Workshop 12 sept 11 presentations final
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Workshop 12 sept 11 presentations final

on

  • 1,016 views

From the 12th Conflict-Free Sourcing Initiative Workshop: Presentations from Sept 11, 2013.

From the 12th Conflict-Free Sourcing Initiative Workshop: Presentations from Sept 11, 2013.

Statistics

Views

Total Views
1,016
Views on SlideShare
1,016
Embed Views
0

Actions

Likes
1
Downloads
64
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Workshop 12 sept 11 presentations final Presentation Transcript

  • 1. An initiative of the Electronic Industry Citizenship Coalition and the Global e-Sustainability Initiative
  • 2. Sponsors
  • 3. 3 Keynote: Hiddo Houben Minister-Counselor, Head of Trade Section, Delegation of the European Union to the United States
  • 4. Update on SEC Conflict Minerals Disclosure Requirements September 11, 2013 Graham Zorn Beveridge & Diamond, P.C. Rick Goss Information Technology Industry Council
  • 5. Background • Devastating conflict in eastern Democratic Republic of Congo (“DRC”) – Deadliest since WWII – Extreme sexual- and gender-based violence – Humanitarian emergency in eastern DRC and neighboring regions • Revenues from mining seen as key driver of conflict • NGO campaign to use consumer pressure on OEMs • Part of general trend to use disclosure as tool to drive corporate policy 5
  • 6. Background: Dodd-Frank Law • Conflict minerals provision included in massive U.S. financial reform law: Dodd-Frank Wall Street Reform and Consumer Protection Act (enacted July 2010) • Sec. 1502 mandates public disclosure by certain companies if – “conflict minerals” (or metals derived from them) – are “necessary to the functionality or production of” – a product that they “manufacture” or (in certain cases) that they “contract to manufacture” • Disclosure, not restriction: transparency in supply chain will drive conflict-free sourcing initiatives, i.e., “name and shame” • Applies directly to companies that report to SEC and indirectly to their suppliers: ripple effect through supply chain 6
  • 7. Conflict Minerals 7 Cassiterite (Tin) Columbite-Tantalite (Tantalum) Wolframite (Tungsten) Gold • Tin cans • Solder • High performance paint • Electronics • Airbags • Jet Engines • Drill bits & tools • Electronics • Semiconductors • Jewelry • Drill bits • Metalworking tools • Electrodes • Welding applications
  • 8. Rule Overview: Basic Three-Step Process 1. Determine applicability 2. Potentially: Conduct “reasonable country of origin inquiry” 3. Potentially: Exercise due diligence on supply chain and file an audited Conflict Minerals Report 8
  • 9. Rule does not apply Conduct Reasonable Country of Origin Inquiry (RCOI) File a Form SD w/ description of RCOI Exercise due diligence (e.g., OECD, CFS) Are minerals scrap or recycled? Are minerals scrap/recycled or not from Covered Countries? Conflict Minerals Report (CMR) w/ Form SD CMR w/ independent private sector audit CMR w/ list of “DRC Conflict Undeterminable” products; consider whether audit required File a Form SD w/ description of due diligence measures Issuer manufactures or contracts to manufacture? Determine whether minerals finance or benefit militias? <2 yrs (4 for smaller companies) after effectiveness of Rule? Issuer files reports with the SEC? NO NO NO NO NO NO NO NO or UNKNOWN NO YES YES YES YES YES YESYESYES Conflict minerals outside supply chain before 1/31/13? Conflict minerals “necessary to functionality or production”? YES Minerals from Covered Countries? 9
  • 10. 1. Determine applicability 2. Conduct “reasonable country of origin inquiry” 3. Potentially: Exercise due diligence on supply chain and file an audited Conflict Minerals Report 10
  • 11. Step 2: Reasonable Country of Origin Inquiry (RCOI) Designed to evaluate whether minerals in a company’s supply chain originated from: • Recycled /scrap sources; or • Outside Covered Countries. Determines whether Step 3 due diligence is necessary 11
  • 12. Step 2: The Disclosure File Form SD to describe RCOI and results; and Post Form SD disclosure on website 12 Even if the issuer is not required to move on to Step 3, the issuer still must:
  • 13. 1. Determine applicability 2. Conduct “reasonable country of origin inquiry” 3. Exercise due diligence on supply chain and file an audited Conflict Minerals Report 13
  • 14. Step 3: The Conflict Minerals Report Not all companies that advance to Step 3 must file a Conflict Minerals Report 14 Like RCOI, if due diligence shows conflict minerals came from recycled/scrap materials or outside the Covered Countries, then no Conflict Minerals Report is necessary Company would then file Form SD with a description of due diligence and results No CMR No Audit
