The following resolution was approved by the Presidents' Committee of IOSCO in May 2000:

In order to respond to the significant growth in cross-border capital flows, IOSCO has sought to facilitate cross-border offerings and listings. IOSCO believes that cross-border offerings and listings would be facilitated by high quality, internationally accepted accounting standards that could be used by incoming multinational issuers in cross-border offerings and listings. Therefore, IOSCO has worked with the International Accounting Standards Committee (IASC) as it sought to develop a reasonably complete set of accounting standards through the IASC core standards work program.

IOSCO has assessed 30 IASC standards, including their related interpretations ('the IASC 2000 standards'), considering their suitability for use in cross-border offerings and listings. IOSCO has identified outstanding substantive issues relating to the IASC 2000 standards in a report that includes an analysis of those issues and specifies supplemental treatments that may be required in a particular jurisdiction to address each of these concerns.

The Presidents' Committee congratulates the IASC for its hard work and contribution to raising the quality of financial reporting worldwide. The IASC's work to date has succeeded in effecting significant improvements in the quality of the IASC standards. Accordingly, the Presidents' Committee recommends that IOSCO members permit incoming multinational issuers to use the 30 IASC 2000 standards to prepare their financial statements for cross-border offerings and listings, as supplemented in the manner described below (the 'supplemental treatments') where necessary to address outstanding substantive issues at a national or regional level.

Those supplemental treatments are:

• reconciliation: requiring reconciliation of certain items to show the effect of
• applying a different accounting method, in contrast with the method applied
• under IASC standards;
• disclosure: requiring additional disclosures, either in the presentation of the
• financial statements or in the footnotes; and
• interpretation: specifying use of a particular alternative provided in an IASC
• standard, or a particular interpretation in cases where the IASC standard is
• unclear or silent.

In addition, as part of national or regional specific requirements, waivers may be envisaged of particular aspects of an IASC standard, without requiring that the effect of the accounting method used be reconciled to the effect of applying the IASC method. The use of waivers should be restricted to exceptional circumstances such as issues identified by a domestic regulator when a specific IASC standard is contrary to domestic or regional regulation. The concerns identified and the expected supplemental treatments are described in the Assessment Report.

IOSCO notes that a body of accounting standards like the IASC standards must continue to evolve in order to address existing and emerging issues. IOSCO's recommendation assumes that IOSCO will continue to be involved in the IASC work and structure and that the IASC will continue to develop its body of standards. IOSCO strongly urges the IASC in its future work program to address the concerns identified in the Assessment Report, in particular, future projects. IOSCO expects to survey its membership by the end of 2001 in order to determine the extent to which members have taken steps to permit incoming multinational issuers to use the IASC 2000 standards, subject to the supplemental treatments described above. At the same time IOSCO expects to continue to work with the IASC, and will determine the extent to which IOSCO's outstanding substantive issues, including proposals for future projects, have been addressed appropriately.

The Technical Committee also will undertake another initiative on Review and Enforcement of Application of Financial Reporting Standards focusing on the range of activities and powers that relate to reviews of public company financial statements by securities regulators and others. This project will focus on the powers and activities of a review process, and criteria and actions needed, regardless of the accounting standards in use. The major output of this project is expected to be an IOSCO statement of principles, best practices, and/or descriptions of effective models in use for such review functions. This project should conclude in 2005.

IOSCO is also developing procedures to encourage cooperation and consultation among members in the regulatory interpretation and enforcement of IFRS. A consultation paper outlining the options with this approach as well as the principles to be adopted and their implementation has been distributed to the IOSCO membership. IOSCO envisages that it will be in a position to confirm a final model during the second half of 2005, in time to be used in conjunction with reviews of 2005 annual financial statements.

8.2 Regulation and Oversight of Auditors. In response to the widespread interest in the conduct and quality of audits and in oversight of auditors, IOSCO recently conducted a survey on the regulation and oversight of auditors in a number of different jurisdictions. The survey revealed that IOSCO principles for auditor oversight and auditor independence were broadly implemented in most of the developed markets and some of the emerging markets even though there remained wide variations in the approaches and structures that are applied. IOSCO is currently in the process of analyzing the survey results and considering possible revisions to the related IOSCO regulatory principles.

In October 2005, IOSCO approved a Statement of Principle for the development of a database in order to facilitate the sharing by securities regulators of regulatory decisions relating to the enforcement of International Financial Reporting Standards (IFRS). Such a database of information will provide a useful reference source for regulators on IFRS decisions and will facilitate coordination and convergence.

IOSCO anticipates that the database will be fully operational during the second half of 2006. IOSCO is liaising with the Committee of European Securities Regulators (CESR) which has developed and implemented a similar database for use in the European Union.

Given that investors may have relied on the ratings provided by credit rating agencies as not only an assessment of the probability of default by an entity, but also as an assessment of the product's liquidity, the Task Force will assess whether alternative models of valuation are needed and whether IOSCO should develop valuation principles or best practices in this area.

