SEC Chairman Lilia R. Bautista said the commission will not hesitate to enforce the necessary sanctions on companies that will be found to have violated SEC reportorial rules as well as provisions in the statement of financial accounting standards (SFAS).
The SFAS is the local equivalent of the international accounting standards (IAS), a set of globally recognized accounting standards and procedures on the presentation of financial statements.
The SEC provided additional sanctions on any officer or director of a company who causes untrue or misleading information in the financial statements or materially incomplete financial reports. The penalty is a P100,000 fine plus a daily fine of P500 until the information is corrected.
Bautista said a team of financial experts and business professors has been formed to closely review the audited financial statements of listed firms for fiscal year 2002 to determine whether they comply with generally accepted accounting standards.
Last year, the SEC amended Rule 68 of the Securities Regulation Code in view of the adoption and implementation of the International Accounting Standards (IAS) by 2005. Amended Rule 68 requires all stock corporations except those with paid-up capital less than P50,000 to file audited financial statements which conform with the generally accepted accounting principles (GAAP).
The GAAP provides a common basis to both preparers and users of the financial statements for understanding the information that is presented in these reports.
There are 500,000 corporations and partnerships currently registered with the SEC but only 200,000 comply with the required submission of financial statements.
While the review will initially involve financial statements of the country’s 237 listed corporations, other corporations will also be under scrutiny in line with efforts to improve financial reporting transparency and comparability. The team’s findings will be submitted to the SEC for possible action against the companies and their auditors.
Under Rule 68, companies are required to disclose the impact of SFAS, which have been approved but not implemented, on their fiscal year 2002 balance sheets. – Zinnia dela Peña