  • 15. FAQ and Key Ambiguities • Definition of product • Contract to manufacture • Other questions of scope • Extent of due diligence required • Applicability to non-US companies • Timing • Audit requirements during the phase-in period 15
  • 16. Litigation • U.S. District Court struck down a challenge from the U.S. Chamber of Commerce, Business Roundtable, and National Association of Manufacturers • Groups took issue with the SEC’s: – economic analysis; – failure to include a de minimis exception; – inclusion of non-manufacturers that "contract to manufacture"; – interpretation of the statutory phrase "did originate [in a covered country]" to mean "reason to believe . . . may have originated [in a covered country]"; – structure of the transition period; and – compelled speech in violation of the First Amendment 16
  • 17. Litigation, cont’d • The SEC countered – The economic analysis is robust – The final rule is reasonable, given the statutory mandate from Congress • Intervenor and amici also filed briefs – Amnesty International – Global Witness – American Coatings Association 17
  • 18. Litigation, cont’d • The Court sided with the SEC on every issue – Analysis of economic effects and reliance on Congress’s findings on humanitarian benefits of conflict minerals reporting are appropriate – SEC’s interpretation of the statute is reasonable and the rule is not arbitrary or capricious with respect to • RCOI • Contract to manufacture • Phase-in period • Lack of de minimis exception 18
  • 19. Litigation, cont’d • Rule has been and is still in effect • Given the timing of the Court’s decision, the rule likely will remain in effect throughout the first reporting period • Plaintiffs filed notice of appeal to the D.C. Cir. 19
  • 20. SEC FAQs • On May 30, the SEC’s Division of Corporation Finance issued a set of FAQs • Offers guidance on various applicability, scoping, and compliance issues • Not binding on the SEC but helpful: http://www.sec.gov/divisions/corpfin/guidance/ conflictminerals-faq.htm • Future guidance possible 20
  • 21. SEC FAQs (6) Question: • An issuer manufactures or contracts to manufacture a package or container that contains a conflict mineral, and the issuer uses the package or container in the display, transport, or sale of a product the issuer also manufactures or contracts to have manufactured. Would a conflict mineral necessary to the functionality or production of the package or container also be considered necessary to the functionality or production of the product under the rule? What if the container or packaging is necessary to preserve the product until the time the product is purchased or used? Answer: • No. Only a conflict mineral that is contained in the product would be considered “necessary to the functionality or production” of the product. The packaging or container sold with a product is not considered to be part of the product. Once the consumer starts to use a product, the packaging is generally discarded. This conclusion is true even if a product’s package or container is necessary to preserve the usability of that product up to and following the product’s purchase. If, however, an issuer manufactures and sells packaging or containers independent of the product, the packaging or containers, in that circumstance, would be considered a product. 21
  • 22. Audit Applicability For Reporting Years 2013 & 2014 Origin of Conflict Minerals IPSA Waiver Applies? Due diligence exercised, but origin of all of the conflict minerals in a product or a product category is unknown Yes Due diligence exercised, but origin of some of the conflict minerals in a product or a product category is unknown; other conflict minerals are known to originate outside the covered countries Yes Some of the conflict minerals in a product or a product category are known to have originated in a covered country, but were sourced through a verified conflict-free supply chain Likely Yes? All of the conflict minerals in a product or a product category are known to have originated in a covered country, but were sourced through a verified conflict-free supply chain Arguably Yes? This approach is not free from doubt Some of the conflict minerals in a product or a product category are known to have originated in a covered country, and are known to finance or benefit armed groups in a covered country No
