Supervision of Financial Reporting IOSCO, October 16, 2007 André J. Delger

Subjects Dutch Supervision Act on Financial Reporting International context Financial Reporting Enforcement Strategy Pre-supervision

Dutch Supervision Act on Financial Reporting

Underlying assumptions of supervision act Systematic review of financial statements to detect failures in complying with applicable standards Review based on public information Primary responsibility with market participants Dialogue between Companies and AFM Use expertise Enterprise Section of the Court of Justice

Scope of supervision act All Dutch legal entities with a listing (anywhere) IFRS for consolidated FS for entities listed within EU Dutch GAAP or IFRS for entities listed outside EU Documents under supervision: Adopted financial statements Annual report Other information required by Netherlands Civil Code Interim reporting (As per implementation Transparency Directive into Netherlands Law)

Filing requirements Companies All documents that fall under the Supervision Act (WTE art.5a) Public law is applicable Powers Sanctions

Enforcement Accounting Standards Civil Law IAS Regulation and Title 9 of Book 2 Dutch Civil Code (Dutch Law) AFM to report cases to the Enterprise Section

Enforcement Accounting Standards Phases in an investigation: AFM Review (confidential) Request for additional information (confidential) No response: information request through Enterprise Section (public) Response Company (confidential) Final Judgement AFM (confidential) No comments Announcement (confidential) Announcement and Recommendation (confidential, but company to go public) Company complies or AFM to report to the Enterprise Section (public)

Corporate Governance Corporate Governance report is responsibility Board of Directors and Shareholder’s meeting Role external auditor Enforcement scope AFM: existence and consistency with Annual Report, Financial Statements and other public information

International Context

Supervision of listed companies in EU Home country principle, statutory seat Potential restrictions in information exchange Cooperation EU supervisors Financial Reporting (CESR) Consistent application IFRS

Coordination supervision in the EU EECS: The European Enforcers' Coordination Sessions: Include all enforcers on financial information in EU (also non-CESR members) Bimonthly meetings with persons representing 29 countries Discussing the decisions taken or to be taken by local enforcers EECS Database

Coordination supervision with SEC Role of CESR-FIN Bilateral contacts Potential restrictions in information exchange

Financial Reporting Enforcement Strategy

Companies under supervision Approximately! Equity - home 130 - abroad 35 165 Bonds - home 155 - abroad 230 385 Total 550

Financial statements Approximately! Consolidated accounts - IFRS 190 - Dutch GAAP 5 195 Company financial statements - IFRS ? - Dutch GAAP 355 355 Total 550

Enforcement Strategy Risk based approach Risk score per company on relevant aspects Impact on capital market Current events Rotation Consolidated: once every 5 years Company FS: once every 7 years Specific topic investigations: yearly

Desktop review In depth analysis of financial statements and all relevant publicly available information Select specific issues and risks for further investigation and discussion Review by team manager and head Need for further questions to company? Issue of information request

Information request Formal approach (information request) Room for in depth discussion with company Aim for solutions by mutual agreement, avoiding involvement of Enterprise Section if possible Discussion of enforcement actions within EECS

Specific topic investigations Analyse large number of financial statements for specific aspects If possible report on planned issues for next year’s FS Use “normal” procedures for findings/doubts Report general findings Planned topics for FS 2006: - IAS 12 Income Taxes - IAS 7 Cash Flow Statements