The Securities and Exchange Commission (SEC) has issued Memorandum Circular No. 04, series of 2026, introducing amendments to the application and definition of terms under the Revised SRC Rule 68, particularly in relation to the adjustment of the audit threshold for entities required to submit audited financial statements.

The Circular updates financial reporting requirements to better reflect current economic conditions and the operational scale of covered entities, while promoting more efficient regulatory compliance.

Adjustment of Audit Threshold

A key feature of the Circular is the adjustment of the audit threshold used to determine which entities are required to submit audited financial statements. The revised threshold affects the classification of entities subject to mandatory audit and reporting obligations, particularly smaller corporations and entities whose financial scale falls below the updated level.

By revising the threshold, the SEC aims to rationalize audit requirements and ensure that regulatory obligations are proportionate to the size and complexity of an entity’s operations.

Amendments to Definitions and Coverage

The Circular also revises and clarifies certain terms and provisions under the Revised SRC Rule 68 to ensure consistent application of the rules. These amendments include:

  • updated definitions relevant to financial reporting and audit coverage;
  • clarification of the entities required to file audited financial statements;
  • corresponding adjustments to reporting and compliance requirements based on the revised threshold; and
  • alignment of financial reporting obligations with the entity’s classification and level of public accountability.

The amendments are intended to remove ambiguity in the determination of audit requirements and provide clearer guidance to regulated entities.

Regulatory Objective

According to the SEC, the amendments seek to streamline compliance procedures, enhance transparency in financial reporting, and ensure that audit requirements remain responsive to prevailing business conditions. The measure likewise supports the efficient allocation of regulatory resources by focusing audit requirements on entities with greater public accountability.

Read the full issuance here.