  • 23. Other US Developments • U.S. Congress – May 21 Hearing in House Financial Services subcommittee on “unintended consequences” of Dodd-Frank • GAO report on Dodd-Frank implementation • US States – California and Maryland have enacted statutes that bar any company that does not fulfill its Dodd-Frank obligations from state contracting – Similar legislation is pending in Massachusetts and Connecticut • Private Procurement – Some universities and municipalities considering Dodd-Frank compliance in purchasing 23
  • 24. International Developments • EU – The European Commission concluded a public consultation to inform recommendations on the nature of a potential EU due diligence initiative (June 2013) • Canada – Legislation pending before the Parliament of Canada that would impose reporting requirements similar to those in the US on Canadian companies 24
  • 25. Expectations for EU Proposal • Commission proposal may be released by year end with final action possible in 2015 • Broad geographic reach to other conflict areas • Expected to build on OECD work and Guidance • Incentives for smelters and responsible sourcing (discourage unintended impacts) • Avoid potential conflicts with SEC rule 25
  • 26. Tools and References • Existing company supply chain management practices • Industry reporting tools – EICC-GeSI reporting template – Conflict Free Smelter program – AIAG, IPC • Reports on OECD guidance pilot – Practical feedback from on-the-ground – Examples of supplier engagement • Industry compliance guides • Expectations for Companies’ Conflict Minerals Reports (Enough, Responsible Sourcing Network) 26
  • 27. Looking Ahead • Most companies are investing in compliance and will likely continue efforts to better understand supply chain • Watch for EU proposal on conflict minerals - likely to differ from Dodd-Frank • EICC-GeSI tools will remain touchstones of due diligence • Anticipate growing stakeholder expectations for transparency around sourcing world-wide 27
  • 28. 28 For Additional Information: Rick Goss, Information Technology Industry Council rgoss@itic.org Paul Hagen, Beveridge & Diamond, P.C. phagen@bdlaw.com Graham Zorn, Beveridge & Diamond, P.C. gzorn@bdlaw.com
  • 29. Conflict Free Sourcing Initiative (CFSI) Program Update Bob Leet Intel, CFSI Lead 29
  • 30. Agenda • CFSI Governance Update • Conflict-Free Smelter Program (CFSP) • Company Assurance • Due Diligence Practices • Summary 30
  • 31. Governance Changes for the CFSI The initiative is undergoing continued improvement: • Name change completed, CFSI is the umbrella • Continue work on future structure (upstream / downstream / NGO) • Revenue generation options being implemented (membership and royalties) • CFSP improvements Overall development and implementation will continue in 2013 and into 2014 31
  • 32. Partitioning of CFSI Information: Public Vs. Private • Current rate of companies joining CFSI is not providing adequate revenue to expand the initiative quickly enough • New revenue sources being established: – RCOI information from CFSP audits only to be provided to CFSI member companies (Compliant smelter/refiner lists will remain public) [available in October 2013] – Use of the CFSP Compliant smelter/refiner list(s) (copyrighted work) in public documents or for-sale information systems will be available to members only, or for CFSI sponsoring vendors [deadline before end of 2013] • Member identification program being created • Considering discounts for partner association members 32
  • 33. In-Region Programs Conflict-Free Smelter Program (CFSP) Company Assurance Finished Product MINE SMELTER/REFINERY OEMS CFSI Conflict-Free Sourcing Approach 33
  • 34. Upstream Smelters / Refiners Downstream Conflict-Free Smelter (CFS) Program Raw Materials Finished Products Supply Chain Focal Point – Smelters/Refiners 34 Why Here? Conversion of distinguishable starting material into an indistinguishable product Small Numbers – tantalum, tin, tungsten and gold smelter/refiners total less than 500 companies globally
  • 35. CFSP Audit Focus 35 Company Mass Balance - Includes all inventory - Includes all facilities Ore / Concentrate Recycled / Scrap Toll Customer Finished Products Toll Supplier Conflict Free Policy Intermediates Unfinished Products Company Program Validation - Conflict Free Policy - Conflict Free Sourcing Systems Sourcing Processes Validation
