Conflict Minerals and Beyond - Part One: Developing a Global Compliance Strategy 

This KPMG report is the first in a four-part series that covers Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It takes a global view of the topic highlighting that despite it being a US law, it affects thousands of companies globally.

 

The report highlights that compliance with these regulations is not just a box-ticking exercise, but a matter of strategy. By taking a broad view of the impact of these regulations on the entire enterprise and developing a strategy of compliance, companies are likely to reap long-term benefits in the form of supply chains that are more efficient, less risky and more transparent.

 

Key Findings 

Some of the key findings of the study include:

 

  • Building a framework for compliance
    If companies are to comply with Section 1502, they will need to get their own house in order. Companies need to set up an internal governance structure below the CFO or COO; including at least the supply chain/procurement, legal counsel, finance and internal audit departments. With the team in place an organization will need to set up an internal reporting system and a robust external process to obtain information from their suppliers.
  • Implementing a conflict minerals program
    Once companies have set up an internal compliance framework, then comes the hard part: finding out where the minerals in their supply chain originate. KPMG recommends a risk-based approach focused on vendors that may be more likely to buy conflict minerals from the DRC. This approach is based on the Organisation for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and includes a supplier survey program and assistance to develop the company’s conflict minerals report.
  • Audit, disclosure and beyond
    The SEC requires companies to provide public disclosure on a new form called Form SD (specialized disclosures) to be filed each year starting on May 31, 2014 for the period covering January 1 through December 31, 2013. Certain issuers’ conflict minerals reports (an exhibit to Form SD) may require an independent third party audit. In its final rule the SEC concluded that the standards for Attestation Engagements or for Performance Audits will apply.

 

 

For more information, download the full report below.

 

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