MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) wants payments system operators to meet stricter standards on financial reporting and audit oversight. The aim is to improve the quality and integrity of information used for regulatory supervision and investor decisions.
The central bank is collecting industry feedback on a draft circular that would adopt regulations meant to strengthen the financial reporting of these entities. These include banks, e-wallet providers and payment gateways that operate platforms that facilitate fund transfers. Comments are being accepted through Dec. 12.
Under the proposal, licensed operators would be required to submit annual financial statements detailing their balance sheets no later than 120 days after the close of the calendar year or fiscal year adopted by the company. They must also hire external auditors only from a BSP-approved list.
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Firms based abroad would need to comply with the disclosure requirements and adhere to equivalent regulations enforced by foreign authorities in their jurisdictions.
Government-run entities exempt
Government-owned or -controlled operators, which also fall under the Commission on Audit’s concurrent jurisdiction, would be exempt from the annual financial audit by external auditors. However, if supervisory concerns arise — such as a significant weakness or breach in internal controls or risk management systems — the Monetary Board may, upon recommendation from the relevant BSP supervisory department, require that the audit be conducted by an external auditor.
When hiring an external auditor, the BSP said payment service operators must follow provisions on rotation and avoidance of conflicts of interest.
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The external auditor must report to the BSP within 15 calendar days upon discovering any issue that could negatively affect the condition or soundness of an operator. Such cases may involve fraud, actual or potential losses, material breach of laws and regulations, and urgent corporate governance issues.
Failure to comply with the requirements would subject the operators to the penalties.
Meanwhile, the BSP may also downgrade the external auditor’s category or exclude it from the central bank’s list of selected providers if they violate any rules.
“The Bangko Sentral recognizes the importance of financial reports and disclosures in the conduct of effective supervision and in sustaining public and stakeholder confidence in the payment system,” the BSP said.
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“In this light, the regulations on financial reporting and audit oversight aim to enhance the quality, integrity and transparency of information channeled to the supervisory process and ultimately promote fairness, accountability, and confidence in financial reporting,” it added. INQ