The Statement of Management Responsibility (SMR) is a mandatory component of the financial statements (FS) that accompany the annual Income Tax Return (ITR) filed with the Bureau of Internal Revenue (BIR). It constitutes a formal written assertion by the entity’s management that it bears primary responsibility for the preparation and fair presentation of the financial statements in accordance with Philippine Financial Reporting Standards (PFRS). The SMR further affirms that management has designed, implemented, and maintained adequate internal controls over financial reporting, has ensured compliance with applicable laws and regulations, and has provided the independent auditor with all relevant information and access necessary for the conduct of the audit. In Philippine tax practice, the SMR is not a mere formality; it is an integral part of the audited financial statements required to be attached to the ITR under the National Internal Revenue Code (NIRC) of 1997, as amended, and the various Revenue Regulations (RR) promulgated by the BIR to implement the filing and attachment requirements for corporate and non-corporate taxpayers.

The legal foundation for the SMR flows from several interlocking statutes and regulations. Section 232 of the NIRC mandates that corporations file their annual ITR together with the audited financial statements when gross sales or receipts exceed the threshold prescribed by the BIR. Successive Revenue Regulations, including those governing the contents and form of financial statements attached to ITRs, expressly require the inclusion of the SMR as a distinct statement signed by responsible officers. This requirement aligns with the Revised Corporation Code of the Philippines (Republic Act No. 11232), which vests in the board of directors and corporate officers the duty to manage the corporation’s affairs and to ensure the integrity of its financial reporting. It is likewise consistent with the Philippine Standards on Auditing (PSA) issued by the Auditing and Assurance Standards Council, particularly those provisions dealing with the respective responsibilities of management and the auditor, and with the Code of Ethics for Professional Accountants in the Philippines. For tax purposes, the SMR serves as management’s explicit acknowledgment that any misstatement or omission in the FS may expose the signing officers to civil, criminal, and administrative liabilities under the NIRC, the Tax Code’s perjury provisions, and the Revised Penal Code.

Authorized Signatories According to Type of Taxpayer

The identity of the persons authorized to sign the SMR is governed by the legal structure of the taxpayer and the specific rules on who may bind the entity for tax-filing and financial-reporting purposes.

Domestic Corporations and Resident Foreign Corporations
The SMR must be signed by the President (or Chief Executive Officer) and the Treasurer (or Chief Financial Officer), or their respective equivalents. This dual-signature requirement mirrors the rule under Section 52 of the NIRC, which provides that the ITR of a corporation shall be signed by the president, vice-president, or other principal officer, and by the treasurer or assistant treasurer. In practice and in BIR-accepted templates, the two highest-ranking officers responsible for operations and finance are the prescribed signatories. Where the corporation’s by-laws or a valid board resolution designates other titles (e.g., Managing Director, Finance Director), those officers may sign provided their authority is duly documented.
When an officer other than the President or Treasurer signs, a Secretary’s Certificate or a certified extract of the board resolution authorizing the signatory must accompany the SMR or be presented upon BIR request. Failure to present such authority may render the SMR defective and expose the FS to disqualification or the return to rejection during post-audit or investigation. In the case of wholly-owned subsidiaries or branches of foreign corporations, the resident manager or the officer-in-charge in the Philippines may sign, again supported by appropriate delegation from the parent or head office.
Partnerships (General or Limited)
The SMR is signed by the managing partner or, in the absence of a designated managing partner, by any partner authorized under the partnership agreement or by a majority vote of the partners. The same rule applies to professional partnerships (e.g., law firms, accounting firms, medical partnerships) registered with the Securities and Exchange Commission (SEC) or the Professional Regulation Commission. The signing partner must be one who exercises actual control over the partnership’s financial affairs.
Sole Proprietorships and Single Proprietors
The owner-proprietor personally signs the SMR. If the owner is incapacitated or absent, a duly authorized representative may sign only upon presentation of a Special Power of Attorney (SPA) that expressly grants authority to sign financial statements and tax returns. The BIR does not accept signatures by hired accountants or bookkeepers in their personal capacity; the owner remains the responsible party.
Estates, Trusts, and Fiduciary Entities
The executor, administrator, or trustee (or the fiduciary designated by court order) signs the SMR in his or her representative capacity. Where a trust company or bank acts as trustee, the authorized trust officer signs on behalf of the institution.
Non-Stock, Non-Profit Corporations and Foundations
The same corporate rule applies: the President and Treasurer (or their equivalents) must sign. In foundations or associations where the board has designated a different financial officer, that officer’s authority must be evidenced by board resolution.
Government-Owned or Controlled Corporations (GOCCs) and Instrumentalities
The SMR is signed by the highest-ranking official (President or General Manager) and the Chief Financial Officer or Comptroller, subject to the charter of the GOCC and applicable rules of the Commission on Audit (COA) and the Department of Budget and Management (DBM).

