Audited Financial Statements (AFS) in the Philippines: BIR and SEC Rules, With 2027 Dates

Atty. Yasser R. Aureada, CPA

Jan 5

11 min read

Updated: 2 days ago

Short answer: AFS means audited financial statements: yearly financial statements examined by an independent CPA. The BIR requires an audit when gross annual sales, earnings, receipts or output exceed ₱3 million. The SEC requires one when total assets or total liabilities exceed ₱3 million (SEC Memorandum Circular No. 4, series of 2026), or the company is a public interest entity. Smaller corporations file unaudited statements with a sworn Statement of Management's Responsibility (SMR). File with the BIR first, then the SEC. Calendar-year 2026 income tax returns are due April 15, 2027.

What does AFS mean?

AFS stands for audited financial statements: a company's yearly financial statements after an independent certified public accountant (CPA) has examined them and given an opinion on whether they are fairly presented. The term shifts a little with context:

BIR: the AFS is an attachment to the annual income tax return, uploaded through eAFS, the BIR's Electronic Audited Financial Statements system (Revenue Memorandum Circular (RMC) No. 20-2026).
SEC: its circulars often use AFS for annual financial statements, which covers audited statements and the unaudited statements small corporations may file (SEC Memorandum Circular (MC) No. 9, s. 2026).
Accounting: AFS can also mean available-for-sale financial assets, a category under the old PAS 39. PFRS 9, in effect for years beginning on or after January 1, 2018, dropped it. Financial assets are now measured at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss.

What is in a set of audited financial statements?

Under Philippine Financial Reporting Standards (PFRS), a complete set has (PAS 1, Presentation of Financial Statements):

a statement of financial position (balance sheet);
a statement of profit or loss and other comprehensive income (statement of comprehensive income);
a statement of changes in equity;
a statement of cash flows; and
notes, with the accounting policies and other explanations.

Each statement shows last year's figures for comparison. The filed AFS also includes:

the independent auditor's report, with the CPA's opinion; and
the SMR, in which top officers state that management prepared the statements and is responsible for them. The BIR requires one with the income tax return (Revenue Regulations (RR) No. 3-2010). The SEC requires one with audited and unaudited statements alike (SRC Rule 68; SEC Financial Reporting Bulletin No. 20; SEC MC No. 4, s. 2026).

The accounting standard depends on size: small entities (total assets or total liabilities above ₱3 million up to ₱100 million) generally use PFRS for Small Entities, and micro entities (₱3 million or less) may use it or the income tax basis (SEC MC No. 5, s. 2018; SEC MC No. 4, s. 2026). See our PFRS guide.

Which ₱3 million test applies to you?

Each agency has its own test:

SEC (balance sheet test): total assets or total liabilities above ₱3 million (SEC MC No. 4, s. 2026, amending Revised SRC Rule 68).
BIR (income test): gross annual sales, earnings, receipts or output above ₱3 million (Section 232(A), National Internal Revenue Code (NIRC), as amended by Republic Act (RA) No. 10963). The Ease of Paying Taxes Act (RA No. 11976) left this rule unchanged.

A holding company with large assets but little income may need an audit only for the SEC; a trader with high sales but a small balance sheet, only for the BIR. Since the SEC accepts only BIR-received statements, one audited set usually serves both.

What is the SEC audit threshold under SEC Memorandum Circular No. 4, series of 2026?

SEC Memorandum Circular No. 4, series of 2026, dated January 20, 2026, raised the SEC's audit threshold. It amends Revised SRC Rule 68, the SEC's rule on the form and content of financial statements.

Old test: an audit was needed at total assets or total liabilities of ₱600,000 or more.
New test: an audit is needed only if total assets or total liabilities are more than ₱3 million. If both are ₱3 million or less, unaudited statements with an SMR are enough.
Start: fiscal years ending on or after December 31, 2025. Earlier year-ends keep the ₱600,000 test.
Legal basis: the Revised Corporation Code lets the Department of Finance set the size below which statements need only be certified under oath (Section 74). It approved ₱3 million in November 2025.
Exceptions: public interest entities must be audited whatever their size. These are companies in the SEC's Groups A, B or C and others the SEC finds vested with public interest. The SEC may also require an audit from any corporation to protect investors or the public.

