Updated

The work of a U.N. team now in Iraq to study whether elections can be held before the U.S.-led coalition hands over power to Iraqis "is going extremely well," Secretary-General Kofi Annan (search) said Monday.

The team arrived in Baghdad on Saturday, and Annan said they have met with the U.S.-led coalition and the Iraqi Governing Council (search), and were now holding separate meetings with individual council members.

"They are reaching out and are open to talk to as many groups as possible," he said.

"So far so good. The atmosphere has been good. They've been well-received and there's been very good and frank discussions," Annan said. "I think the work of the team is going extremely well."

The transfer of power is becoming a major headache for the coalition and the U.S.-installed council.

The current U.S. plan is to choose legislators in regional caucuses, a move opposed by the country's most powerful Shiite cleric, Grand Ayatollah Ali al-Husseini al-Sistani (search), who wants direct elections.

During the team's talks with the council on Sunday, Sunni Muslim Arabs echoed the U.S. view that early elections were not practical because of the need for extensive preparations to ensure a fair and credible ballot.

Most of the Shiite members favored an early vote, arguing that sufficient data was available to guarantee an acceptable election.

The secretary-general said the team, led by his personal adviser Lakhdar Brahimi, is operating on the assumption that the U.S.-led coalition will transfer power by June 30, as called for in its Nov. 15 agreement with the Iraqi Governing Council.

But he reiterated that "if the parties were to agree to other arrangements I think it would be difficult to reject it. We will have to consider it."

U.S. Ambassador John Negroponte stressed, however, the importance of sticking to the June 30 hand over.

"We are very committed to the June 30 deadline," he said. "This is a date of the utmost importance to us."

Annan said Brahimi will meet al-Sistani, who lives in the Shiite holy city of Najaf, but he didn't have the time or date yet.

Annan said he expects the team to remain in Iraq "for about a week or so."

"Obviously, they will have to come to New York to finalize their report and give their conclusions to me to study, and then I will convey my conclusions to the CPA and the Iraqi Governing Council," he said.

Annan said he needs to give the report to the Governing Council later this month "to factor the decision into their end of February deadline for completion of the basic law" which the Iraqis are drafting to govern the transition.

Asked whether the United States will abide by the U.N. findings, Negroponte said, "Certainly these views are going to be weighed with the utmost seriousness."

Negroponte said the United States had made clear it would welcome Brahimi's involvement, but added that the decision to send Brahimi was the secretary-general's, not Washington's.