In 2010, ELM completed the first third-party traceability audits for tantalum under these programs. Our initial round of audits resulted in the first ever “Conflict-
Lawrence Heim, Director at ELM, presented on these experiences at The Auditing Roundtable Winter Meeting January 25. Key points made:
• Planning is critical. Greater success is achieved by starting the auditing process as close to the mine as practical and moving toward the consumer. Working backwards creates complexities, confusion and increases costs.
• SEC sees different audit types, but the market doesn’t. SEC regulations establish two different traceability activities: “reviews” and “Conflict Minerals Reports”, with third party audits required only for Reports. However, the supply chain is already demanding third party credibility and independence for any material origin statements.
• Audits are SEC-based, not EHS. As stated in SEC’s proposal, AICPA-based attestations are a critical component of viable traceability programs. Traditional EHS auditor standards, certifications and practices may be insufficient to meet these requirements.
• Additional sources of audit information necessary. Increased stakeholder and regulator concern over information veracity reflecting ore provenance is driving the need for new data resources and verification tools.
Heim concludes, “Media coverage has painted an unnecessarily pessimistic picture of the practicality and cost of these conflict minerals audits. Our experience demonstrates that such pessimism is generally unwarranted, provided the right plan and resources are in place.”
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Founded in 2001, THE ELM CONSULTING GROUP INTERNATIONAL LLC is a health, safety, environmental and sustainability services firm with offices in the US, Mexico, Argentina, Venezuela, New Zealand, Indonesia, China (joint venture) and a network of over 100 hand-selected affiliates in 22 other countries. To maintain independence, we focus on auditing and maintain third-party auditor certifications in the US and abroad.