What do corporations below the SEC threshold file?

They still file annual financial statements through eFAST, the SEC's online filing system. The filing has (SEC MC No. 4, s. 2026):

unaudited statements with at least a statement of financial position, an income statement and notes, with comparative figures where applicable; and
an SMR signed under oath by the chairman, the president or CEO, and the treasurer or CFO, as authorized by the board. For a One Person Corporation (OPC), the president and treasurer sign. If an authorized signer is absent, the board may expressly delegate the task to an officer or director with equivalent authority.

The circular's annexes give SMR templates. The signers answer for the figures; incomplete, false or misleading statements are penalized under the Securities Regulation Code and the Revised Corporation Code.

Who must file audited financial statements with the SEC?

Every corporation, domestic or foreign, doing business in the Philippines files annual financial statements and a General Information Sheet (GIS) with the SEC (Section 177, Revised Corporation Code). An audit by an independent CPA is required for:

domestic stock and nonstock corporations with total assets or total liabilities above ₱3 million (SEC MC No. 4, s. 2026);
branches and representative offices of foreign corporations with assigned capital (stock corporations) or total assets (nonstock corporations) of ₱1 million or more, and regional operating headquarters with revenues of ₱1 million or more (SEC MC No. 9, s. 2026); and
public interest entities of any size (SEC MC No. 4, s. 2026).

Groups A to C, the SEC's auditor-accreditation groups, cover listed and public companies, issuers of registered securities, and certain financial institutions and large nonprofits (SEC MC No. 20, s. 2019, as amended). One Person Corporations follow the same ₱3 million test; see OPC compliance in 2026. For the GIS, see our GIS guide.

Who is not required to file audited financial statements?

With the SEC:

Domestic stock and nonstock corporations, including OPCs, whose total assets and total liabilities are both ₱3 million or less, unless they are public interest entities or the SEC orders an audit. They still file unaudited statements with a sworn SMR (SEC MC No. 4, s. 2026).
Sole proprietors. The SEC rule covers corporations (Section 177, Revised Corporation Code), so only the BIR test applies to a sole proprietorship.

With the BIR:

Taxpayers whose gross annual sales, earnings, receipts or output are ₱3 million or less (Section 232(A), NIRC). They need no audit, but they still attach financial statements to the income tax return where required. The BIR's 2026 filing circular lists "unaudited or audited financial statements" among the attachments (RMC No. 20-2026).
Individuals who claim the optional standard deduction (OSD). They need not submit with their return the financial statements otherwise required, but they must keep records of their gross sales or receipts (Section 34(L), NIRC, as amended).

What does the BIR require with the AFS?

Above the ₱3 million test, Section 232(A) requires corporations, partnerships and other persons to have their books audited yearly by an independent CPA, and to file income tax returns with information from the certified statements.

Return deadline: April 15 for calendar-year corporations, or the 15th day of the fourth month after a fiscal year ends (Section 77(B), NIRC, as amended by RA No. 11976).
Attachments: only those that apply, such as the audited or unaudited financial statements with notes, the SMR, certificates of taxes withheld, and BIR Form 1709 for related-party transactions (RMC No. 20-2026).
Tax notes: the notes must show taxes, duties and license fees paid or accrued during the year, including VAT, withholding taxes, documentary stamp tax, other national and local taxes, and any deficiency assessments and tax cases (RR No. 21-2002, as amended by RR No. 15-2010, implementing Section 6(H), NIRC).
eAFS: upload the attachments within 15 days after the return deadline, or after actual filing if the return is late (RMC No. 34-2025; RMC No. 20-2026).

In 2026, the BIR moved the return, payment and attachments from April 15 to May 15 (RMC No. 30-2026), with attachments due by May 15 whatever the filing date (RMC No. 39-2026). Taxpayers hit by eAFS failures had until May 25 for attachments only (RMC No. 46-2026). If you missed a BIR date, see what happens if you miss a BIR filing deadline.

How do you get an AFS done and submitted?