  • 36. Program Improvements • 3Ts harmonized protocol improvements nearly complete (expecting release – Addressing tin industry concerns (definition, ASM, secondary materials, slags) – Definition of a Tin smelter will expand due to crude material paths – Improving standardization, readability and clarity – Explicit alignment with U.S. SEC Rule – Working with Tungsten industry requests very late, may require a sequential revision • CFSP Program-Manual generation in progress – Procedural/Decision-making documentation – ISO, IEC, ISEAL alignment improvements • Auditor Accreditation Program generation in progress – Team kicked off, investigating options – Currently expecting to deliver program in mid 2014 36
  • 37. CFSP Online Indicators / Active List • Active = signed agreements, audit progress being made • Presently no Tungsten smelters active 37 http://www.conflictfreesmelter.org/cfshome.htm
  • 38. In-Region Programs Conflict-Free Smelter Program (CFS) Company Assurance Finished Product MINE SMELTER/REFINERY OEMS CFSI Conflict-Free Sourcing Approach 38
  • 39. Company Assurance Development, integration and maintenance of tools and processes which support a down- stream company’s management system and risk assessment activities: – Policy language included in the EICC Code of Conduct (http://www.eicc.info/eicc_code.shtml ) – Created; maintaining a tool to collect information about a supplier’s due diligence processes and sourcing: Conflict Minerals Reporting Template – Establishing resources and processes to support data collection and analysis 39
  • 40. Conflict Minerals Reporting Template Flow 40 Smelter Smelter Smelters Sub- Suppliers Sub- Suppliers Sub- Suppliers Template User Direct Suppliers Direct Suppliers Direct Suppliers 1. Sends request to direct suppliers 2. Sends request to sub-suppliers 3. Cascades through supply chain until smelters identified. Sub- suppliers return template to suppliers.Direct Suppliers Direct Suppliers Direct Suppliers Original User Customer 4. Direct suppliers return aggregated roll up template 5. User returns final aggregated roll up template
  • 41. Company Assurance Program Updates • Conflict Minerals Reporting Template (CMRT) & Dashboard – Revision 2.03 released June 2013 – MRPRO Dashboard (free) improved to accept all 2.xx versions as well us upgrade Rev.1 templates (available here) – Supporting Solution Providers creating database versions – Considering a quarterly update schedule; primary purpose is revision of the Standard Smelter List; next major release contingent on IPC Standard • Online training for completing the CMRT is available in English; additional languages in process • Supporting FAQs released related to use of the CMRT, CMRT versions and collection of data from suppliers • Standard Smelter List Management – Activities initiated to refine smelter identification and list management process CMRT and supporting materials available at http://www.conflictfreesmelter.org 41
  • 42. Company Assurance Program Updates Continued • CMRT Release 2.03 Noteworthy Improvements – Addressed incompatibility issue with Excel 2003 – Additions / edits to the “Standard Smelter List” – File now available as Excel 2003 version to ensure backward compatibility • Standard Smelter List Management – Activities initiated to refine smelter identification and list management process CMRT and supporting materials available at http://www.conflictfreesmelter.org 42
  • 43. IPC1755 Standard • EICC and GeSI collaborating with the IPC (www.ipc.org, “Association Connecting Electronics Industries”) with the objective to: – Develop a standard for exchange of data related to conflict minerals used in manufactured products to facilitate efficient data exchange across companies, supply chain levels, and industries • Not an actual data collection tool – but a set of due diligence information requirements and “instructions” to allow different tools to communicate • IPC facilitating an open ANSI standard process 43
  • 44. IPC Progress and Next Steps • Work began in November 2012 and continues: – Standard revised per committee decisions in February – Circulating Proposed Standard for Ballot to the Ballot Committee: Deadline September 26, 2013 – EICC and GeSI as organizations will also be voting – If the standard passes the ballot, publish final by EOY 2013 • Contact: – Stephanie Castorina: scastorina@ipc.org 44
  • 45. CFSI Due Diligence Practices • Release of White Paper that provides practical steps for downstream companies to: – Interpret the OECD DDG – Link to SEC reporting obligations (how to..) – Incorporate use of CFSI tools and programs • Release of Trigger Document regarding Independent Private Sector Audits (IPSA) • Release of Frequently Asked Questions (FAQ) Document on company assurance and conflict minerals disclosure 45 http://www.conflictfreesmelter.org/cfshome.htm
