SEC revises Financial Reporting Bulletins for 2022: Amendments and Deletions implemented article from Mazars Philippines Accounting Firm Mazars Accounting firm in the Philippines, Audit firm in the Philippines, payroll services, and corporate services com (2024)

The Securities and Exchange Commission (SEC) held a meeting deciding that specific Financial Reporting Bulletins (FRBs) needed to be updated because of the changes in the rules regarding financial reporting.

The Securities and Exchange Commission (SEC), thru its Commission en Banc (the ‘Commission’), held a meeting on January 2022, where it was decided that specific Financial Reporting Bulletins (FRBs) needed to be updated because of the changes in the rules and regulations towards the financial reporting currently implemented by the Commission, more specifically, a section within the Revised Securities Regulation Code (SRC) Rule 68 (the ‘Rule’), which was put in practice on October 18, 2019.

The most significant amendments and deletions on the FRBs are listed below, along with bulletins still being used but have not been altered.

FRB Amendments:

Bulletin No:	Date	Bulletin Section	Amendments
01	January 6, 2022	Changes to Rule 68 of Revised Securities Regulation Code (SRC) on other documents and schedules to be filed along with the financial statements.	Other documents following Part I, Section 5 and the schedules under Annex 68-J of the Rule submitted with the company statements must be covered by the Statement of Management’s Responsibility (SMR). The amended FRB emphasises documents and schedules, stating that they should be covered by a legal matter paragraph in the Auditor’s Report or placed in an alternate auditor report on each component. However, this should only be practised if it applies to the company.
02	January 6, 2022	Changes to SRC rules on Material Uncertainty Related to Going Concern Section – Part I, Section 3 (E)(vi)	The amendments state that if, other than the specific extensions given under subpar. (vi), items (1) to (3) of Part I. Section 3(E) of the Rule, and the auditor believes that the audit report on a company with capital deficiency does not warrant an additional section for material uncertainty related to going concern, confirmation needs to be obtained from the Commission by passing through the submission of a position paper. But for companies that have incurred a capital deficiency, their external auditor must give a Material Uncertainty Related to Going Concern section in the Audit Report, following the guidelines in Part 1. Section 3(E)(v) of the Rule. The previous version of the FRB required an Emphasis of Matter paragraph for companies with capital deficiency instead of a section of a material uncertainty related to the issue.
06	January 6, 2022	Deposits for Future Subscriptions	The SEC approved this guideline due to implementing a one-day processing” policy of applications to increase Authorized Capital Stock (ACS). It states that an entity must classify a contact to deliver its equity instruments under equity as a separate account form (ex. Deposit for Stock Subscription) Outstanding Capital Stock if all the elements presented in the FRB are present. The bulletin also explains that an investment company is no longer mandated to comply with the minimum subscribed and paid-up capital relative to the increase in its authorised capital stock. This makes it so that investment companies can no longer accept deposits for future stock subscriptions starting December 20, 2020. However, DFFS recognised within the equity in the financial statements are still acceptable given that all the elements mentioned in this Rule are present as of the end of the field reporting period and that the application for an increase in authorised capital stock has been filed with the commission before December 20, 2020
07	January 6, 2022	Statement of Management’s Responsibility (SMR)	The Regional/Area Headquarters (RHQ) was established in the Philippines with total assets of Six Hundred Thousand (P600,000), or more is covered by Revised SRC Rule 68. Paragraph (vi) of Part I, Section (2)(B) of the Rule will also be applied to RHQ. This makes it that the SMR will be signed by its local manager currently in charge of the operations in the county.
09	January 6, 2022	Micro Entities	Micro Entities that have previously adopted full PFRSs by SEC’s Notice of Implementation Guidelines on PFRS for SMEs can continue using full PFRS. Nevertheless, micro-entities may also choose to change their financial reporting framework to one of the options available under the Rule. Such change should be accounted for following PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The revisions also clarify that micro-entities are not required to disclose their rationale for choosing whichever financial reporting framework is available for them in their notes about the financial statements.
10	January 6, 2022	On entities in the process of filing their financial statements to issue any class of instruments (whatever shares of stock or bonds) in a public market	This bulletin states that financial statements that are to be filled by entities to issue any class of instruments (be it by shares of stock or bonds) in a public market are required to comply with the provisions of Part of the Revised SRC Rule 68, including the supplementary schedules in Annex 68-J. The FRB also added a requirement in the form of a schedule within the prescribed Form per Annex 68-E of the Rule, this shows financial soundness indicators in two (2) comparative methods, which are as follows: Current/Liquidity Ratios Solvency Ratios, debt-to-equity ratios Asset-to-equity Ratios Interest rate coverage ratios Profitability Ratios Other relevant ratios as the Commission may consider necessary. All these with the requirement that an Auditor’s Report covers the schedule only applies to Listed Companies.