Close your books early. Management prepares the financial statements; the auditor examines them.
Engage an independent CPA with the right accreditation (see the next section).
Get the auditor's report and sign the SMR.
File the income tax return with the BIR, then upload the AFS and other attachments through eAFS. Keep the confirmation receipt.
File with the SEC through eFAST. The SEC accepts only statements stamped "received" by the BIR, or accompanied by the eAFS confirmation receipt showing the company name, TIN, taxable year and file names (SEC MC No. 9, s. 2026).
Include all basic components required by Revised SRC Rule 68. Email, courier and over-the-counter filings are no longer accepted.
Mind the timing. Weekend and holiday filings count as filed on the next working day (SEC MC No. 9, s. 2026).

Who can do the audit?

Any audit: an independent CPA accredited by the Board of Accountancy (BOA) and the Professional Regulation Commission for public practice (Sections 28 and 31, RA No. 9298).
Group A, B and C entities: an SEC-accredited auditor from the matching group (Revised SRC Rule 68; SEC MC No. 20, s. 2019). The Supreme Court upheld the SEC's power to require this accreditation in SEC v. 1Accountants Party-List, Inc. (G.R. No. 246027, January 28, 2025).
Other companies do not need an SEC-accredited auditor.

What mistakes get an AFS filing reverted or penalized?

The SEC reverts (sends back) a report for (SEC MC No. 9, s. 2026):

poor image quality, such as blurred or unreadable pages;
wrong page orientation;
the wrong company profile;
the wrong period covered or the wrong submission type; and
an erroneous or incorrect report.

A reverted report counts as not filed. If the corrected report comes in after the deadline, it is late. Other mistakes that break the rules:

Filing with the SEC before the BIR. The SEC needs the BIR stamp or the eAFS confirmation receipt (SEC MC No. 9, s. 2026).
A missing or defective SMR. It must be signed under oath by the right officers (SEC MC No. 4, s. 2026). SEC reviews have flagged SMRs without a complete signing date or signed by someone who is not a director or officer (SEC, 2022 AFS Review Common Findings).
Missing parts. Leaving out a basic component required by Revised SRC Rule 68 is ground for penalties, even after acceptance (SEC MC No. 9, s. 2026).
No tax notes for the BIR. The notes must carry the tax information listed in RR No. 15-2010.
The wrong auditor. Group A, B and C companies need an auditor with the matching SEC accreditation (SEC MC No. 20, s. 2019).
Checking only one test. Being below the SEC's ₱3 million test does not settle the BIR's, and the reverse.

What happens after you file?

BIR proof: the eAFS Transaction Reference Number or confirmation receipt proves you submitted the attachments (RMC No. 20-2026). The SEC filing needs it.
SEC receipt: eFAST receives the AFS automatically and issues a QR code, subject to post review (SEC MC No. 9, s. 2026).
SEC review: all reports stay subject to review, and acceptance does not stop penalties for deficiencies found later (SEC MC No. 9, s. 2026). If the SEC reverts your report, correct and refile it quickly.
Records: keep your books of accounts and accounting records for five years, counted from the day after the return deadline, or from the filing date if the return was late (Section 235, NIRC, as amended by RA No. 11976).
Errors in the tax return: you may amend a filed return within three years from filing, if no notice of audit or investigation has been served on you (Section 6(A), NIRC).

What are the fines for filing late?

Under SEC MC No. 6, s. 2024, a domestic stock corporation that files late (within a year after the deadline) pays ₱5,000 to ₱25,000 for a first offense, depending on retained earnings, plus ₱1,000 for each month of delay (₱500 if in deficit). Non-filing (more than a year late, or never) costs ₱10,000 to ₱30,000 for a first offense. Fines rise with each repeat offense, and nonstock and foreign corporations have separate scales. Three failures to file within five years can mean delinquent status (Section 177, Revised Corporation Code).

From May 14 to December 31, 2026, the SEC is not charging the monthly add-on, but basic fines and deadlines still apply (SEC MC No. 16, s. 2026). See SEC penalties for late AFS filing.

What were the SEC deadlines in 2026?