The Task Force, in order to evaluate potential problems raised by the accounting treatment of structured products, will also consider revisiting last year's the report on special purpose vehicles (SPVs) in order to better analyse the mechanisms whereby SPVs are kept on the balance sheet and the possible implications in terms of risk measurement and information to investors where listed companies are involved.

The process and structure for setting ISAs has been the subject of reform and improvement efforts in recent years. In 2003, IOSCO and other regulatory and international financial organizations worked with the International Federation of Accountants (IFAC), to create a set of reforms for international audit standard setting and other public interest activities of IFAC. These reforms included the establishment of the international Public Interest Oversight Board (PIOB) to carry out independent oversight of the IAASB's standard setting activities and other IFAC public interest activities, as well as other process changes. The reforms also included provisions for a future evaluation of their effectiveness. IOSCO recognizes the importance of the work of both the IAASB and PIOB.

In recent years, the IAASB has developed and issued a number of new and updated standards in the Board's Clarity project. Additional revised standards are expected in 2008. IOSCO is currently evaluating under what conditions IOSCO could endorse ISAs for use for cross border purposes and the form of such an endorsement. The IAASB's responses to public interest concerns in its standards setting will be relevant to such an endorsement.

1. A clear and unambiguous statement of the reporting framework on which the accounting policies are based;
2. A clear statement of the company's accounting policies on all material accounting areas;
3. An explanation of where the accounting standards that underpin the policies can be found;
4. A statement that explains that the financial statements are in compliance with IFRS as issued by the IASB, if this is the case; and
5. A statement that explains in what regard the standards and the reporting framework used differs from IFRS as issued by the IASB, if this is the case.

• The first key success factor for IFRS is that the standards be crafted in the interest of investors. That has to be their overarching purpose.
• The second is that the standard setting process be transparent. That is essential not only to maintain investor confidence, but to ensure the integrity and quality of the standards.
• The third is that the standard setter must be independent. That means independent from special pleaders, from the political process, from favored industries or industry players, and from national or regional biases.
• Fourth, the standard setter must be accountable. This means ensuring that IFRS actually meet the needs of investors and other stakeholders, and that they are updated in a timely way.
• And fifth and finally, it is vitally important that all of the stakeholders themselves participate in the standard setting process in order to ensure the continued success of IFRS.

The job of developing and maintaining high quality standards that provide transparency to investors relies to a critical extent on independent accounting standards setters. In this connection, we support the International Accounting Standards Board (IASB) and Financial Accounting Standards Board's (FASB) announced joint action to address issues related to the credit crisis pursuant to an accelerated due process. We welcome their willingness to seek input from all stakeholders and applaud their efforts to work together, with speed and rigor, in identifying high quality global solutions.

The job of developing and maintaining high quality standards that provide transparency to investors relies to a critical extent on independent accounting standards setters, including the IASB. Standard setters will be best able to produce high quality standards if they are able to exercise independent judgment, relying on their skills, experience and due process, without undue political pressure and taking into account the views of all stakeholders. In this light, IOSCO stands ready as a community of capital market authorities to support accounting standards setters in their roles.

At the same time, IOSCO members are those with direct responsibility for protecting investors in our markets. To fulfill this duty, IOSCO members must have a means of ensuring that accounting standard setters are working in the best interests of investors. IFRS is being used in more and more jurisdictions around the world. It is critical for securities regulators that allow or require the use of IFRS in their jurisdictions (or are considering doing so) to maintain a balance between protecting the independence and integrity of the IASB as the standard setter for IFRS, while ensuring that the IASB is accountable for producing standards in the best interests of investors.

• Transparency of firms that audit public companies. This paper explores whether enhancing the transparency of audit firms' governance, audit quality indicators and audited financial statements could maintain and improve audit quality and the availability and delivery of audit services.
• Auditor communications. This paper considers whether changes to the standard audit report or additional auditor communications are warranted to address concerns about the effectiveness of the standard audit report in communicating important information about the audit and audit process to investor.
• Ownership structures for audit firms. This paper focuses on the impact of audit firm ownership restrictions on concentration in the market for auditing large issuers. The paper describes the current state of audit firm concentration and explores the potential benefits for audit service availability of removing ownership restrictions and discusses the adverse impact that removing ownership restrictions may have on audit firm competence, professionalism, independence, and audit quality. The paper also considers the pros and cons of authorizing alternative forms of audit firm ownership and governance.

1. Periodic reports should contain relevant information (the IOSCO report elaborates on this principle in considerable detail)
2. For those periodic reports in which financial statements are included, the persons responsible for the financial statements provided should be clearly identified, and should state that the financial information provided in the report is fairly presented
3. The issuer's internal control over financial reporting should be assessed or reviewed
4. Information should be available to the public on a timely basis
5. Periodic reports should be filed with the relevant regulator
6. The information should be stored to facilitate public access to the information
7. Disclosure criteria (including fair presentation, not misleading, no material omissions, clear and concise language)
8. Equal access to disclosure by all investors at the same time
9. Equivalence of disclosure in all markets in which the entity is listed