FRB Deletions:

The bulletins listed below have been removed due to the implementation of the FRBs.

Bulletin No:	Date	Bulletin Section	Description
08	April 3, 2012	Small and Medium-sized Entities (SMEs)	This removed bulletin explains that specific types of SMEs can be exempted from the mandatory adoption of the Philippine Financial Reporting Standard (PFRS) for SMEs and will have the option to apply for full PFRS.
16	January 24, 2013	List of Effective Standards and Interpretations (as of December 31, 2012)	This required large and/or publicly accountable entities to submit with their audited financial statements a schedule, in a table format, showing in the first column a list of all the effective standards and interpretations under the PFRS as the year-end.
17	March 7, 2013	Newly Registered Corporations	This deleted bulletin once mandated that every corporation, either domestic or foreign, that are lawfully doing business in the Philippines need to submit an annual report of its operations to the SEC, together with a financial statement of its assets and liabilities, certified by any independent certified public accountant in appropriate cases, covering the preceding fiscal year and such other requirements as required by the SEC.
18	December 22, 2015	Age Requirement for Financial Statements	This previously mandated that for the time a registration statement on SEC Form 12-1 to become effective, the financial information therein shall be as of a date 180 days (about 6 months) from the effective date. The SEC will no longer grant further requests for extension of said period.
20	January 26, 2017	Revised SMR	This removed bulletin was in line with the adoption of the new and revised auditor reporting standards, it required the standard form of SMR is prescribed under Section 2 (B) of the Revised SRC Rule 68, as mandated.

Unamended Bulletins

The bulletins listed below are still being used and have not received any significant changes:

Bulletin No. 003 – Revised SRC Rule 68: Disclosures of receivables/ payables with related parties are mandated to be eliminated during consolidation (Annex 68-J)
Bulletin No. 004 – Includes business establishments not covered under Revised SRC Rule 68

Bulletin No. 005 – Includes businesses that have no operations but is covered under Revised SRC Rule 68
Bulletin No. 011 – Highlights Non-stock and non-profit organizations
Bulletin No. 012 – Contains Annex 68-J – Schedule A. Financial Assets meant for Issuers of Securities to the Public
Bulletin No. 013 – Shows the Presentation of Related Party Disclosures
Bulletin No. 014 – Shows the Presentation Reconciliation of Retained Earnings
Bulletin No. 015 – Presents the Appropriation of Retained Earnings for Business Expansion

Bulletin No. 019 – Expectations for an Effective Audit Function

Based on the information provided, it seems that the Securities and Exchange Commission (SEC) recently held a meeting to discuss updates to specific Financial Reporting Bulletins (FRBs) due to changes in the rules regarding financial reporting. The meeting took place in January 2022 and focused on the amendments and deletions to the FRBs. The amendments include changes to Rule 68 of the Revised Securities Regulation Code (SRC) related to other documents and schedules to be filed along with financial statements, changes to SRC rules on Material Uncertainty Related to Going Concern Section, guidelines for Deposits for Future Subscriptions, requirements for the Statement of Management's Responsibility (SMR), and provisions for Micro Entities and entities filing financial statements to issue instruments in a public market. The deletions involve bulletins related to Small and Medium-sized Entities (SMEs), a list of effective standards and interpretations, newly registered corporations, age requirement for financial statements, and a revised SMR. There are also several unamended bulletins that are still being used and have not received significant changes [[1]].

Amendments to FRBs:

