The Audit Guidelines aim to (i) provide guidance and templates to OEs, Collectives and PROs, and their respective independent third-party EPR compliance auditors on how to comply with the EPR Act and EPR IRR, (ii) serve as phase-in capacity and capability mechanisms pending adoption of uniform standards and accreditation rules, and (iii) allow the NEC, in coordination with the Environmental Management Bureau (EMB) to monitor and evaluate the compliance of OEs, Collectives and PROs with their respective EPR programs and their submission of regular reports to the National Solid Waste Management Commission.

Our Q&A on the EPR Act is accessible at this link.

Key takeaways

• The Audit Guidelines cover OEs, Collectives and PROs that are required to submit their annual EPR compliance audit report (ECAR) under the EPR Act and EPR IRR.
• The ECAR consists of both the EPR compliance report (ECR) and the audit report.
• The Audit Guidelines set forth the minimum contents of the ECAR and ECR, and the deadline for the submission of the same.
• The Audit Guidelines prescribe rules for the treatment of confidential business information.
• The Uniform Standards of the EPR Compliance Reporting and Audit will replace the Audit Guidelines as soon as they are adopted and promulgated by the DENR. 

In more detail

1. ECAR

The ECAR is comprised of the ECR and the audit report, whether based on agreed-upon procedures with the DENR (AUP) or limited assurance or reasonable assurance engagements with the independent third-party EPR compliance auditors.

The Audit Guidelines require the ECAR to bear the signature of the auditor. The auditor must not be an officer or employee, or an affiliate of the reporting entity, and must be a certified public accountant.

The ECAR shall cover the ECR prepared by the reporting entity, which includes the following:

• Footprint declaration of the reporting entity with a breakdown of material types
• Recovery or plastic package waste diversion by waste diverters
• Determination of the equivalent plastic packaging waste footprint reduction resulting from other EPR programs, as applicable
• Confirmation of records, reports or information, or particular portions thereof, that the reporting entity considers and declares to be confidential

The deadline for submission of the ECAR to the EMB shall be 30 June or the first working day immediately thereafter of the year following the reporting year, in accordance with the following schedule:

For the reporting year 2023, the Audit Guidelines state that the reporting entity may choose to base its plastic packaging footprint on the figures for the year 2022 or 2023.

2. ECR

Under the EPR Act and EPR IRR, OEs, Collectives and PROs shall submit an ECR annually.

The ECR must contain the following:

• Name of the registered OE, Collective and PRO and their respective EPR registration number
• Reference year of the ECR
• Summary of the accountable plastic packaging footprint
• Summary of the accounted plastic waste diverted
• Plastic waste diversion accomplishment

The duly designated officer responsible for the EPR program, together with the president, chief executive officer, executive director or equivalent officer of the reporting entity, must execute a sworn statement attesting to the veracity of the data presented in the ECR. The sworn statement must be submitted together with the audit report.

The ECR shall be the basis for the conduct of an independent third-party audit and the issuance of the ECAR. 

The Audit Guidelines also prescribe certain supporting documents, schedules and reports ("Supporting Documents"), which should be used as the basis for the ECR. The Supporting Documents must be made available to the auditor during the conduct of the compliance audit.

OEs may also prepare sustainability reports using generally accepted reporting standards such as the International Sustainability Standards Board and Global Reporting Initiative.

Notably, the Audit Guidelines also allow a reporting entity to include voluntary disclosures in the ECR. Under the Audit Guidelines, voluntary disclosures are not subject to audit, and include information such as information on solid waste generation and management, as well as the management, technical and operational approaches to resource recovery or information of processors/recyclers, the list of materials being recycled or bought by them and their respective prices, among others. The Audit Guidelines enumerate the possible voluntary disclosures that the reporting entity may include in the ECR.

3. EPR compliance audit checklist

The Audit Guidelines provide that the independent third-party auditors shall be guided by the professional standards and Code of Ethics of Professional Accountants in the Philippines.

The conduct of the compliance audit should include an audit report based on the AUP, limited assurance or reasonable assurance. The Audit Guidelines prescribe the agreed upon procedures for the AUP.

4. Confidential business information

Under the Audit Guidelines, the following is considered confidential business information:

• Trade secrets
• Breakdown of production or sales figures
• Contracts, agreements, methods or processes unique to the enterprise, and other records, reports or information, or particular portions thereof, that would otherwise tend to adversely affect its competitive position

The confidential business information enumerated above does not have to be submitted together with the ECAR to avoid inadvertent public disclosure. However, in the course of its review, the DENR or EMB may require the presentation and evaluation, in an executive session, of confidential business information by the duly designated officer of the OE, Collective or PRO, or under such rules or procedures that the Pollution Adjudication Board may promulgate.

Please contact QTInfoDesk@quisumbingtorres.com for inquiries.

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