Audited Financial Statement is also known as AFS. It is a legal document illustrating the financial standing of a company. It is designed to give a clear snapshot of the company’s financial and compliance activities to the Bureau of Internal Revenue or BIR and the Securities of Exchange Commission or SEC. As a business owner, this will also help you ascertain the fiscal health of your company, allowing you to see areas of strengths and improvements.
Companies are required by BIR and SEC to hire third-party auditors to make sure that the statement will not be biased. The companies will put together the financial statement based on accounting records and auditors will review and certify whether or not the statement is true. The auditing is done by an independent auditing or accounting firm. Failure to do so can mean severe penalties, along with an audit nightmare from the BIR. Learn more about this below and check if it applies to you.
Companies that Need to Submit an Audited Financial Statement
Under the Tax Reform Law Section 232, entitled Keeping of Books of Accounts. “…corporations, companies, partnerships or persons whose gross quarterly sales, earnings, receipts or output exceed One Hundred Fifty Thousand Pesos (P150,000) shall have their books of accounts audited and examined yearly by an independent Certified Public Accountants.”
However, the TRAIN law amended the requirement changing the total amount and the time frame. The changes are as follows: “Sec. 232. Keeping of Books of Accounts.—”…corporations, companies, partnerships or persons whose gross annual sales, earnings, receipts or output exceed Three million pesos (₱3,000,000), shall have their books of accounts audited and examined yearly by independent Certified Public Accountants.”
If you own a company that earns P3 million annually, you need to submit an audited financial statement every year. Hence, you must keep a record of your books and submit your company’s financial statement to be audited by tax and audit services in the Philippines.
Take note that the SEC has its own threshold regulation and its amount is PHP 600,000 total assets/liabilities. Even if you did not meet the threshold set by BIR, you are still required to get an AFS for SEC purposes.
Deadline for Filing the Audited Financial Statement
The deadline for filing AFS will depend on when your company’s registered financial year is. Typically, corporations whose fiscal dates other than December 31 should file their AFS within 120 calendar days from the end of its fiscal year. Notably, publicly listed companies and other issuers of security have 105 calendar days.
However, most companies prefer to file on the 15th day of the fourth month, where most companies lodge their Annual Income Tax Return (AITR). Most companies align their financial year with the calendar year so the deadline for filing audit obligations falls on April 15. After all the AFS must be submitted with the AITR.
The Process of Filing Audited Financial Statement
Check out the process of filing the audited financial statement below:
1. Create a Draft of Your Audited Financial Statement
Filing Audited Financial Statement or AFS will depend on how well your company operations have been tracking all financial and compliance activities to BIR and SEC. If your files are organized, it will be easier for your company to create a draft of your Audited Financial Statement.
2. Let an Independent Auditing Contractor Review Your Draft
Once you are done making the financial document, an independent auditing contractor should review it and certify the information to be correct, accurate, and updated. Fortunately, there are many accounting services offering help so you can comply with the government regulations.
3. Submit AFS to BIR
After that, you should submit the document to BIR. You can do it manually or online. If you want to manually file, you have to visit your local RDO or Regional District Office. If you wish to submit it virtually, check first whether or not your local RDO accepts online submissions because not all RDOs accept online processing of this requirement.
4. File AFS with SEC
After you submit your document to BIR, file your AFS with the Securities and Exchange Commission or SEC. As of now, the SEC will no longer be accepting AFS hard copies. It should be submitted online. You can file your AFS through SEC’s Online Submission Tool or OST. If you need to file your financial statements, you need to register with the OST.
Filing your Audited Financial Statement is simple and straightforward if you are diligent with your bookkeeping and accounting. If your records are disorganized, you will have a hard time creating the financial statement. Moreover, it is important to look for trustworthy third-party accounting contractors. You need someone skilled and reliable to audit and assess your operation accurately.
If you need assistance in this aspect, don’t hesitate to call our team. We can audit your books and certify your financial statements. Remember, failure to comply with government requirements can lead to penalties. Call us right away and take advantage of our free 30-minute consultation.