  • 46. Summary • The CFSI continues to drive improvements in its programs to enable companies in their ability to source conflict-free minerals • Improving governance of the initiative, both in structure and revenue generation are key to sustainability and health • Company assurance activities of the CFSI are focused on improving company capabilities to validate responsible sourcing of materials by creating common standards, tools and processes 46
  • 47. Options for CFSI Participation • EICC or GeSI Membership – Full Membership provides access to CFSI and all EICC/GeSI WG’s ( http://www.eicc.info/Membership_Application.shtml ) ( http://www.gesi.org/Membership/tabid/59/Default.aspx ) • CFSI Partner Company Participation ( http://www.eicc.info/documents/ExternalWGMembers-Companies.pdf ) – $5K fee annually – Voting rights, access to all Work Groups, access to RCOI information • CFSI Partner Association Participation ( http://www.eicc.info/documents/ExternalWGMembers-Organizations.pdf ) – $20K fee annually – Voting rights (one vote for organization) – Up to two participants to CFSI Meeting or CFSI Work Groups, responsible for disseminating all information (staff or constituent members welcome) • White Paper on the Extractives WG (now the CFSI) available (www.conflictfreesmelter.org) 47
  • 48. 48 “To be or not to be DRC- or GLR-free”: Perspectives on strategies to comply with Dodd-Frank Sasha Lezhnev, Enough Project Steffen Schmidt, Wolfram Bergau und Hütten Mike Loch, Motorola Solutions Brad Brooks-Rubin, Holland & Hart
  • 49. Afternoon Breakout Sessions: In-region sourcing Reporting Basics Conflict-Free Smelter Program Independent Private Section Audit Software Demonstrations
  • 50. DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example • Brenda Baney, Delphi • Jay Celorie, HP Tues. 9/10 3:30-5:15pm Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
  • 51. DD Break-out Session Kick-off • Who is upstream? • Who is a smelter/refiner? • Who is downstream? • Who is an EICC or CFSI member company? For CY2013 • Who has completed the Conflict Minerals Reporting Template? • Who knows they must file with SEC? • Who believes they will file a CMR? • Who believes they need an IPSA?
  • 52. Conflict Minerals Reporting Basics Bryan Fiereck – Intel David Hancock – Boeing Sept. 11, 1:30-3:00pm
  • 53. Agenda  20 minutes: Reporting Basics and Examples  20 minutes: Q&A  15 minutes: NGO Expectations document  15 minutes: Q&A
  • 54. SEC 3-Step Compliance • Step 1: Determine applicability If subject to the SEC Final Rule, then • Step 2: Conduct RCOI Goal: Seek to determine whether CMs are – sourced from within the covered countries – derived solely from recycle/scrap If required, conduct DD on CMs sourced from within the covered countries which were not derived from recycle/scrap. Goal: Seek to determine whether sourcing of CMs directly or indirect support conflict in the DRC. • Step 3: Report via Form SD (and CMR as required) Goal: Transparency of sourcing information
  • 55. Reporting Basics • Form SD template provided within the SEC Final Rule. – see pg. 344 • Report(s) to be filed “. . .no later than May 31 after the end of the issuer’s most recent calendar year.” – pg. 345 • “Report must be signed by the registrant on behalf of the registrant by an executive officer.” – pg. 346
  • 56. Reporting Requirements: Form SD Form SD: under a separate heading entitled “Conflict Minerals Disclosure”, • Briefly describe the RCOI in form SD if you have established that a large majority of CM in your supply base did not originate in the covered countries or were from scrap or recycled materials • Otherwise, all substantive content should be contained in the CMR • In either case, the information must be posted in a public website and a link to the posting must be included on Form SD
  • 57. Reporting Requirements: CMR Company’s CM Policies conform in all material respects to a nationally or internationally recognized due diligence framework For products not been found to be “DRC conflict free”, 1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs 3. Country of origin of the CMs in those products 4. Efforts to determine mine or location of origin Likewise for products which are “DRC conflict undeterminable”, 1. Provide description of product(s) 2. Smelter/refiner facilities used to process CMs, if known 3. Country of origin of the CMs in those products, if known 4. Efforts to determine mine or location of origin 5. Steps to mitigate the risk that its CMs benefit armed groups (including steps to improve due diligence)
