THE Securities and Exchange Commission (SEC) plans to establish one-stop shops for the accreditation of external auditors in the financial sector by next month.

The corporate regulator posted on its website last Friday draft guidelines on the Adoption of Centralized (One-Stop-Shop) Framework for Accreditation/ Selection of External Auditors. The proposed rules will cover institutions regulated and supervised by the SEC, Bangko Sentral ng Pilipinas (BSP), and Insurance Commission (IC).

Under the draft guidelines, the commission will handle the acceptance, processing, and approval of applications for the accreditation of external auditors of institutions supervised by the aforementioned regulators.

While the SEC will handle the applications, it will work together with the BSP and IC for the respective institutions they handle.

“The proposed one-stop-shop framework for the accreditation of external auditors will not only streamline the application process on the part of independent auditors and audit firms but also improve the ease of doing business in the country, in general,” SEC Chairperson Emilio B. Aquino said in a statement.

The guidelines will classify external auditors into three categories based on the institutions they are allowed to audit.

Those under Category A will include universal or commercial banks, foreign banks, trust departments and trust corporations for the BSP. Category A for the SEC may audit issuers of registered securities, issues with a class of securities listed for trading in an exchange, and public companies.

As for the IC, auditors under Category A may handle insurance companies, reinsurance companies, and mutual benefit associations.

Category B and C will cover smaller institutions such as thrift banks, rural and cooperative banks, pawnshops, investment houses, brokers and dealers of securities, lending companies, pre-need companies, health maintenance organization (HMO) companies, and HMO brokers, among others.

Institutions must appoint an external auditor belonging to the same category or from categories higher than what is designated for them.

The SEC may ask for different requirements depending on the external auditor’s category, in addition to the concerned financial sector’s specific requirements.

The proposed guidelines also state that an individual external auditor or partner of an audit firm must be accredited and licensed by the Board of Accountancy (BOA) during the time of application. They must also have at least five years of experience in external audit as an in-charge, manager, lead partner, engagement quality control reviewer or its equivalent.

For an audit firm, the company must likewise be accredited by the BOA, while the name of the partners involved in the firm must be attached to the certificate of accreditation issued by the BOA or the Professional Regulation Commission.

The accreditation will be valid for five years, or for a shorter period as prescribed by the financial sector regulators. External auditors whose current accreditation will expire by end-December will be given a one-year extension so that they may engage in the audit of 2019 financial statements.

The commission is requesting all interested parties to submit their comments, recommendations, suggestions, and inputs by Aug. 5. — Arra B. Francia

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