As we have done for Cycle 1 and Cycle 2, Elm has published - in conjunction with MetalMiner – a detailed review and analysis of the final (Cycle 3) report of the pilot program of OECD’s conflict minerals Due Diligence framework implementation for downstream companies. MetalMiner also recently published a very successful A-Z Guide on conflict minerals compliance for U.S. manufacturing companies. One of the unique aspects of this guide is that it presents conflict minerals content information on a range of finished and semi-finished metal/alloy commodity products to help users identify products of concern in relation to conflict minerals.
Read more →Anyone who has been involved with SEC’s conflict minerals regulations for any amount of time is well aware of its confusing nature, overly complex and labyrinthine sentences and significant substantive ambiguities. Among these, two matters seem to be rising to the top in popularity – due to the sweeping nature of the applicability: Is packaging within the scope of the regulation as something that is “necessary to the functionality or production” of a product? In some cases, packaging may serve little more than a product container to convey the product to the market or consumer in a convenient manner. In other cases, packaging could be seen as preventing the degradation of the product, and therefore arguably contributing to its functionality. Is organotin – as well as other non-metallic forms of 3TG – considered a different/specific “derivative” of cassiterite that is not intended to be regulated in the same manner as the specifically-named derivative “tin”? In the preamble of the final rule (77 Fed. Reg. 56284 – 56285), SEC addressed the matter of organotin without bringing full clarity to their views on the matter. There may – or may not – a glimmer of insight into the Commission’s potential interpretation on these two topics. Take
Read more →One of the more common questions we hear from companies on the topic of conflict minerals is “Are we behind the curve?” Every company faces their own challenges in understanding the requirments, assessing their needs and implementing programmatic changes. But there are a number of common guideposts that provide reasonable indications on general progress – and shed light on whether your company is falling behind. So, in an unabashed take-off of Jeff Foxworthy’s “You Might be a Redneck If…”, we offer the following. If any of these sound familiar, then it is probably time to pick up the pace. Second quarter is fast approaching and one consistent trend has emerged for companies who are immersed in this right now - this process takes more time, and is more complex, than it seems. It is valuable to ensure you have as much time as possible in 2013 to make key decisions, gather data and develop processes to support SEC reporting or customer information requests. You might be falling behind on conflict minerals if… You had not heard the term “conflict minerals” before the first of this year. Customer information requests on conflict minerals are piling up unanswered. Your company has not established
Read more →Last week, OECD made available the complete final report on downstream company pilot program implementation of its conflict minerals due diligence framework. We have not completed our review and summary, but the report can be downloaded for free here. Of particular initial interest to many may be: the illustrative list of products (page 12) key trends (pages 15-18) learnings and recommendations from pilot participants (pages 60-64). Among the recommendations is one that Elm has voiced for two years: that the audit/auditor standards be upgraded from the generic ISO19011. However, the recommendation references ISO/IEC 17021, which brings its own unique concerns and challenges. list of 3T smelters (pages 70-75). It is important to understand that this list does not include gold refiners, nor is the list exhaustive or limited to ”approved” or “certified” smelters. We hope to have additional analysis and insights available soon.
Read more →Elm has been selected by The Auditing Roundtable to lead their newly formed Working Group to develop a professional auitdor guidance intended for use by non-CPAs in applying the “generally accepted government auditing standards” (also known as “GAGAS” or the Yellow Book) to audits of Conflict Minerals Reports under SEC’s conflict minerals regulations. Lawrence Heim, CPEA, Director of Elm’s Conflict Minerals services: ”The Board of Directors agreed to take on the challenge of developing this guidance, and doing so as rapidly as possible to serve the regulated community. I am honored that the Board asked me to play a role in that process.” Heim continued: “Given the importance, visibility and global impact of of this guidance, the Board recognizes how critical broad-based input and consensus will be. The Working Group’s first order of business is to present to the Board for their approval two lists: one of recommended professional peer reviewers and one of organizations/entities from whom input will be sought as stakeholders.” The Working Group will hold its first meeting in conjunction with the Roundtable’s national meeting in San Diego January 28-30, 2013. Elm has been a vocal proponent of strong auditing and auditor qualification/independence standards in the conflict
Read more →With 2013 looming, the past 2 months have been a whirl of meetings, conference calls, proposals, RFP development support and project work. Through all that, a few questions companies are asking in this regard are becoming almost universal. A handful of these questions and thoughts specific to SEC regulatory compliance are below. We hope you will find these informative and helpful. How far back in the supply chain do I need to go? The preamble to the final rule makes it clear that issuers may satisfy the Reasonable Country of Origin Inquiry obtaining and relying on representations from the company’s direct (Tier 1) suppliers. However, you must have reason to believe the representations are true and additional efforts may be required to either (a) identify/monitor “applicable warning signs or other circumstances” indicating that materials may originate from Covered Countries or are not scrap, or (b) confirm the accuracy/credibility of information from those suppliers. How can I be comfortable relying on information provided to me by my suppliers? This is a difficult question but one that should be approached with an attitude of what auditors call “professional skepticism”. For example, one company recently released a letter to its customers clearly stating that
