UPDATES ON SEC ACCREDITATION FOR EXTERNAL AUDITORS & Teaching Accounting in the AI Age

The accounting profession today stands at a unique intersection: regulatory compliance and technological transformation. On one hand, regulatory bodies like the Securities and Exchange Commission (SEC) are tightening accreditation standards to ensure audit quality and public trust. On the other, Artificial Intelligence (AI) is reshaping how accountants work and how educators prepare the next generation.

This blog brings together insights from two recent professional development sessions — “Updates on SEC Accreditation for External Auditors” and “Teaching Accounting in the AI Age: Empowering Educators, Engaging Learners.” Together, they highlight the dual challenge and opportunity facing the profession: maintaining integrity through compliance, while embracing innovation through technology and education.

Updates on SEC Accreditation for External Auditors

In line with the SEC’s ongoing efforts to strengthen financial transparency and uphold audit quality, the recent session provided valuable insights into the latest guidelines, procedures, and compliance requirements for practitioners and firms engaged in auditing SEC-regulated entities.

Key Updates

• All covered corporations, except those under Part II of SRC Rule 68, must comply with accreditation rules beginning with fiscal years ending December 31, 2025.

• Entities under Part II must comply starting September 30, 2025.

• Extensions have been granted for auditors whose previous accreditation only covered audits up to 2023 or 2024.

This proactive measure ensures sufficient time to process renewals under updated rules.

Step-by-Step Accreditation Process

Outlined on pages 8–10 of the presentation:

1. Pre-Evaluation – Submission of documentary requirements (in-person or via secoga@sec.gov.ph).

2. Evaluation – Review of materiality thresholds and audit findings, leading to approval, conditional approval, or downgraded accreditation.

3. Forms – Standard templates for Pre-Evaluation, Firm Application, and Auditor Application.

Common Areas of Non-Compliance

• Improper disclosures in auditor’s reports (PSA 700, 710)

• Missing or inconsistent Statement of Management’s Responsibility (SMR)

• Misclassified items in cash flow statements

• Omitted disclosures on subsidiaries, revenue recognition, and retirement liabilities

• Excessive retained earnings without board-approved justification

Pervasive Findings

• Failure to prepare consolidated financial statements (PFRS 10)

• Improper restatement of prior-period errors (PAS 8)

Key Takeaway: The SEC’s updated framework emphasizes competence, integrity, and compliance. Audit quality is not just a regulatory obligation — it’s a professional commitment to public trust and accountability.

Transition: From Compliance to Innovation

While regulatory compliance secures the profession’s credibility, the accounting field must also prepare for the future of work. Technological disruption, particularly the rise of AI, is redefining both practice and education. Accountants and educators alike must adapt, ensuring that tomorrow’s professionals are both technically proficient and ethically grounded.

Teaching Accounting in the AI Age: Empowering Educators, Engaging Learners

The session led by Agnes Jade Aclan-Potapov of Aclan & Co. CPAs explored how AI is reshaping accounting practice and how educators can harness it responsibly.

The Role of AI in Accounting and Finance

AI applications now power:

• Bookkeeping: Automating data entry and reconciliations

• Auditing: Using predictive analytics for risk assessment

• Banking & Finance: Accelerating credit analysis and forecasting

• Taxation: Managing high-volume data for compliance and fraud detection

According to the World Economic Forum’s Future of Jobs Survey 2024, the share of tasks performed by people will drop from 47% to 33% by 2030, highlighting a growing reliance on intelligent systems.

Opportunities and Challenges

AI delivers efficiency and insight, but it raises concerns about dependency, data privacy, algorithmic bias, and potential job displacement if professionals fail to upskill.

The Changing Role of Educators

Educators are shifting from being sources of information to facilitators of learning — fostering critical thinking, ethical reasoning, and AI literacy. The focus is now on teaching students how to question, validate, and interpret AI-generated outputs responsibly.

Integrating AI in the Classroom

Practical strategies include:

• Using real-world datasets for case analysis

• Simulating audit and finance scenarios with AI tools

• Offering adaptive, personalized feedback

• Maintaining human oversight to ensure accuracy and ethics

The Enduring Relevance of Educators

While AI handles automation, educators remain central to developing judgment, ethics, and critical reasoning — skills machines cannot replicate.

Key Takeaway: AI is not a threat, but a tool. Used responsibly, it enhances education and practice. Just as SEC accreditation safeguards trust through compliance, AI integration prepares the profession for resilience and innovation in the years ahead.