Conflict Minerals Reporting

Will your company be ready for Conflict Minerals Reporting? Recent legislation (Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) requires manufacturers and their customers to disclose steps taken to ensure their products do not contain the columbite-tantalite (coltan or tantalum), cassiterite (tin), wolframite (tungsten), gold, or any other mineral or its derivatives, determined by the US Secretary of State to be financing conflict in the Democratic Republic of Congo or adjoining country.

This regulation directly affects many sectors, including Aerospace and Defense, Electrical Equipment/Products Manufacturing, Chemical Manufacturing, Electronics Manufacturing, Environmental Service and Equipment, Health Care, Industrial Manufacturing, Metals and Mining, and the Semiconductor industry. Even companies not directly regulated by the SEC, privately held and foreign owned, will be impacted by the audit requirements as they are pushed-down throughout entire supply chains. The independent third-party supply chain traceability audits and the accurate reporting of this information will strain purchasing departments even further, as their existing systems are often not equipped to deal with such issues.

Lack of Mineral Source/Origin Insight

The first step in Conflict Minerals Reporting is a reasonable inquiry as to whether a determination of source/origin of tin, tantalum, tungsten, or gold can be made. Most internal systems are disjointed and cannot carry out this determination in an automated fashion. As such, companies have to rely on contacting suppliers directly, and possibly second-tier suppliers as well, to inquire about materials and source.

You should be concerned with:

  • Making a reliable determination as to the source/origin of minerals or their derivatives
  • Ensuring proper due diligence in determining source/origin of minerals
Successful supplier information management systems have the ability to survey a supplier. Upon identifying key pieces of information (e.g., the need to survey a second-tier supplier, identification of a conflict mineral), appropriate next steps are automated. These steps may include gathering contact and product information on a second-tier supplier; ensuring source/origin of the potential conflict mineral is entered; and ensuring audit traceability of all entered information.

Inefficient independent, private sector audits

Procurement, or any one compliance function, does not have the ability or expertise to oversee all compliance areas. For most organizations audits involve multiple departments and, in Conflict Mineral Reporting, the additional use of external auditing firms. Ensuring the audit is coordinated, and that all supplier and commodity information is available, proves a difficult task, even for large procurement organizations.

You should be concerned with:

  • Cost inefficiencies and the amount of time spent by internal resources in scheduling audits
  • The ability to share information across departments, repurpose audit procedures, automate workflow and findings generation
  • Improving relationships with suppliers through a commonly coordinated audit approach
This growing list of risks and auditing needs has had an adverse effect both on internal resources and supplier relationships, as audits take time and money to coordinate and execute for all parties involved. Furthermore, as audit programs emerge with new legislation, working with point-to-point or other standalone solutions can cause inefficiencies as organizations are unable to coordinate suppliers and auditors to schedule audits, brief suppliers, analyze risk, and provide ongoing oversight.

Accurate Reporting

The CMR statute specifies that any audits be “conducted in accordance with standards established by the Comptroller General of the United States, in accordance with rules promulgated by the Commission.” Using the same audit standards as other SEC auditing requirements, the SEC will not allow companies to issue self-generated statements or certifications to satisfy the law.

Information gathered requires traceability, and subsequent reports require the ability to include this information. The audit must follow set processes, such as determining what information to gather, ensuring it is gathered, and identifying who is responsible for supplying the information. With self-declaration of accuracy, the final reporting and monitoring of the program is simplified. Without the use of intelligent systems, efforts to comply with the reporting requirements are often frantic, and corporations are exposed to potential errors, missing data – and risk penalties.

Solution

With the HICX Conflict Minerals Reporting solution, you will be able to:

  • Customize the system to fit your environment
    • Tailor the solution to your specific CMR environment, including surveys, workflows, reports, and integration points
    • Deploy across an entire enterprise quickly, but have the flexibility to add region and location-specific criteria
  • Collect Information on suppliers, sub-suppliers, and products
    • Deploy unlimited, and flexible, CMR initiatives based on your exact requirements
    • Utilize dynamic field permissions and validations
    • Assess information required by commodity
    • Allow Third Party Auditor access to documents, forms, and surveys as required by the US Government
    • Store and manage documents for reporting requirements
  • Capitalize on automated workflows and approvals
    • Build and deploy workflows from a graphical interface
    • Leverage complex workflows that model your CMR compliance needs, whether dynamic routing, parallel, serial, to individual, to role, etc.
    • Ensure that process/workflow changes do not disrupt existing work in progress
    • Prioritize workflows so that processes added further down the organizational structure become additive versus substitutes
  • Communicate with all necessary stakeholders
    • Use surveys and forms to collect necessary CMR information from both internal stakeholders and suppliers
    • Notify individuals by alerts and emails when action is required
    • Escalate issues as needed
    • Communicate content and requirements based business relationships
  • Gain insight into all aspects of the program
    • Quickly view customized dashboards that present your most critical indicators in simple form
    • Leverage both standard and ad-hoc reports that access all captured supplier information
    • Export data for use within internally owned business intelligence tools
    • Search on structured criteria, or use full-text search across all supplier information (including within documents, dynamic fields, etc.)
    • Audit any aspect of information (e.g., who changed the information, from what, when, etc.)

Additional Resources