Read more →In response to yesterday’s passage by the US Securities and Exchange Commission of the final conflict minerals regulation, today marks the official launch of an international consortium formed to provide comprehensive services globally for conflict minerals due diligence, traceability, auditing and disclosure for companies impacted by conflict minerals requirements. The group, called the Conflict Minerals Solutions Consortium, was initiated by The Elm Consulting Group International LLC. Lawrence Heim, Director of Elm, stated “We don’t believe that any single entity is able to provide similar comprehensive services due to the complexity of global supply chains and material flow. Our goal was to assemble a unique and highly qualified group to serve the wide range of companies and potential requirements.“ Heim continued, “We tried to assemble project team members who are not directly working in existing conflict minerals audit/traceability programs such as those under OECD or electronics industry groups. We believe this independence will foster development of new solutions that may be more efficient and/or effective than those currently available.” Members of the Consortium include recognized experts globally representing: HSE/sustainability auditing Management systems program development RoHS/REACH/EPEAT program development Mining industry auditing/traceability program development Traceability software CSR integration/reporting Legal advisory (US and Africa)
Read more →Source 44, a leading provider of supply chain sustainability solutions, and The Elm Consulting Group International LLC (“Elm”) today announced they have formed a cooperative relationship that will provide a range of conflict minerals traceability and due diligence offerings. The firms are both leaders in developing groundbreaking technology and solutions that can help companies meet conflict minerals regulations outlined in Section 1502 of the Dodd-Frank Act. This announcement comes ahead of the imminent ruling expected by the U.S. Securities and Exchange Commission (SEC) on the scope of Section 1502 and the nature of the relevant reporting requirements. “Some time ago, we realized that information management tools will be a critical component of conflict minerals traceability programs,” said Lawrence Heim, Director in Elm’s Atlanta office. “We were struck by Source 44’s functionality, user interface and dashboard, as well as the auditability of the source information within the system.” Source 44 is a leader in accessing, managing and leveraging information technology to drive sustainable supply chain management. Elm has extensive experience and expertize in environmental/sustainability management systems development and auditing, including conflict minerals. Together, the firms will be able to provide a seamless solution offering for conflict minerals due diligence traceability program development,
Read more →The WSJ reported yesterday that SEC is considering toughening certain aspects of their 2010 conflict minerals proposal. The statements made in the article corroborate information provided to Elm last week by reliable sources. If the final rule passes as the article indicates and as we have been told, the official Conflict Minerals Report (CMR) audits will be conducted as Attestation Engagements and only by CPAs. The proposed rule stated that SEC and GAO felt that the audits could be done as Performance Audits, allowing EHS auditors to do those. That sentiment was also clear during the SEC’s Roundtable in October. However, we understand that SEC stands ready to finalize their determination that CMR audits must be filed rather than furnished, making the audits part of the Form 10-K and other SEC forms. If the CMR audits were to be “furnished” as the proposed rule indicated, there would be more flexibility in who could be considered appropriate auditors. One implication of this decision is that the credibility of information relied upon in due diligence processes – including any of the nice supporting audits listed in the recent GAO report – will be heavily scrutinized before CPAs and company senior management sign off on the CMR audits.
Read more →Top law firm Akin Gump recently published an Alert containing their in-depth analysis of the letter from Senator Leahy and others to SEC expressing views on the final SEC conflict minerals regulation yet to be promulgated. Akin Gump noted Leahy’s comments on the SEC’s apparent position that the conflict minerals report (CMR) be “furnished” rather than “filed”. The practical impact of the “furnished” vs. “filed” distinction is that “furnished” information is not automatically incorporated by reference into a reporting issuer’s filings with the Commission and is not subject to liability under Section 18 of the Exchange Act. Section 18 of the Exchange Act makes reporting issuers liable for “false or misleading statements” if investors rely on such statements when purchasing or selling securities at a price which was affected by such statements. Reporting issuers who are required to “furnish” information to the SEC as an exhibit to an annual filing may still be subject to liability for violations of Sections 13(a) or 15(d) of the Exchange Act if they fail to furnish a required exhibit or if the required exhibit is “unreliable”. Penalties for such violations may be injunctive, civil or criminal and may also extend to individual executives of
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