  • 58. Likely Filing Scenarios for CY2013 Determination by Registrant Scenario Result File Necessary CMs are from outside the covered countries and/or solely from recycle/scrap 1 DRC conflict free Form SD Know (or have reason to believe) necessary CMs originated from a conflict free source within the covered countries 2 DRC conflict free Form SD & CMR Know (or has reason to believe) necessary CMs originated from within the covered countries and are not (or may not be) from recycle/scrap sources 3 DRC conflict undeterminable Form SD & CMR 4 DRC conflict free & DRC conflict undeterminable Form SD & CMR Know (or have reason to believe) necessary CMs originated from a conflict source within the covered countries 5 Not found to be DRC conflict free Form SD & CMR • Many registrants will report within Scenarios 1 & 3 • Some registrants may report within Scenario 4 • Limited registrants will likely report within Scenario 2 & 5
  • 59. Examples
  • 60. SRI and NGO Expectations for 1502 Reporting Patricia Jurewicz Director, Responsible Sourcing Network CFSI 12th Extractives Workshop September 11th, 2013
  • 61. Structure • Category • Key Elements • Best Practices • Indicators
  • 62. Policy and Program • Publicly disclosed, easy to find • Key elements included – Commitment and steps to exercising due diligence, requirements of suppliers, etc. • % staff aware and educated • % suppliers received copy & educated
  • 63. Reasonable Country of Origin Inquiry • % of products/product categories containing 3TG • % of surveyed 3TG products and % of responded suppliers • % of products with indeterminate 3TG • % of 3TG products with smelters/refiners identified • % of suppliers using material from CFS smelters • Publicly available list of identified smelters or refiners
  • 64. Due Diligence • % of suppliers adopted policy & program consistent w/ OECD • % of suppliers undergoing remediation • % of smelters not participating in an independent verification system • Number or % of validated smelters in supply chain sourcing certified conflict-free minerals from covered countries
  • 65. In-region Clean Minerals Trade • List of conflict-free initiatives participating in • Quantity or % of products producing with certified conflict-free minerals from region • Support of responsible supply chain or alternative- livelihood initiatives • Participation in the MSG Policy or Diplomacy Working Groups
  • 66. Thank you for being part of the solution Patricia Jurewicz Director Responsible Sourcing Network patricia@sourcingnetwork.org 510.735.8145 Sasha Lezhnev Sr. Policy Analyst Enough Project sasha@enoughproject.org 703.485.6949
  • 67. DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example • Brenda Baney, Delphi • Jay Celorie, HP Tues. 9/10 3:30-5:15pm Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
  • 68. DD Break-Out Sessions Agenda Date/Time Current Tues. 9/10 1:30-3pm Compliance basics (RCOI & DD) and example • Brenda Baney, Delphi • Jay Celorie, HP Tues. 9/10 3:30-5:15pm Downstream due diligence: OECD steps interpretation • Jay Celorie, HP • Sandy Merber, GE Wed 9/11 1:30-3:00pm Reporting basics (Form SD, CMR, and other) and examples • Bryan Fiereck, Intel • David Hancock, Boeing • Patricia Jurewicz, Responsible Sourcing Network Wed 9/11 3:00 – 3:15pm Break – Arlington Ballroom Foyer Wed 9/11 3:15-4:45pm Independent Private Section Audit (IPSA) Panel Discussion • Bryan Fiereck, Intel Corporation • Sandy Merber, General Electric • Lawrence Heim, Auditing Roundtable • Mandy Nelson, American Institute of Certified Public Accountants
  • 69. CMR Transition Period IPSA Triggers and Objectives
  • 70. When is IPSA Required for CMR? Result of RCOI/DD During Transition Product Status IPSA Required After Transition Product Status IPSA Required All CM Unknown Undeterminable No Not found to be Conflict Free Yes Some CM known – Conflict Free Undeterminable Pending SEC FAQ Not found to be Conflict Free Yes Some CM known – Conflict Supporting Not Conflict Free Yes Not Conflict Free Yes All CM known – Conflict Free Conflict Free Yes Conflict Free Yes
  • 71. Audit Objectives Express an opinion or conclusion as to whether 1. The design of the registrant’s due diligence measures as set forth in, and with respect to the period covered by, [the CMR] is in conformity with, in all material respects, the criteria set forth in the nationally or internationally recognized due diligence framework used by the registrant; and 2. The registrant’s description of the due diligence measures it performed as set forth in the [CMR], with respect to the period covered by the report, is consistent with the due diligence process that the registrant undertook.
