PLDT Auditor Resigns After Nearly 24 Years over Impaired Independence
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SyCip Gorres Velayo & Co. Resigned as auditor to PLDT after nearly 24 years, withdrawing its audit opinions on the Philippine telecom company’s 2024 and 2025 financial statements prepared for international reporting.
The Ernst & Young member firm informed PLDT on October 31 that its independence had been impaired under US Securities and Exchange Commission regulations and auditing oversight rules. PLDT appointed Isla Lipana & Co., the Philippine member firm of PwC, as its new external auditor effective Monday, November 2.
The departure follows accounting errors PLDT acknowledged in August tied to deficiencies in controls over structured hedge arrangements, with SGV finding a material weakness in internal control over financial reporting as of December 31, 2025.
Flawed Hedges and Control Failures
The auditor rupture follows internal accounting errors that surfaced earlier this year. In August, PLDT reported control deficiencies tied to structured hedge transactions designed to manage currency exposure, misstating how gains and losses from those contracts were recognized on its books.
SGV concluded that a material weakness existed in PLDT’s internal control over financial reporting as of December 31, 2025. The auditor had initially granted clean opinions for both 2024 and 2025 before withdrawing them on October 31, stating the 2025 findings could no longer be relied upon while an assessment of 2024 data remained incomplete.
“SGV concluded that a material weakness existed in PLDT’s internal control over financial reporting as of December 31, 2025.”
PLDT told investors the revisions will not materially alter its net income, EBITDA, earnings per share, cash flows, or operating metrics. The Philippine Stock Exchange halted trade in PLDT shares for one hour on August 14 following the initial hedge disclosure, after which the stock closed down 4.49 per cent at 1,170 pesos.
Scrutiny for Telecom Capital Markets
For regional institutional investors, the breakdown creates immediate friction in valuation and debt covenants. Telcos across Southeast Asia carry high use to fund network upgrades, making absolute confidence in treasury and derivative controls essential for bondholders and banks.
The resignation deepens regulatory vulnerability because PLDT maintains American depositary shares on the New York Stock Exchange. While Isla Lipana took over the Philippine accounts, PLDT has not yet secured an accounting firm to audit its international financial statements and sign off on internal control reporting mandated by US regulators.
Overrun Precedents Dog Balance Sheet
This is the second major breakdown in PLDT’s financial administration in four years. In December 2022, the group disclosed a 48 billion peso capital expenditure overrun accumulated between 2019 and 2022, prompting an internal overhaul of its procurement protocols even after an external review found no fraud.
The hedge accounting breakdown shows those spending overhauls failed to insulate broader treasury management from control failures. SGV’s sudden withdrawal of two years of audit statements leaves PLDT operating without verified baseline books for international market compliance.
PLDT must now install a US-registered independent accounting firm to complete the international audits, while investors monitor whether restatements ripple across its upcoming quarterly earnings reports.
Questions & Answers
Q.Why did SyCip Gorres Velayo & Co. Step down as PLDT's auditor?
Why did SyCip Gorres Velayo & Co. Step down as PLDT's auditor?
The Ernst & Young member firm resigned after concluding its independence had been impaired under US Securities and Exchange Commission regulations. This followed accounting errors in structured currency hedges, which led to a material weakness in PLDT’s internal control over financial reporting.
Q.Who will take over the auditing of PLDT's financial statements?
Who will take over the auditing of PLDT's financial statements?
PLDT appointed Isla Lipana & Co., the Philippine member firm of PwC, as its new external auditor effective 2 November. However, the company has not yet appointed an accounting firm to audit its international financial statements and sign off on US regulatory reporting.
Q.How will the hedge accounting errors affect PLDT's financial results?
How will the hedge accounting errors affect PLDT's financial results?
PLDT told investors that the revisions will not materially alter its net income, EBITDA, earnings per share, cash flows, or operating metrics. Even so, the initial disclosure prompted a one-hour trading halt in August and a 4.49 per cent drop in its share price.
Q.What prior financial control failures has PLDT encountered?
What prior financial control failures has PLDT encountered?
In December 2022, PLDT disclosed a 48 billion peso capital expenditure overrun accumulated between 2019 and 2022. That incident forced an overhaul of its procurement protocols, though an external review cleared the company of fraud before the latest hedge accounting failures emerged.
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