Bulletin No. 01 - This bulletin, dated January 6, 2022, introduces changes to Rule 68 of the Revised Securities Regulation Code (SRC) regarding other documents and schedules to be filed along with financial statements. It emphasizes that these documents and schedules should be covered by a legal matter paragraph in the Auditor's Report or placed in an alternate auditor report on each component. However, this requirement only applies if it is relevant to the company [[1]].
Bulletin No. 02 - Dated January 6, 2022, this bulletin amends SRC rules on Material Uncertainty Related to Going Concern Section. It states that if the auditor believes that the audit report on a company with capital deficiency does not warrant an additional section for material uncertainty related to going concern, confirmation needs to be obtained from the Commission by submitting a position paper. However, for companies that have incurred a capital deficiency, their external auditor must include a Material Uncertainty Related to Going Concern section in the Audit Report, following the guidelines in Part 1, Section 3(E)(v) of the Rule. The previous version of the FRB required an Emphasis of Matter paragraph for companies with capital deficiency instead of a section on material uncertainty [[1]].
Bulletin No. 06 - This bulletin, dated January 6, 2022, introduces guidelines for Deposits for Future Subscriptions. It states that an entity must classify a contract to deliver its equity instruments under equity as a separate account form (e.g., Deposit for Stock Subscription) Outstanding Capital Stock if all the elements presented in the FRB are present. The bulletin also explains that investment companies can no longer accept deposits for future stock subscriptions starting December 20, 2020. However, DFFS (Deposit for Future Stock Subscriptions) recognized within the equity in the financial statements is still acceptable if all the elements mentioned in the Rule are present as of the end of the reporting period and if the application for an increase in authorized capital stock has been filed with the commission before December 20, 2020 [[1]].
Bulletin No. 07 - Dated January 6, 2022, this bulletin pertains to the Statement of Management's Responsibility (SMR). It states that Regional/Area Headquarters (RHQ) established in the Philippines with total assets of Six Hundred Thousand (P600,000) or more are covered by Revised SRC Rule 68. Paragraph (vi) of Part I, Section (2)(B) of the Rule will also be applied to RHQ. This means that the SMR will be signed by the local manager currently in charge of the operations in the country [[1]].
Bulletin No. 09 - This bulletin, dated January 6, 2022, focuses on Micro Entities. It clarifies that Micro Entities that have previously adopted full PFRSs (Philippine Financial Reporting Standards) by SEC's Notice of Implementation Guidelines on PFRS for SMEs can continue using full PFRS. However, micro-entities may also choose to change their financial reporting framework to one of the options available under the Rule. Such a change should be accounted for following PAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. The revisions also state that micro-entities are not required to disclose their rationale for choosing a particular financial reporting framework in their notes about the financial statements [[1]].
Bulletin No. 10 - Dated January 6, 2022, this bulletin pertains to entities in the process of filing their financial statements to issue any class of instruments (shares of stock or bonds) in a public market. It states that financial statements to be filed by such entities are required to comply with the provisions of Part of the Revised SRC Rule 68, including the supplementary schedules in Annex 68-J. The bulletin also adds a requirement for a schedule within the prescribed Form per Annex 68-E of the Rule, which shows financial soundness indicators in two comparative methods. These indicators include current/liquidity ratios, solvency ratios, debt-to-equity ratios, asset-to-equity ratios, interest rate coverage ratios, profitability ratios, and other relevant ratios as determined by the Commission. The requirement for an Auditor's Report covering the schedule only applies to Listed Companies [[1]].

Deletions to FRBs:

The following bulletins have been removed due to the implementation of the FRBs:

Bulletin No. 08 - Dated April 3, 2012, this bulletin pertained to Small and Medium-sized Entities (SMEs). It explained that specific types of SMEs could be exempted from the mandatory adoption of the Philippine Financial Reporting Standard (PFRS) for SMEs and had the option to apply for full PFRS [[1]].
Bulletin No. 16 - Dated January 24, 2013, this bulletin required large and/or publicly accountable entities to submit a schedule, in a table format, showing all the effective standards and interpretations under the PFRS as of the year-end [[1]].
Bulletin No. 17 - Dated March 7, 2013, this bulletin mandated that every corporation, domestic or foreign, lawfully doing business in the Philippines, needed to submit an annual report of its operations to the SEC, along with a financial statement of its assets and liabilities, certified by any independent certified public accountant in appropriate cases, covering the preceding fiscal year and other requirements as required by the SEC [[1]].
Bulletin No. 18 - Dated December 22, 2015, this bulletin previously mandated that the financial information in a registration statement on SEC Form 12-1 should be as of a date 180 days (approximately 6 months) from the effective date. The SEC will no longer grant further requests for an extension of this period [[1]].
Bulletin No. 20 - Dated January 26, 2017, this bulletin pertained to the revised Statement of Management's Responsibility (SMR) in line with the adoption of new and revised auditor reporting standards. It required the standard form of SMR prescribed under Section 2(B) of the Revised SRC Rule 68 [[1]].

Unamended Bulletins:

The following bulletins are still being used and have not received significant changes:

Bulletin No. 003 - Revised SRC Rule 68: Disclosures of receivables/payables with related parties are mandated to be eliminated during consolidation (Annex 68-J)
Bulletin No. 004 - Includes business establishments not covered under Revised SRC Rule 68
Bulletin No. 005 - Includes businesses that have no operations but are covered under Revised SRC Rule 68
Bulletin No. 011 - Highlights non-stock and non-profit organizations
Bulletin No. 012 - Contains Annex 68-J - Schedule A. Financial Assets meant for Issuers of Securities to the Public
Bulletin No. 013 - Shows the Presentation of Related Party Disclosures
Bulletin No. 014 - Shows the Presentation Reconciliation of Retained Earnings
Bulletin No. 015 - Presents the Appropriation of Retained Earnings for Business Expansion
Bulletin No. 019 - Expectations for an Effective Audit Function [[1]].

Please note that the information provided is based on the available search results and may not include the most recent updates or changes. It is always recommended to refer to official sources or consult with professionals for the most up-to-date and accurate information regarding financial reporting regulations and guidelines.