SEC pushes for stricter compliance with audit quality and financial reporting

THE Securities and Exchange Commission (SEC) is pushing for stricter compliance with audit quality and financial reporting among companies as part of efforts to improve governance in the local corporate sector.

“The SEC remains steadfast in its commitment to ensure that companies strictly comply with accounting policies and uphold audit quality as it continues to promote good governance in the corporate sector,” SEC Chairperson Emilio B. Aquino said in an e-mail statement on Thursday.

During a March 5-7 inspection workshop in Mauritius by the International Forum of Independent Audit Regulators (IFIAR), SEC Oversight Assurance Review (SOAR) Inspection Team Leader Guada May S. Preciados and SOAR Deputy Inspection Team Leader Rizzo D. Tarroza highlighted auditing and financial reporting challenges in the Philippines.

These include instances of companies misapplying accounting policies, particularly in recognizing and measuring revenue, as well as auditors failing to evaluate whether the application of accounting policies complies with local reporting standards.

“These challenges in financial reporting underscore the need for stricter oversight and enhanced auditor training to ensure that auditors exercise a heightened level of professional skepticism and due care when assessing the appropriateness of revenue recognition practices,” the SEC said.

“Establishing robust consultation policies and procedures within audit firms is also vital to enabling auditors to seek guidance and challenge complex accounting treatments effectively,” it added.

The IFIAR inspection workshop gathered more than 100 audit regulators from 56 member countries to exchange insights on improving global audit oversight and regulatory best practices.

It is an annual event hosted by a member country, with its inspection workshop working group currently led by the Auditor Oversight Body of Germany. — Revin Mikhael D. Ochave