MANILA — The Securities and Exchange Commission (SEC) is strengthening oversight of auditing firms and external auditors, particularly for government contractors, in a bid to protect investors and prevent corruption.

On April 1, the commission released a draft memorandum circular for public comment proposing amendments to its accreditation guidelines for auditors of SEC-regulated entities under Revised Rule 68 of the Securities Regulation Code (SRC).

The proposed rules would expand oversight to corporations with government contracts totaling at least ₱150 million in a year, or single contracts of at least ₱100 million. These companies would be required to engage SEC-accredited auditors under the Group A category until projects are fully completed. Companies must also submit a notarized schedule disclosing project descriptions, costs, and status, accompanied by an auditor’s report.

The SEC is also raising qualification standards for auditors. Group A applicants must now have at least five corporate clients with total assets of ₱100 million each, up from the previous ₱50 million. Group B auditors must serve at least five clients with ₱50 million in assets each, up from three clients with ₱20 million. Group C auditors must handle at least five clients with ₱5 million in assets, instead of three.

The draft also introduces stricter evaluation standards and new grounds for outright denial of accreditation. These include misrepresentation during evaluation, issuing unqualified opinions despite material misstatements, six or more material findings in a single financial statement, and failure to maintain independence, including cases where the auditor directly prepared the statements.

The public may submit comments on the proposed rules to the SEC Office of the General Accountant via email at secoga@sec.gov.ph until May 15.