The work plan is a direct output from the December 2005 meeting between SEC Chairman Christopher Cox and CESR Chairman Arthur Docters van Leeuwen, at which they emphasized their desire to build on the dialogue between the SEC and CESR in a concrete and practical manner.

The work plan will serve to guide the SEC-CESR Dialogue in the immediate future. The main focus of the work plan is the application by internationally active companies of International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP) in the United States and the European Union, respectively. In addition, the staff of the SEC and CESR will forge a closer dialogue on the modernization of financial reporting and disclosure information technology, and regulatory platforms for risk management.

The close co-operation between the staff of the SEC and CESR on the application of IFRS and US GAAP in the United States and the European Union will promote:

• the development of high quality accounting standards
• the high quality and consistent application of IFRS around the world
• full consideration of international counterparts' positions regarding application and enforcement
• and the avoidance of conflicting regulatory decisions on the application of IFRS and US GAAP

In practical terms, as part of its regular review of corporate filings, the staff of the SEC will review issuers' implementation of IFRS in the United States. Staff of CESR Members also will continue to review US GAAP implementation by US issuers in the European Union. Under the work plan, the output of these reviews will be used in the following ways:

The staff of the SEC and CESR-Fin, the expert group within CESR focused on financial reporting, will share information about areas of IFRS and US GAAP that raise questions in terms of high-quality and consistent application.

Where appropriate, the staff of the SEC and the staff of CESR Members will consult on issuer-specific matters regarding the application of US GAAP and IFRS in order to facilitate a solution that contributes to the consistent application of US GAAP or IFRS by companies that are both listed in the EU and registered with the SEC. Protocols for the sharing of this confidential information between the staff of CESR members and the staff of the SEC will be established.

These two levels of discussion will help ensure that high standards are maintained and consistent financial reporting is achieved.

Chairman Cox said, "As our markets grow more sophisticated, so must the relationships among regulators. The work plan demonstrates the intention of the SEC and CESR to have a forward-looking dialogue on key emerging issues, as well as take practical steps to encourage high-quality and consistent application of IFRS. The result will be greater protection and better disclosure for investors, particularly as they seek investment opportunities across the Atlantic."

Arthur Docters van Leeuwen, CESR's Chairman, noted, "This work plan takes forward the relationship that the SEC and CESR have developed in a proactive and transparent manner. The introduction of IFRS in Europe provides a dynamic opportunity for convergence in the EU and a benefit to global financial markets. Through CESR, the SEC can now undertake a co-ordinated discussion with Europe's securities supervisors, and this dialogue should strengthen the application of financial reporting standards to the benefit of both investors and market participants both in the EU and across the Atlantic."

Ethiopis Tafara, Director of the Office of International Affairs, said, "This work plan represents the next step in the relationship between the SEC and CESR. Through the work plan, the SEC staff and CESR have greatly enhanced the framework for open dialogue and communication by which regulators share information to facilitate converged, or at least compatible, ways of addressing issues of common interest."

Fabrice Demarigny, Secretary General of CESR, said, "This work plan creates a constructive and practical cooperation framework between the EU and US securities supervisors in the enforcement of financial reporting. I believe it will significantly contribute towards decisions on the use of IFRS in the US and US GAAP in Europe."