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

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

3. Dutch Supervision Act on Financial Reporting

4. 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

5. 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)

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

7. 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

8. 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)

9. 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

10. International Context

11. 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

12. 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

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

14. Financial Reporting Enforcement Strategy

15. Companies under supervision
Approximately!
Equity - home abroad
Bonds - home abroad Total

16. Financial statements Approximately! Consolidated accounts
- IFRS Dutch GAAP
Company financial statements - IFRS ? - Dutch GAAP Total

17. 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

18. 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

19. 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

20. 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