SEC issues amendments to Investment Co. Act

The Securities and Exchange Commission (SEC) has issued amendments to the implementing rules and regulations of the Investment Company Act.

Specifically, the SEC laid down responsibilities of independent accountants in fulfilling their audit functions.

Independent accountants shall be responsible in observing the principles on the expectation for an effective audit function.

They shall also perform the audit of financial statements of the investment fund managers and fund distributor in accordance with the requirements of the Philippine Standards on Auditing, the Ethical Standards under International Ethics Standard Board of Accountants Code of Ethics for Professional Accountants and relevant regulatory issuances of the commission.

Independent auditors shall also report to the commission any non-compliance by the investment company, fund manager and fund distributor with their contractual and regulatory requirement, based solely on the matters discovered from performing the audit.

“The engagement contract shall contain a provision that the disclosure of information by the independent auditor to the commission shall not constitute a breach of confidentiality nor shall it be ground for civil, criminal or disciplinary proceedings against the independent auditor,” the SEC said.

SEC chairman Emilio Aquino said the amendments shall be applicable beginning the 2018 audit engagement.

The SEC has been continuously improving corporate governance efforts by tightening rules governing companies and tapping third parties such as independent auditors to help them in their regulatory function.

In other jurisdictions in the past, investors have blamed independent auditors for conniving with companies in concealing fraudulent acts or those that violate corporate governance standards.

Aquino said under his leadership, the SEC seeks to protect investors by putting in place tighter regulatory measures.

The SEC chair said there is a constant need to strike a balance between encouraging investments in the country and at the same time protecting investors. –