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Committee of European Securities Regulators

2. . . Current organisation Outline of the enforcement system in the European Union CESR-Fin current activitiesCESR-Fin priorities for 2008. . Index. 3. CESR-Fin - Current Organisation. CESR-Fin. . ARCAuRC. IASBIFRIC. EFRAG. . . . . . . . . Project groups . . European Enforcers Co-ordination Sessions EECS.

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Committee of European Securities Regulators

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    1. 1 IASCF Foundation IFRS Conference, Amsterdam Wednesday 25 June and Thursday 26 June 2008 CESR-Fin Current activities André Delger Dutch Authority for the Financial Markets (AFM) CESR-Fin Committee of European Securities Regulators

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    3. 3 CESR-Fin - Current Organisation

    4. 4 Outline of the enforcement system in the European Union

    5. 5 CESR-Fin current activities Project on Fair value Accounting Publication of enforcement decisions Equivalence of 3rd country GAAPs Transparency Directive - accounting and auditing issues Prospectus Directive - accounting and auditing issues

    6. 6 CESR takes steps to strengthen market confidence New project approved by CESR Chairs 13 May 2008 Objective is to facilitate convergent interpretation in the application of fair value accounting Measurement of illiquid complex financial instruments and related disclosures Objective is to publish a CESR statement to be addressed to preparers, auditors and other interested parties as a first step

    7. 7 The project will be split in two phases: CESR statement Fact finding exercise CESR statement scheduled to be published for public consultation by summer 2008 Fact finding exercise has been discussed and will be reassessed when the CESR statement is published Fact finding exercise on the application of mainly IFRS 7 Also other issues regarding fair value such as contents of the management report audit report (any qualifications or emphasis of matter paragraphs) IAS 10 Events after the balance sheet date IAS 27 – SIC 12 Consolidation and SPEs

    8. 8 The project will only look into existing requirements CESR will not assess whether the current requirements should be amended in any way The project will cover both measurement and disclosure issues As enforcers it is difficult to address measurement issues such as Criteria to decide whether quoted prices in a particular market can be used for fair value measurement Criteria to select inputs to valuation techniques

    9. 9 CESR would like to obtain more information regarding measurement issues that arises in practice CESR organised a workshop with market participants such as Issuers – preparers from banks National banking organisations Analysts from credit rating agencies Auditors with expertise on fair value measurement Topics discussed are as mentioned the practical application of the requirements regarding fair value accounting

    10. 10 A major part of the work with financial information in CESR is discussion of enforcement decisions taken at national level Enforcement decisions taken on national level and discussed in CESR are published on a regular basis The purpose of publishing enforcement decisions is to contribute to the promotion of market confidence and supervisory convergence of IFRS Only decisions that do not deal with simple or obvious accounting matters or oversight of IFRS requirements will be published

    11. 11 The decisions do not provide generally applicable interpretations of IFRS as this is the role of IFRIC CESR published the 3rd package of enforcement decisions on May 19, 2008 The 3rd package contains 14 decisions After publication of the 3rd package a total of 41 decisions taken on national level regarding enforcement of IFRS since 1 January 2005 have been published

    12. 12 The European Commission seeks CESRs advice regarding the assessment of whether accounting requirements from specific 3rd countries can be considered as equivalent to IFRS as adopted in Europe CESR responded to the first request from the Commission on US GAAP, Japanese GAAP and Chinese GAAP in March 2008 CESR has in May 2008 responded to the second request from the Commission regarding Canadian and South Korean GAAP CESR recommends that both GAAPs can be accepted until 2011 CESR has also received a request to assess Indian GAAP It has so far not been possible to obtain sufficient information about the current progress of transition to IFRS in India to produce a consultation document

    13. 13 CESR conducted the first call for evidence of the implementation of the Transparency Directive during 2007 The outcome of the call for evidence was that market participants would like more information about the implementation in the member states Especially on the use of options in the directive CESR decided to form an expert group on the Transparency Directive – Transparency Expert Group All market participants are welcome to submit questions to the interpretation of the directive to the Transparency Expert Group

    14. 14 The Transparency Expert Group is dealing with Mapping of the implementation of the directive Discussing questions from various members regarding specific interpretations of articles in the directive – Publish Q&A where there is consensus The Transparency Expert Group has had 3 meetings so far Concrete interpretations have mainly been regarding major holdings Not published yet, as there have not been so many so far The outcome of the mapping will be published in 2008 Individual answers from each member state to the questionnaire A report summarizing the responses

    15. 15 CESR publishes Q&A regarding interpretations of the prospectus directive and regulation The issues regarding prospectuses and accounting and auditing have manly focused on pro forma information All market participants are welcome to submit questions to the interpretation of the directive and the regulation to the Prospectus Contact Group

    16. 16 The current issues regarding prospectuses and accounting and auditing issues are the following: What is the required level of assurance for auditors reports in prospectuses? Status: CESR believes that this issue should first be assessed by the auditors. IAASB has started a project on “Assurance reports on Prospectus information”, where CESR has served as an observer in the preparation phase. CESR will follow the project and participate in it, when IAASB requests us to do so

    17. 17 Is there any conflict between the requirements in the prospectus directive regarding audit reports and the wording in the standard audit reports according to ISAs? According to the prospectus Regulation annex II, the auditor should state in the auditors report that: the pro forma financial information has been properly compiled on the basis stated; basis is consistent with the accounting policies of the issuer.

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