The Securities and Exchange Commission announced that stronger audit oversight is essential for attracting investment and bolstering confidence in the Philippine capital market as it released the 2026 SEC Oversight Assurance Review (SOAR) Public Inspection Report.
The report, issued in July, compiles findings from inspections conducted between 2022 and 2025 under the SOAR Inspection Program, which is administered by the Office of the General Accountant. It represents the second public inspection report issued under the program.
SEC Chairperson Francisco Ed. Lim emphasized that the country's regulatory framework must continuously align with international standards to support its investment objectives.
He described audit oversight as a public duty that protects investors, strengthens market confidence, and reinforces the credibility of the financial system.
Lim added that financial transparency should be viewed not merely as a compliance requirement but as a competitive advantage that lowers capital costs and builds economic resilience.
The inspection examined six of the nation’s largest audit firms, which together audit roughly 87 % of publicly listed companies and account for about 99 % of the Philippine Stock Exchange’s total market capitalization.
SEC evaluators focused on two aspects of audit quality: the firms’ systems of quality management and the performance of individual audit engagements.
The report identified a rise in findings related to quality‑management systems as firms transitioned to the Philippine Standard on Quality Management 1, with most issues concentrated in ethical requirements, monitoring and remediation, information and communication, governance and leadership, and risk assessment.
This increase was attributed to the profession’s shift to the new framework amid post‑pandemic challenges, including remote work arrangements, reduced in‑person training, heavier workloads, and staffing constraints.
Despite those challenges, the latest inspection cycle showed improvements in audit engagement performance, reflected in enhanced consultations, more rigorous engagement reviews, and better assembly of final audit files.
Nevertheless, the report highlighted accounting estimates, audit sampling, and group audits as areas that still require further improvement.
It also examined the use of root‑cause analysis and automated technologies in audit processes and outlined a roadmap for mandatory sustainability reporting for certain entities beginning this year.
The report concluded that sustainability reporting strengthens stakeholder trust, supports risk management, attracts investment, and enhances corporate reputation, positioning it as a necessary measure for resilience, innovation, and long‑term value creation.
