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 →Since the US Securities and Exchange Commission adopted their final conflict minerals rule on August 22, Elm and our Conflict Minerals Consortium partners have seen an explosion in proposals, RFPs and related meetings, which we expected. Also expected was the concurrent growth of firms marketing themselves as conflict minerals experts or having off-the-shelf technological solutions. We offer the following points to consider when evaluating possible business partners for a long, unprecedented, complex – and likely costly – journey. A little due diligence on your consultants may provide you a smoother due diligence process for conflict minerals. You may find it worth asking your potential conflict minerals advisors, consultants and solutions providers questions like those below. Even a 60 second review of Google search results on the expert can be revealing. When did the expert start working on conflict minerals matters? The issue began to come forward in the electronics industry back in 2008, but gained real momentum in 2010 with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010. A very small number of external advisors/consultants have direct experience going back to 2010, or even 2011 for that matter. Did the expert participate in public
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
Read more →As is generally known, the corporate disclosure and auditing requirements of Dodd-Frank Section 1502 are to start “with the [company’s] first full fiscal year that begins after the date of promulgation of such regulations.” Therefore, the timing is a function of both the corporate fiscal year as well as the date of promulgation. In the wake of SEC moving the window for promulgation of the final conflict minerals rule to between January – June 2012 (with many sources indicating the end of January), we asked several notable legal experts to offer their thoughts on how (or if) this delay would impact publicly traded companies that operate on a fiscal year other than the calendar year. If the rule is indeed promulgated in January, how might a company with a March – February or July – June fiscal year be impacted for 2012? Would it be plausible to satisfy the CMR reporting requirement with a short summary report on due diligence process development/implementation status that will likely be lacking in significant detail? _________________________ K. Russell LaMotte is a Principal at Beveridge & Diamond, PC in Washington DC. He previously served as a senior lawyer at the State Department. His practice focuses
Read more →We welcome David Schatsky as a guest contributor. David is principal analyst and founder of Green Research, a research, advisory and consulting firm focusing on clean tech, alternative energy and sustainability. He is at work on a study of the impact of the conflict minerals regulations on U.S.-listed companies and their suppliers. David is also the founder/editor of the website Dodd-Frank Section 1502, a valuable and timely compendium of news items on conflict minerals issues. Hundreds of people turned out on Tuesday, December 13 for a day-long discussion titled, “Transparency, Conflict Minerals and Natural Resources: What You Don’t Know About Dodd-Frank.” The event was held at the National Press Club in Washington, D.C. and was co-hosted by The Brookings Institution, a public policy think tank and Global Witness, a non-governmental organization that works to end conflict and poverty poor, often resource-rich, countries. The day was organized in two parts. The morning was focused on Dodd-Frank Section 1504, dealing with extractive industries disclosure. The afternoon focused on Section 1502, the conflict minerals disclosure. Rep. Jim McDemott (D-Wash) opened the session and Sen. Benjamin Cardin (D-Md.) presented the closing comments. The Rev. Jim Wallis spoke at lunch. The full agenda and list
Read more →As a member of IPC, we get information alerts from time to time. We received this one today with important information for many companies and clients. REMINDER: California’s Human Trafficking and Slavery Law Takes Effect January 1, 2012 On January 1, 2012, companies doing business in California that have annual gross global receipts in excess of $100 million will need to comply with California’s Human Trafficking and Slavery Law. The law requires companies to publicly disclose efforts to ensure their supply chains do not support human trafficking or slavery. The bill will have unintended consequences on the electronics industry as the entire supply chain will be questioned and audited regarding their social responsibility practices. Although the law only directly impacts larger companies, the supply chain will need to provide substantial information and undergo extensive audits. If you think that your company is not impacted because your company doesn’t sell products in the State of California think again. Your current and potential customers in California will most likely request information from your company on efforts to eradicate human trafficking and slavery. Because most companies will likely choose to continue conducting business in California, the world’s 8th largest economy, it is expected
Read more →Prior to the November 1 closing of the reopened public comment period on SEC’s proposed conflict minerals regulations, several companies and individuals filed new or updated comments. Among the commenters are two organizations serving environmental, health and safety auditing practitioners. … Continue reading →
The following is a transcript of Elm’s opening comments and answers to questions posed by SEC staff at this week’s Conflict Minerals Roundtable in Washington DC. These comments were presented by Lawrence M. Heim, CPEA of Elm’s Atlanta office. Opening … Continue reading →
A new study on the economic impact of SEC proposed conflict minerals rule was released earlier this week by Tulane University. The study evaluated cost estimates from SEC , National Association of Manufacturers (NAM) and IPC and provides what they … Continue reading →
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