SEC simplifies financial reporting for small firms

The Securities and Exchange Commission (SEC) has simplified financial reporting for small companies in line with efforts to support the growth of these entities.

Small entities are those that have total assets of between P3 million and P100 million or total liabilities of between P3 million and P100 million. If the entity is a parent company, the said amounts shall be based on the consolidated figures.

They are also considered small entities if they are not required to file financial statements under Part II of the Securities Regulation Code and are not in the process of filing their financial statements for the purpose of issuing any class of instruments in a public market and that they are not holders of secondary licenses issued by regulatory agencies.

Among the features of the new financial reporting requirements include allowing inventories to be subsequently valued at the lower cost and market value.

Investment properties can also be carried either at cost or at fair value, depending on the policy choice made by the entity and that there is no accounting for onerous contracts.

Entities are also given a choice of not recognizing deferred taxes in the financial statements and that biological assets can be carried either at cost or at current market price.

Small entities are required to adopt the new requirements beginning Jan. 1, 2019.