At the beginning of every year, most Philippine companies are required to prepare the Audited Financial Statement. This is also known as an AFS and is a legal document that shows the financial standing of a company. According to tax services in Manila, the AFS is designed to show you a glimpse, or a clear snapshot, of an operation’s compliance and financial activities with the Bureau of Internal Revenue (BIR) and the Securities and Exchange Commission.
The Philippine BIR and SEC both require companies to work with third-party auditors to ensure that their financial statements are bias-free and error-free. That said, it is important to note that third-party auditors only clarify and certify the veracity of the information. The companies are still majorly responsible for putting together the financial statement by consistently implementing correct accounting practices.
Think of it like preparing a worksheet for school to then have it submitted and checked by a teacher. Third-party auditors are often independent accounting or auditing firms. But, with recent new developments in technology that allow for work to be done across varying distances, many have also opted for outsourcing accounting online, especially when this proves to be more economical. If you are interested in knowing more, read on to find out.
Who and what companies must submit an Audited Financial Statement?
The Tax Reform Law requires that all companies with operations grossing a quarterly amount of at least P 150,000 submit an audited financial statement. This includes Corporations, Companies, Partnerships, Sole Proprietorships, and Individual persons (self-employed), and those fitting the aforementioned criteria must submit to a yearly audit by a Certified Public Accountant.
However, the new TRAIN law has included amendments that state only companies whose gross annual sales, earnings, receipts, or output reach or exceed a sum of P3,000,000 are required to be subject to a yearly audit by a Certified Public Accountant. Companies or individuals must submit an Audited Financial Statement if they reach or surpass this threshold at any given time in the year.
Noteworthy, the SEC also has in place a threshold regulation for assets and liabilities, amounting to P 600,000. Even if companies do not reach the P 3,000,000 threshold but meet the threshold for assets or liabilities, they are required to submit an AFS for the SEC.
When is the filing deadline for Audited Financial Statements?
There is no specific deadline for SEC and BIR audit requirements. That is because the deadline will vary for each company depending on the start of their fiscal year. That said, the Audited Financial Statements are to be submitted along with the Annual Income Tax Return on the 15th day of the fourth month after the company’s year-end date.
If you are like most companies that end their fiscal year in December, following the calendar year, then your deadline will be the 15th of April the year following that which ended in December. According to accounting services in the Philippines, those companies that do not follow the December 31 deadline have 120 calendar days from the end of the fiscal year. Meanwhile, publicly listed companies and other issuers of security only have 105 calendar days.
What is the Filing Process?
The filing process will depend on the diligence of your operation in keeping track of all transactions, both financial and compliance activities.
- Create a draft of your financial statement
The first step would be for your company to finish preparing its statements. All this hinge on proper accounting efforts throughout the year.
- Send this to a reputable auditor
After this, your files must be sent to an auditor who will certify their correctness, accuracy, and how updated the files are. You must choose a reputable team offering tax and audit services in the Philippines to make sure there are no issues with your paperwork with submitting to government offices.
- Submit the certified AFS to the BIR
The next step is your company must submit the AFS to the BIR. This can be done manually or online. Do take note that not all RDOs accept online submissions. If you’re keen on doing virtual filing, then you must verify this first.
- Submit the AFS to the SEC
Finally, you can file your AFS with the SEC. As of the moment, the SEC no longer accepts hard copies of your records. Hence, you must create an account by registering with the SEC’s Online Submission Tool or OST. From there, you will be able to upload your AFS online and comply with the requirements.
It’s easy to file your audited financial statement if you’re diligent with bookkeeping and accounting. The most important part in this step is to look for a reliable team of CPAs to audit and certify the veracity of your financial statements. If you need help with this, our team can do it for you. We offer tax and audit services in Pasig, Metro Manila. Schedule a free consultation with us today so we can get started.