On December 28, 2020, the Securities and Exchange Commission (SEC) issued SEC Memorandum Circular No. 35, Series of 2020 (referred to herein after as “the Circular”) that provides the adoption of an industry specific framework for licensed financing companies (FCs), lending companies (LCs) and accredited microfinance NGOs (MF-NGOs), to be referred to as either the Philippine Financial Reporting Standards (PFRS), Philippine Financial Reporting Standard for Small and Medium-Sized Entities (PFRS for SMEs) or Philippine Financial Reporting Standard for Small Entities (PFRS for SEs), as modified by the application of the financial reporting reliefs issued and approved by the SEC. Accordingly, FCs, LCs and MF-NGOs have the option to prepare their annual financial statements using the said industry specific framework, or full PFRS, PFRS for SMEs or PFRS for SEs for the duration and terms allowed by the SEC.
This Alert has been prepared by the Auditing and Assurance Standards Council (AASC) to provide guidance to external auditors who have been engaged to audit in accordance with Philippine Standards on Auditing annual financial statements for FCs, LCs and MF-NGOs which have been prepared using either PFRS/PFRS for SMEs/PFRS for SEs, as modified by the application of the financial reporting reliefs issued and approved by the SEC. The succeeding sections discuss the impact on the auditor’s report and proved illustrative Opinion paragraph and Emphasis of Matter paragraph as well as illustrative changes to other relevant sections of the audito;s report.
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Download The AASC Alert No. 002 of 2021