So how far along the road to reconciliation are we now? I believe that we are well on our way to eliminating the reconciliation requirement. Thanks to Commissioner McCreevy's leadership, the European Commission bolstered the move towards equivalence by extending an exemption to make reconciliation of US GAAP to IFRS unnecessary. Just imagine how counter-productive it would be to our mutual recognition efforts if the EU would impose a new reconciliation requirement, essentially saying that the two are not equivalent! Think how difficult it would be for us to then disagree with our friends and determine the opposite – that they are in fact equivalent.

Meanwhile, the SEC has been gaining its first insights into just how IFRS is working in practice. Last summer, our staff began reviewing the filings that we received from foreign private issuers that adopted IFRS in 2005. Our staff is working with the Committee of European Securities Regulators pursuant to a joint work plan that the chairmen of CESR and the SEC announced last summer.

The objective of the SEC staff's reviews is to see how closely IFRS filers in fact are adhering to IFRS standards. The purpose is not to attempt to dictate how IFRS ought to be applied. The purpose is also not to turn IFRS from principles-based accounting standards into rule-based standards. Rather our staff is looking at whether IFRS filings are complete and adhere to IFRS standards. I suspect that many of the problems that we have seen in these areas are a natural by-product of the first year of IFRS implementation and will disappear as companies and their auditors become more accustomed to IFRS.