Many companies in the Philippines are now starting to prepare for their annual SEC filing deadlines in the coming weeks. Here is what you need to know about the key upcoming filings – the Audited Financial Statement and the General Information Sheet.
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Are you starting to prepare for your annual SEC filings? We hope so! It’s likely that your company’s Audited Financial Statement (AFS) and General Information Sheet (GIS) have to be filed in the coming weeks. Don’t forget that there are financial penalties for failing to file on time or failing to file at all!
The Securities and Exchange Commission (SEC) has published its first memo of 2019, SEC Memorandum Circular No. 1 (SMC No.1) The purpose of the memo is to educate businesses on the requirements for filing the AFS and GIS with the SEC.
We want to make it even easier for you! That’s why we have outlined below a comprehensive guide on SMC No.1 and the process for filing an AFS and GIS with the SEC in the Philippines.
Need strategic advice on your accounting, bookkeeping and finance activities? Visit www.cloudcfo.ph today to book a free consultation.
- 1 The Audited Financial Statement (AFS)
- 2 What is the SEC filing deadline for the AFS?
- 3 Who is required to file an AFS with the SEC?
- 4 Do you have to submit other information with the AFS?
- 5 Is the company fully compliant once the AFS has been submitted to the SEC?
- 6 Where is the AFS filed?
- 7 General Information Sheet (GIS)
- 8 What is the GIS?
- 9 What is the deadline for filing the GIS?
- 10 Where can you file the GIS?
- 11 When will the SEC review the GIS?
- 12 SEC filing penalties – AFS and GIS
The Audited Financial Statement (AFS)
What is the SEC filing deadline for the AFS?
For businesses with calendar fiscal years (i.e. financial years ending on Dec. 31, 2018), the date by which the AFS must be filed is dictated by the last digit of the company’s SEC Registration License Number.
So if the SEC Registration Licence Number ends in:
- 1 or 2, the deadline is April 22,23,24,25,26
- 3 or 4, the deadline is April 29,30, May 2,3
- 5 or 6, the deadline is May 6,7,8,9,10
- 7 or 8, the deadline is May 20,21,22,23,24
- 9 or 0, the deadline is May 27,28,29,30,31
Companies with a fiscal year that does not end on December 31 must file their AFS within 120 calendar days of their fiscal year end. So, if your company’s fiscal year ends on March 31, the AFS must be filed with the SEC on or before July 29.
Our recent article on preparing for the 2019 audit season also includes information to help you achieve compliance with your audit deadlines.
Who is required to file an AFS with the SEC?
By definition, all registered corporations must file an AFS with the SEC. This article deals with private corporations. Corporations with stocks registered with the Philippine Stock Exchange (PSE) have different filing requirements.
What about company branches? Yes, branches must file also. In fact, all regional headquarters, regional operating headquarters of foreign corporations and even representative offices are required to file an AFS with the SEC.
So review your corporate structure now – make sure you are complying with your SEC filing requirements across all parts of your business!
Do you have to submit other information with the AFS?
Yes. The requirements for AFS filings with the SEC are governed by the Securities Regulation Code No. 68. An AFS submitted to the SEC must:
- Include a Statement of Management’s Responsibility for Financial Statements – a document affirming that the company’s management (including the Board of Directors) is responsible for the accuracy and completeness of the submitted financial statement.
- Include an independent auditor’s report. The auditor must be SEC accredited to ensure a SEC-compliant auditor’s report. A company may receive a “qualified” audit report if there is an issue with their accounting records. This can result in financial penalties for the company! So make sure your company has appropriate accounting and bookkeeping process in place. A great starting point is to ensure that the company’s books of accounts are regularly maintained and can support the company’s business model. Check out our recent article that identifies which books of accounts best support the various types of businesses.
- Comply with the Philippine Financial Reporting Standards (PFRS) or PFRS for SMEs (for companies categorised as Small and Medium-sized Entities).
- Be stamped as “received” by the Bureau of Internal Revenue (BIR) or a BIR authorized bank (the BIR may allow an alternative proof of submission from its authorized banks).
Is the company fully compliant once the AFS has been submitted to the SEC?
No! Acceptance by the SEC of the AFS does not mean a company is compliant. It just means that the company filed on time. The SEC can decide to audit a company itself. If the SEC finds deficiencies with the company or its filings through this audit, financial penalties can be imposed by the SEC!
Where is the AFS filed?
Companies can file the AFS at the SEC head office at the PICC Building, PICC Complex, Roxas Blvd., Pasay City, Metro Manila (Operating Hours 8AM-5PM M-F) Contact Number: (02) 584-7652 or at one of the SEC satellite or extension offices across the Philippines. Find your nearest SEC office here.
A company can also use the SEC Express Nationwide Submission System (SENS) to file their AFS. SENS is a system that enables a company to file SEC documents through a courier – no need for a company representative to attend the SEC. The company will first have to download and complete the SENS Checklist and Undertaking Form. This link provides further information on SENS.
General Information Sheet (GIS)
What is the GIS?
The General Information Sheet (GIS) is an annual document submitted to the SEC which contains information about a company’s corporate profile (type of corporation, stockholder information, investments, dividend information, etc). The SEC uses the information in the GIS to monitor and regulate companies under its supervision and the securities market.
What is the deadline for filing the GIS?
Local corporations must submit the GIS within 30 calendar days after their annual stockholders or members meeting (depending on the type of corporation).
Foreign corporations must file their GIS within 30 calendar days after the anniversary date of their SEC Registration.
Where can you file the GIS?
Corporations can file their GIS at the SEC head office or at one of the SEC satellite or extension offices. See the AFS section above for details on the SEC offices in the Philippines.
A company can also use SENS (see the AFS section above) to file their GIS.
When will the SEC review the GIS?
The SEC will check the GIS immediately upon submission. Obvious mistakes will be highlighted by the SEC at once – which will give the company time to correct the submission.
Remember – just like with the AFS filing, acceptance by the SEC of the GIS does not confirm compliance! The SEC can still audit the company and impose penalties at a later stage.
SEC filing penalties – AFS and GIS
Penalties for late filings to the SEC are calculated on the total assets of the corporation as stated in the company’s most recent financial statements.
For late AFS and GIS filings – the minimum penalty for each first offence is P500, for companies with assets of P100,000 or less. The penalty rises with the increase in assets, up to P5,000 for companies with assets above P10,000,000.
For a failure to file for a first offence, the minimum fine is P1,000 for a company with assets of less than P10,000. The maximum fine is P10,000 for a company with assets amounting to more than P10,000,000.
For second and third offences for both late filings and non-filings, add an additional 10% and 15% respectively to the total fines calculated!
For a complete list of fines and penalties, check out the SEC’s Consolidated Scale of Fines.
One of the most common reasons why companies file their AFS late is because their books of accounts have not been closed out in time. Outsourcing your accounting and bookkeeping services can solve this issue and help ensure no deadlines are missed.
CloudCfo’s team of highly-skilled accounting and bookkeeping professionals can help you to achieve compliance and ultimately grow your business. Cloudcfo.ph offers a wide-range of accounting, tax and bookkeeping services – with the further benefit of a strategic financial report as an added-value output. Never miss a deadline again!
Our accounting and bookkeeping services are provided online via cloud accounting and through the use of smart technology. These are just some of the services offered by CloudCfo.