Conflict Mineral Guidance

March 5, 2014

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act consisting of over 2,000 pages of complex financial reforms to be implemented by the US Securities and Exchange Commission (SEC). Section 1502 of the law requires reporting companies to investigate whether tin, tungsten, tantalum or gold (“3TG”) in present in products and, if so, disclose in a new SEC filing whether any originated from the African country of the Democratic Republic of Congo (DRC) or the nine countries that share a border with the DRC (altogether referred to as “covered countries”).

As part of the due diligence and disclosure, the companies subject to this requirement must commission an independent private sector audit (IPSA) of certain sections of the report.  The IPSA must be conducted using either the Attestation Engagement or Performance Audit standards of the US Government Accountability Office Government Auditing Standards (referred to as “GAGAS” or the “Yellow Book”.  The GAGAS includes standards for Attestation Engagements and Performance Audits.

Attestation Engagements can only be performed by CPAs (or those working directly under the supervision/direction of a CPA).  The American Institute of Certified Public Accountants (AICPA) and GAGAS both govern Attestation engagements, including those covering CMRs.

Performance Audits must be conducted by appropriately-qualified auditors and are not governed by AICPA.

The Auditing Roundtable, through the Conflict Minerals Interest Group, undertook an initiative to develop auditor guidance for those conducting IPSA Performance Audits, especially auditors in the environmental, health, safety, sustainability and social responsibility auditing (EHSSS) practice area.  The guidance is intended to provide a basis for consistency and substantive interpretations and was developed to be consistent with the CPA auditor guidance published by AICPA.

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