Now that the inaugural conflict minerals disclosures have been filed with the SEC, and those filings also made public on company websites, expectations have been raised on the adequacy, accuracy and certainty of the information for 2014. Our recent post on DRC Conflict Free determinations got us thinking – how comfortable will issuers be in making a DRC Conflict Free determination based only on their Reasonable Country of Origin Inquiry (RCOI)? How can the executive who signs the Form SD ease their concerns or anxiety about putting their name on the form?
In our view, CY2014 claims of “DRC Conflict Free”, while voluntary, will be put under a microscope by customers, NGOs and certainly the media. Filers making the claim based on their RCOI only (i.e., determining that none of their conflict minerals originated from the Covered Countries, or originates from 100% scrap/recycled materials) will be scrutinized even more due to a general perception that this is a loophole for companies to avoid effort, cost and information disclosure.
Companies anticipating claiming DRC Conflict Free status because none of their conflict minerals originates from the Covered Countries, or 100% originates from scrap/recycled materials should seriously consider having an independent program review/assessment to support such a claim.
This type of program review is not mandated, and is not contemplated by the SEC’s disclosure requirement, but can significantly strengthen company claims and determinations. Different from the Independent Private Sector Audit (IPSA) that is required for a DRC Conflict Free determination after full due diligence, an RCOI program assessment can be more flexible. The IPSA focuses on conformity of the processes to criteria, whereas the RCOI assessment would evaluate and validate the results and validity of the RCOI efforts to directly support the determination.
For us, however, such an assessment is nothing new. As part of our conflict minerals program assessments, we conduct detailed reviews and evaluations of the programs, processes and results – as well as the information on which the company relies.
If you want to substantiate your RCOI claims, contact us via our website or call 678-200-5220.