SEC Raised the AFS Filing Threshold to ₱3M — Here's the Vendor Blind Spot It Creates
Key takeaways: SEC Memorandum Circular No. 9-2026 raised the threshold at which a Philippine corporation must file audited financial statements (AFS) — from total assets or liabilities of at least ₱600,000 to more than ₱3 million. A meaningful slice of small and mid-sized suppliers that previously filed AFS every year will now file nothing. For procurement and credit teams that treat "collect the AFS" as the vendor-vetting checkbox, that document is about to disappear for exactly the segment — small, newer, cash-tight suppliers — where financial distress is most likely and least visible.
For most Philippine enterprises, vendor due diligence has one document at its center: the audited financial statement. A supplier is onboarded, its SEC registration and AFS are filed away, and the relationship proceeds on the assumption that the AFS will be there again next year if anyone needs to look. SEC Memorandum Circular No. 9-2026 just removed that assumption for a large part of the supplier base.
What exactly changed under SEC MC No. 9-2026?
The Securities and Exchange Commission raised the filing threshold for audited financial statements. Previously, a stock or non-stock corporation with total assets or total liabilities of at least ₱600,000 was required to file AFS. Under the new circular, that threshold rises to more than ₱3 million. Corporations below the new threshold — including many micro and small suppliers, single-project contractors, and newer entities — are no longer required to submit audited financials to the SEC.
The change is framed as regulatory relief: fewer small corporations spend on external audits they can barely afford, and the SEC's own filing and review load shrinks. Both are reasonable goals. But the threshold does not track risk — it tracks size. And smaller does not mean safer.
This sits alongside a broader wave of 2026 SEC activity. The annual AFS and General Information Sheet filing window through eFAST ran through mid-June for calendar-year filers, and the SEC's beneficial ownership disclosure rules (effective 1 January 2026) now require every corporation to trace ownership to a named individual. Taken together, the direction is: more transparency on who controls a corporation, less mandatory disclosure on how financially sound a large share of them are.
Why does this create a blind spot for procurement and credit teams?
Because the corporations most likely to fall below the new ₱3 million threshold are exactly the ones a risk team should be watching most closely.
Consider who typically sits just above the old ₱600,000 line and just below the new ₱3 million one. It is rarely a mature, diversified business. It is more often a single-client contractor, a recently incorporated supplier riding one contract, or a small trading company operating on thin margins. These are the counterparties with the least capital cushion if a payment is delayed, a client is lost, or input costs spike — and the most likely to be a genuine surprise when they fail.
Until now, even a threadbare AFS gave a procurement team a data point: revenue trend, liabilities, whether equity was eroding. That data point is now optional for a meaningfully larger set of vendors. A supplier can stop filing and a procurement team relying purely on "did they submit their AFS this year" will see nothing change — no red flag, no missing document, no signal at all. The absence of a requirement looks identical to the absence of a problem.
Doesn't "audited financials" from a small supplier tell you much anyway?
This is the honest objection, and it cuts the other way from what most teams assume. A single year of AFS from a small, closely held corporation was never a strong signal on its own — self-declared figures, informal-sector adjacent operations, and thin audit scope all limit how much one document can tell you. The Department of Finance has long noted that self-employed and small-business income is frequently understated relative to true operations.
That is precisely the argument for not relying on a single filed document, whether it exists or not. The reason a single year of AFS was always a weak signal comes down to what earnings-quality analysis requires: you need at least two to three years of cross-statement data to detect the manipulation patterns that matter — receivables growing faster than revenue, gross margin compression masked by cost capitalization, unusual accruals relative to cash flow, asset quality deterioration that the income statement doesn't yet reflect. These are the signals that Beneish-style multi-year analysis is designed to surface, and none of them are visible in a single year's filing. A procurement team accepting one AFS and moving on was not doing financial risk assessment — it was doing document collection.
A structured assessment reads a supplier's available financial and credit data — SEC filings where they exist across multiple years, CIC credit history and payment behavior, trade references, and corporate structure — and applies exactly this cross-statement, multi-year lens: deteriorating payables relative to cost of sales, revenue concentration in a single client, working capital erosion across periods, accrual patterns that diverge from cash generation. When the AFS itself goes away for a supplier, the other data sources that remain — CIC payment behavior, trade references, business registration age and status — are the inputs that still move in the same direction these financial signals would have.
We see this pattern with a listed Philippine power utility we work with, where the accredited vendor base spans large, AFS-filing contractors and dozens of small subcontractors well under the new ₱3 million line. Treating both groups the same way — "AFS on file, no AFS on file" — was already an imprecise proxy for risk before this circular. It is a materially weaker one now.
So what should a procurement or credit team actually do differently?
Three things, in order of effort:
First, map your vendor base against the new threshold. Identify which accredited suppliers likely sit below ₱3 million in assets or liabilities — this is a large share of any typical vendor list for a mid-sized or large enterprise, particularly among subcontractors and single-service providers. These are the vendors for whom "no AFS" will soon mean nothing about their financial condition either way.
Second, stop treating AFS presence as a pass/fail gate. For vendors that fall below the threshold, the assessment needs to run on the data that does exist — credit bureau history, payment behavior with other counterparties, business registration status, and whatever financial disclosure the vendor is willing to provide voluntarily. A vendor risk framework built only around "collect the AFS" has a growing hole in it.
Second and a half, in practice: ask for it anyway. Nothing in the circular prohibits a corporation from preparing financials even if it is no longer required to file them with the SEC. Making AFS submission a condition of accreditation — regardless of the SEC's own filing threshold — keeps the data point in your process even where the regulator no longer mandates it.
Third, build a monitoring cadence, not a one-time check. A supplier's financial condition changes faster than an annual filing cycle captures, especially for small, thinly capitalized entities. Whatever data sources replace the AFS for smaller vendors need to be checked on a schedule — at onboarding and at defined intervals — not once and filed away.
The regulator's goal and the procurement team's goal are not the same
SEC MC No. 9-2026 is a reasonable regulatory decision on its own terms — it reduces compliance cost for small corporations that were arguably never the SEC's real enforcement priority. But a filing threshold set for regulatory efficiency is not a risk threshold, and treating it as one is the mistake to avoid.
The corporations that drop out of mandatory AFS filing are not, on average, lower-risk counterparties. They are smaller, and smaller often means less capital, less diversification, and less resilience to a single lost contract or late payment. For any enterprise whose supply chain includes these vendors — and most do — 2026 is the year the AFS-as-checkbox model quietly stops working for a growing share of the vendor list. The teams that notice now, and build an assessment process that doesn't depend on a document a supplier may no longer be required to produce, will be the ones who see a problem coming instead of reading about it in a termination notice.
Every stat above is sourced to SEC Memorandum Circular No. 9-2026 and the SEC's 2026 Beneficial Ownership Disclosure Rules (Memorandum Circular No. 15, Series of 2025); no figures in this article are estimated or assumed.