As you may recall, last August the U.S. Securities and Exchange Commission (SEC) adopted two new provisions into the Dodd-Frank financial reform package that would require tech and energy firms to search their supply chains for “conflict minerals.” Such minerals being mined like tantalum, tin, gold and tungsten have been used to finance the many civil wars throughout Central Africa. The two provisions – sections 1502 and 1504 – are intended to provide transparency among those involved in mineral extraction. Specifically, section 1504 requires firms to perform audits and report to SEC about any monies exchanged with U.S. and foreign governments for mineral extraction.
…A detail buried in the SEC’s final rules allows for performance audits instead of more commonly-known financial audits and attestation reports. But unlike financial audits and attestation reports, performance audits don’t use a standard form and language, meant to offer companies a clear black-and-white conclusion, but are more of a free-flowing narrative that offers an array of opinions and recommendations.
In the context of the conflict minerals rules, no one knows exactly what a performance audit will look like, and the SEC isn’t required to publish standards for such audits. The uncertainty has presented challenges for both the auditing community and companies seeking to comply with the rule…
Clearly, more work needs to be done to address the auditing issue. Luckily, there is still grassroots activism around bringing the discussion to the mainstream. This is Congo is a documentary still in the works that will give more insight into the social impact mineral extraction has in the country. The filmmakers recently raised enough money on Kickstarter to finish the film. In addition, the filmmakers received a piece of a $US 500,000 grant from Cinereach. The more people are educated on the subject, the more action can be taken to reduce this problem.