Procedural and Formal Requirements

The SMR must appear as a separate page immediately preceding or forming part of the notes to the financial statements. It must be dated, bear the printed names and titles of the signatories, and contain the exact wording prescribed or accepted by the BIR in its current templates. Electronic filing through the eBIRForms system or the Electronic Filing and Payment System (eFPS) allows for digital signatures, but the underlying authority of the signatories remains governed by the same rules; the digital certificate must be registered in the name of the authorized officer.

The financial statements to which the SMR relates must themselves be audited by an independent Certified Public Accountant (CPA) accredited by the BIR and the Board of Accountancy when the taxpayer’s gross annual sales or receipts exceed the amount fixed by regulation (currently pegged at levels that trigger mandatory audit). The SMR does not replace the auditor’s report; rather, it complements it by shifting the primary accountability for the assertions contained in the FS to management.

Delegation and Special Circumstances

Authority to sign may be delegated only through formal corporate action. A board resolution passed in accordance with the Revised Corporation Code and the entity’s by-laws is the minimum requirement. In urgent cases where the President or Treasurer is unavailable, an acting officer elected or designated by the board may sign, provided the resolution is properly recorded and certified. Temporary delegation via SPA is accepted by the BIR only when the principal is physically unable to sign and the SPA explicitly enumerates the power to sign the SMR and the related ITR. Blanket or general powers of attorney are insufficient.

Liability and Sanctions for Improper Signing

Signing officers who affix their signatures to a false or misleading SMR expose themselves and the corporation to severe sanctions. Under Section 255 of the NIRC, any person who willfully files a false or fraudulent return is subject to criminal prosecution. Section 248 imposes civil penalties for substantial underdeclaration attributable to fraud. The signing officers may also be held administratively liable before the SEC for violation of fiduciary duties under the Revised Corporation Code. In extreme cases involving material misstatement, the officers may face charges of perjury under Article 183 of the Revised Penal Code or estafa if third parties are prejudiced. The BIR may also disregard the FS, reconstruct taxable income, and impose deficiency taxes plus interest, surcharges, and compromise penalties. Professional accountants who knowingly allow an unauthorized person to sign the SMR may face sanctions from the Board of Accountancy and the Professional Regulation Commission.

Best Practices and Compliance Recommendations

Corporate secretaries and compliance officers are advised to maintain a standing board resolution at the beginning of each fiscal year expressly designating the President and Treasurer (or their successors in title) as the authorized signatories for the SMR and the annual ITR. The resolution should be renewed annually or upon any change in officers. Copies of the resolution should be kept on file and readily available for BIR examination. In group structures, parent companies often issue group-wide policies requiring consistent signatory protocols across subsidiaries to ensure uniformity and audit readiness.

The SMR remains a living document of accountability. Its proper execution by the correct officers ensures the integrity of the Philippine tax system, protects the public interest in transparent financial reporting, and shields the entity and its officers from unnecessary disputes with the BIR. Compliance with the signatory rules is therefore not merely a technical requirement but a cornerstone of good corporate governance and lawful tax administration in the Philippines.