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What are the rules for external auditors in the Philippines?

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What are the rules for external auditors in the Philippines?

Posted On February 2016

Under Securities Regulation Code (SRC) Rule 68, every company is required to submit its financial statements accompanied by an auditor’s report issued by an independent Certified Public Accountant (CPA). This external auditor is officially appointed by the corporation's Board of Directors. The profession itself is regulated by the Professional Regulation Commission (PRC) and the Board of Accountancy (PRBOA), which ensure that all CPAs adhere to the rules set forth in the Philippine Accountancy Law of 2004.

To prevent conflicts of interest and ensure audit compliance, regulators enforce a strict rotation policy. The Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), and Insurance Commission (IC) all mandate that external auditors, or the signing partner in the case of auditing firms for public companies, must be changed every five consecutive years. Once an auditor has served this five-year term, they must observe a two-year cooling-off period before they can participate in the auditing process for that specific client again.

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