  • 72. AICPA Conflict Minerals Task Force • Task force includes representatives from seven CPA firms • Q & A’s posted to AICPA website • Independence • Differences/similarities between attestation engagements and performance audits • Q & A’s under development • Objectives of IPSA • Opining on design of due diligence framework • Completeness of description in CMR • Evaluations outside scope of IPSA • Sample audit procedures • Example reports
  • 73. Conflict Minerals Report Audits: The Auditing Roundtable Performance Audit Updates Lawrence Heim, CPEA
  • 74. The Auditing Roundtable • Founded 1982 as The Environmental Auditing Roundtable – Now includes health, safety, management systems, Responsible Care and Process Safety Management • Joint venture in 1997 with Institute of Internal Auditors for third party EHS auditor certification – Board of Environmental Auditor Certification (BEAC) – EHS compliance and associated management systems – Requires experience, exam, continuing education, peer/supervisor commendations, code of ethics commitment • Audit program standards and auditor training
  • 75. The Auditing Roundtable Conflict Minerals Interest Group (CMIG) • Initiated in December 2012 to develop CMR auditor guidance under GAO Performance Audit standard • Began as narrative field manual, now Q&A format to mirror SEC and AICPA • Coordinating closely with AICPA, SEC and GAO • External stakeholder reviewers: – CFSI, IPC, ITRI
  • 76. The Auditing Roundtable Performance Audit Guidance • Q&A still in CMIG draft stage – Internal peer reviews required before stakeholder reviews, then final Board approval needed • Well aligned with Attestation/AICPA guidance • To be issued before end of 2013 and maintained as a living document – Will be available free of charge on AR website • May develop narrative field guide in future
  • 77. The Auditing Roundtable Contacts • Kathy Reith, Managing Director – kathy@auditing-roundtable.org – 480-659-3738 • Lawrence Heim, CMIG Chair – lheim@elmgroup.com – 678-200-5220
  • 78. Executive Analytic Exchange on the Democratic Republic of the Congo and Great Lakes Co-sponsored by the Bureau of Intelligence and Research of the U.S. Department of State and the National Intelligence Council September 6, 2013 Dr. Richard Robinson, Extractive Industries Technical Adviser, USAID DRC
  • 79. Mineral Country Value ($ export Per year) Amt/Percent legal & conflict- free Gold DRC $600m-$2.0 b $350m-17% or more (vs $2.0 b) Tin, tantalum, tungsten (3T) DRC $135 m-$350 m 40% DRC-27% from Kivu’s, 90- 100% from Katanga 3T Rwanda $154 m 55% or more based on historical productivity Copper DRC $4.8 b 100% Cobalt DRC $500 m 90% Diamonds DRC $300 m 90% Total estimated $6.5-8 billion 80 Estimated mineral exports DRC & Rwanda—legal & illegal--2012
  • 80. Move from desperate economic choices
  • 81. To LSM/Banro South Kivu—15% of DRC gold conflict-free
  • 82. What does long-term improvement for the CFSP look like? Bob Leet, Intel Jean-Paul Meutcheho, GAM
  • 83. How should the CFSP change/improve over the next 2-5 years? • Think of both existing and new issues • Some topical areas: – Audit Execution – Audit Protocols – Scope – Costs / Funding / Membership – Program Management – Information Management – Communications