SEC MC No. 9, s. 2026 (February 11, 2026) set the schedule for December 31, 2025 year-ends. After the BIR's extension, an SEC notice dated April 14, 2026 moved the dates:

Most corporations, including branches, representative offices and regional headquarters of foreign corporations: May 29 to June 15, 2026.
Listed companies, registered issuers, public companies and other filers under Section 17.2 of the Securities Regulation Code (with SEC Form 17-A): April 15 to May 15, 2026.
Brokers and dealers (with SEC Form 52-AR): April 30 to May 15, 2026.
Other fiscal years: within 120 calendar days after year-end (SEC MC No. 9, s. 2026).

What dates apply to 2027 filings?

For years ending December 31, 2026:

Threshold: the ₱3 million test applies again (SEC MC No. 4, s. 2026).
BIR: the return is due Thursday, April 15, 2027. If the 15-day rule stays, eAFS attachments are due Friday, April 30, 2027; confirm in the BIR's 2027 circular.
SEC: watch for the 2027 schedule. The baseline is 120 calendar days after year-end, which would be April 30, 2027, unless the SEC sets another date. In 2026, the schedule came out in February, and the SEC later gave more time.
Penalties: monthly add-ons return on January 1, 2027, unless the SEC extends the relief. File any missing 2025 statements while it lasts.
Government contractors: corporate contractors with a single government contract of ₱400 million or more, or ₱500 million or more in total, will need Group A or B auditors (SEC MC No. 26, s. 2026). Check when the rule first applies to your reporting period.

More dates are in our compliance calendar.

Frequently asked questions

What does AFS mean for the BIR?

Audited financial statements attached to the annual income tax return and uploaded through eAFS. An audit is needed only if gross annual sales, earnings, receipts or output exceed ₱3 million.

Our assets are under ₱3 million. Do we still file with the SEC?

Yes. If your liabilities are also ₱3 million or less, file unaudited statements with a sworn SMR through eFAST, unless you are a public interest entity.

Our sales exceed ₱3 million, but our assets are small. Do we need an audit?

Yes, for the BIR (Section 232(A), NIRC). File the same BIR-received audited statements with the SEC.

When are 2027 filings due?

The income tax return is due April 15, 2027. For the SEC date, check the SEC's 2027 circular.

Sources

Republic Act No. 11232 (Revised Corporation Code), Sections 74 and 177
National Internal Revenue Code of 1997, as amended, Sections 6(A), 6(H), 34(L), 77(B), 232(A) and 235
Republic Act Nos. 10963 (TRAIN Law), 11976 (Ease of Paying Taxes Act) and 9298 (Philippine Accountancy Act of 2004, Sections 28 and 31)
SEC Memorandum Circular No. 4, Series of 2026 (January 20, 2026), with Annexes A.1 and A.2
SEC Memorandum Circular Nos. 9 (February 11, 2026), 16 (May 13, 2026) and 26, Series of 2026
SEC Notice dated April 14, 2026 (extension of 2025 AFS deadlines)
SEC Memorandum Circular No. 6, Series of 2024; No. 20, Series of 2019; and No. 5, Series of 2018
Revised SRC Rule 68; SEC Financial Reporting Bulletin No. 20 (2017)
SEC, 2022 AFS Review Common Findings
Revenue Regulations No. 3-2010, and No. 21-2002, as amended by Revenue Regulations No. 15-2010
Revenue Memorandum Circular Nos. 34-2025, 20-2026, 30-2026, 39-2026 and 46-2026
PAS 1, Presentation of Financial Statements; PFRS 9, Financial Instruments; PAS 39
SEC v. 1Accountants Party-List, Inc., G.R. No. 246027, January 28, 2025

Looking for an accredited external auditor?

Our assurance practice is accredited with the SEC and BSP (Class C) and with the Cooperative Development Authority (CDA) as an external auditor, and audits financial statements for SEC and BIR filing. See our audit and assurance services.

Book a consultation

You can also email info@aureadalaw.com or call (02) 8812-9990.

Related guides

This article is general information as of its publication date, not legal advice, and does not create a lawyer-client relationship. For advice on your situation, consult a lawyer.