fail to submit their Audited Financial Statement.
Filing an Audited Financial Statement for small businesses involves several critical steps to ensure compliance with the BIR and SEC. Here are the steps:
The process starts with the compilation of financial data – income statements, balance sheets, and cash flow statements. This is done by the company, often from the start of the fiscal year.
Then, the company engages with their auditing company or an accredited CPA who will review and certify the financial statement.
Once the auditor expresses their opinion on the financial statement, the auditing process is complete.
Obtain the following certifications before filing your AFS:
The Audited Financial Statement may be filed with the BIR manually or online.
Filing manually means physically attending at your local Regional District Office (RDO) of the BIR and filing hard copies of the AFS at the counter.
To file digitally, visit the BIR’s online filing portal and follow the steps for creating an account and uploading your documents.
Depending on how the business is registered with the BIR, your accounting firm may be able to file the AFS online for you. So make sure to ask your accountant or bookkeeper about the most efficient method for filing your Audited Financial Statement.
The AFS filing with the SEC is done completely online, through the Electronic Filing and Submission Tool (eFAST).
Create an account at eFAST. Then, submit your Audited Financial Statement, the stamped Statement of Management’s Responsibility, and the independent auditor’s report.
The amount of work you’ll need to successfully complete the auditing process and submit your Audited Financial Statement in the Philippines depends on how you’ve managed your Books of Account and general finances throughout the particular financial year.
If your books are well-maintained and accurate, the audit process should run smoothly, with limited clarifications and queries from the Auditor.
In short, the better shape your books are in, the more efficient the audit!
An equally important factor in the success of filing Audited Financial Statements for small businesses in the Philippines is the selection of an independent Auditor.
Below are just some of the key factors that a small business in the Philippines should consider when selecting an Auditor for their Audited Financial Statement.
If your small business’s fiscal year is ending on 31 December 2025 and you have not engaged with an Auditor for your Audited Financial Statement, make this a top priority in the coming days.
Engaging an audit firm is only the first step—audit season is just beginning. Since the audit process can be costly and time-consuming, it’s essential to have a strong audit management plan in place from the start.
The key is audit planning. Setting clear timelines for each step helps both the company and the audit firm stay aligned. It’s also important to designate an audit manager on both sides. This ensures clear communication, accountability, and smooth collaboration throughout the process.
Who is responsible for completing the audit and submitting the Audited Financial Statement? The legal responsibility lies with the company. However, the audit firm is hired and paid to deliver this service within an agreed timeline.
In short, a successful audit depends on ongoing, proactive collaboration between the company and the audit firm at every stage.
Preparing for Audit Season starts with maintaining accurate and organized financial records. When a company’s books of accounts are well-managed, preparing the documents needed for an Audited Financial Statement (AFS) becomes much easier and the audit process can run more smoothly.
Some businesses choose to work with accounting service providers to help maintain their books and prepare financial reports throughout the year. CloudCFO offers expert accounting services that supports startups and SMEs in the Philippines with bookkeeping, compliance, and financial reporting.
While CloudCFO does not perform financial statement audits, if you’re looking for a reliable accounting partner that keeps your books audit-ready all year round, we’d love to help. Get in touch with us today or reach out via hello@cloudcfo.ph.
And to stay ahead of audit deadlines and compliance requirements, subscribe to our newsletter for timely updates on financial and regulatory developments in the Philippines.
Get accurate, audit-ready books and monthly reports from a dedicated accounting team led by a Senior Accountant.
Explore this service →or book a free consultation
Questions about how this affects your business? Our team replies within one business day.
![BIR Form 2303 or the Certificate of Registration: The Key Tax Compliance Document for PH Businesses [2026 Update]](https://cdn.prod.website-files.com/6abb649ace693a5b89cd1f0d/6acdaa89487fec15bcf8b451_6acda4b16be660d665036059_blog-bir-certificate-of-registration.jpeg)
