Tag Archives: Conflict Minerals Report

Across the Finish Line for Conflict Minerals Filings

UPDATE: As of June 15, the total number of filers stands at 1,209 by our count.

Today is June 1, 2016, the day after SEC’s filing deadline for Form SDs and Conflict Minerals Reports (CMRs).  All regulated companies should have submitted their disclosures by now, although we expect to see more continue to trickle in for a few days.  But by our count as of late afternoon June 1, the final tally is 1,197 companies filed a Form SD.  We didn’t look into how many submitted a CMR versus just a Form SD – we will leave that to Dr. Chris Bayer.

With regard to the IPSA count, our final numbers, the listing of the companies conducting an IPSA, and a breakdown of the auditors is available in this post.

Congratulations to all those who crossed the finish line.  Enjoy your summer before having to turn your attention back to conflict minerals.


The Checkered Flag Comes Down on Conflict Minerals Filings

UPDATE as of 8:00pm Eastern time:

  • 1248 total Form SDs have been filed covering CY2014
  • 541 were filed today alone
  • We are still only able to find 6 IPSAs as indicated below.


Today is June 1, 2015 – the deadline for submitting to the Securities and Exchange Commission the CY2014 Form SDs and Conflict Minerals Reports.  Interesting statistics will be changing by the hour, but as of 8:00am eastern time today:

  • 750 Form SDs have been filed
  • at least 31 CY2014 filers did not file last year.  Four more initially seem to be new filers this year, but that is due to minor changes in the name of the company for CY2014 and in reality, they did file last year under their old name.
  • 6 IPSAs were conducted – 3 by CPAs and 3 by non-CPAs.

Stay tuned for updates through today and this week as well.

Conflict Minerals Filings Status Update – May 27, 2015

As of 8:00am eastern time today, 113 Form SDs have been filed since January 1, 2015 covering reporting year 2014.  This is far more than had been filed last year four days before the deadline.

More interesting, however, is that 10% of the 113 did not submit a Form SD last year at all.  We didn’t look deeper to try to determine why this is the case.  A few of our clients have gone through IPOs, sales and divestitures in the 2012 – 2014 time period, which changed their reporting status.  Even further, some companies only recently brought to market products that trigger conflict minerals reporting.  We are certain that many other filers have gone through similar legitimate changes.  But we also expect there to be some companies who missed last year’s filing altogether for other reasons and this will be their first Form SD.

Does Your Conflict Mineral Smelter/Refiner List Look Like This?

In a previous post, we discussed smelter/refiners lists in conflict minerals reports (CMRs).  In this post, we broaden the discussion.

Last year, definitive information on smelter/refiner names and locations was severely lacking. Early efforts at using the CMRT for collecting smelter/refiner names resulted in many non-smelters/refiners being listed by suppliers, so EICC/CFSI initiated their “verified smelter/refiner” listings. “Verified” is not the same as audited; “verified” means that the CFSI has simply confirmed that the location is a legitimate smelter/refiner operation. Further, the CFSI list represented only those facilities identified within the electronics supply chain, and therefore did not represent all smelters/refiners globally. This point was communicated in the heading of the Standard Smelter Names tab of the CMRT.  The CMRT version 3.02 (November 7, 2014), lists 279 verified smelters/refiners.

For the CY2013 filing, issuers arguably could make a reasonable interpretation that any processing facility name not verified by the CFSI was not definitively a smelter/refiner and therefore did not need to be reported. As a result, many issuers listing smelters/refiners in their CMR included only those facilities that were either CFSI audited or verified* (and within the electronics supply chain only).

In September 2014, the Department of Commerce published their report – DEPARTMENT OF COMMERCE REPORTING REQUIREMENTS UNDER SECTION 1502(d)(3)(C) OF THE DODD-FRANK ACT, WORLD-WIDE CONFLICT MINERAL PROCESSING FACILITIES. In this report, Commerce stated “…to our knowledge, the attached list is the most comprehensive list to date of all known processing facilities in the world.” Approximately 450 processing facilities are listed – about 170 more than are CFSI verified or audited.

For CY2014, we don’t believe issuers can take the same approach to omitting smelters/refiners as last year. Since the Commerce list is considered by US Government to be the most comprehensive list to date of all known processing facilities in the world, it may no longer be reasonable to omit facility names using the argument that they can’t be confirmed as a smelter/refiner.

In other words, if your CY2014 smelter/refiner list is limited to ONLY processing facilities that are CFSI audited or verified, your disclosure may be incomplete (unless CFSI audited/verified facilities actually do make up 100% of the names provided by your suppliers).

Recently, we have seen some draft smelter/refiner lists for CY2014 filings that were incomplete because they omitted any facility name that was not on a CFSI list. The logic behind these was based on CY2013 data availability and is no longer valid in our opinion.

If your list of smelters/refiners (either in your CMRT or Conflict Minerals Report) contains only facilities with a CID number, we suggest you review your supplier data and confirm this is indeed accurate. Otherwise, we recommend that you list all supplier-provided facility names that are included in the Commerce list, regardless of their status with CFSI.

And don’t forget to conduct research into the countries of origin used by those facilities.


* Of the 1300 filers for CY2013, only 18% included a smelter/refiner list in the CMR.

Psst – Hey Buddy, Wanna Buy a Cheap Conflict Minerals IPSA??

UPDATE:  For additional insight on how to separate RCOI and due diligence for purposes of the IPSA, read this.

Readers of our blog, or anyone who has stood still long enough for us to grab them to talk about the Independent Private Sector Audits (IPSAs) of Conflict Minerals Reports (CMRs) – whether they wanted to or not – have heard us discuss strategies to reduce the effort and costs of the IPSAs.  Two of our articles on the matter can be read here and here.  In recent weeks, we had some interesting experiences in this regard.

To begin with, we completed our first IPSA for a major company in the electronics supply chain. In conducting the IPSA, essentially all of our expectations about the process and effort were confirmed. We also saw first hand the value of good pre-audit preparations and a thoughtfully written CMR.

Second, clients and outside law firms have told us that a number of audit firms are pulling out of the IPSA market. In the early days of the final SEC rule, many audit firms expected IPSAs to require significant time and effort, generating large revenue opportunities. Once the SEC staff clarified their expectations of the IPSA, it became evident that the effort, scope and cost of the audit were lower than originally thought (or perhaps “hoped” by the audit profession). The actual IPSA costs are simply too small for some firms to bother with, and we hear a number of them are quietly withdrawing from the market.

Some may recall that the SEC had hoped pricing of the IPSAs would be impacted by competition resulting from allowing non-CPAs to conduct Performance Audit IPSAs. We believe this is happening, and continue to think that the SEC’s estimated IPSA cost of $25,000 is fairly accurate under certain easily-attainable circumstances.

Which leads us to our last experience. Our consulting clients are beginning to explore IPSA providers, and we are seeing higher prices and bigger scopes for IPSAs than we would expect. This has been surprising, but also makes clear that issuers needing an IPSA should strive to be more educated on the IPSA than the auditors themselves. We tend to think our clients are.

The major takeaways from all this are:

  • As we have said before, the wording and content of the CMR are absolutely critical to the effort and cost of the IPSA. For a cost effective IPSA, the wording must be auditable and concise. The audit firm will likely review the CMR for auditability prior to the IPSA, but the more you do this yourself, the less time the auditor will need for that task.
  • Perhaps most importantly, RCOI activities should not be included in the description of due diligence measures undertaken. The SEC Q&A (#18) clarifies that “[t]he IPSA does not need to include the reasonable country of origin inquiry because, under the rule, that inquiry is a distinct step separate from the due diligence process.”
  • Similarly, it is not necessary to define “due diligence” as all five steps of the OECD Due Diligence Guidance. This has been a point of confusion since the document is called “Due Diligence Guidance”, but the SEC’s definition of due diligence differs from all five steps (as demonstrated by the point above).
  • Assertively manage your IPSA auditor. Don’t be swayed by scare tactics used to pad the effort and price. Make sure you understand what the IPSA is not to cover.   Some matters that are not within the IPSA scope are set forth in Question .06 in AICPA’s Conflict Minerals Resources Q&A.  It is probably well worth having an auditor conduct preparation activities before selecting the IPSA auditor. You can use Internal Audit staff to do this (once they are adequately informed or trained on this unique audit), or hire a qualified third party auditor. The better informed you are, the better you can control the IPSA cost.