Crowe Horwath Jamaica (www.crowehorwath.com.jm) is one of the largest public accounting, consulting, and advisory firms in Jamaica . Crowe uses its deep industry expertise to provide audit services to public and private entities while also helping clients reach their goals with tax, advisory, risk and performance services.
Crowe Horwath Jamaica serves clients worldwide as an independent member of Crowe Horwath International, one of the largest global accounting networks in the world. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.
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Conflict Minerals Compliance Brochure
1. The Unique Alternative to the Big Four®
Conflict Minerals Compliance
Mining Benefits With Proactive Disclosure
Crowe Conflict Minerals Tracker™
Solution
Audit | Tax | Advisory | Risk | Performance
2. From cellphones to toothpaste, vehicle parts to
medical devices, manufacturers both large and small
are affected by Section 1502 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and
the Securities and Exchange Commission’s (SEC’s)
conflict minerals rule. This law requires SEC registrants
to disclose the presence of tantalum, tin, tungsten,
or gold (3TG) in their manufactured products. The
rule is intended to cut off funding to armed rebels
responsible for human rights abuses in the Democratic
Republic of the Congo (DRC) and adjoining countries
where these precious minerals are mined.
Thousands of companies in many industries, including
aerospace, automotive, defense, electronics, and jewelry
must perform some level of due diligence to determine
the use of 3TG in their products, identify the sources of
3TG throughout their supply chain, and proactively report
their findings to customers and regulatory agencies.
Guidance from regulatory and trade groups is evolving
with new mandates from states and countries and adds
to the already complex due diligence requirements.
2
4. 4
Crowe Horwath LLP
Digging Deep Into SEC Disclosure
While the conflict minerals rule applies
to approximately 6,000 registered
companies worldwide (according to
SEC estimates), it also significantly
affects tens of thousands of direct or
indirect suppliers of components or raw
materials. In most cases, companies are
unfamiliar with the extent and origins of
conflict minerals present in their products
since they may rely on a multitiered
supply chain. Organizations with many
intermediate steps between extraction
of raw materials and completion of
a final product can find tracking the
origins of minerals extremely difficult.
Getting to the point of disclosure
requires an extensive supply chain
due diligence effort to identify the
source of 3TG minerals in a company’s
products. Many companies discover
that the lack of available company
resources to carry out the due diligence
process becomes a hindrance. The
process is further complicated by
the inevitable roadblocks associated
with collecting data from suppliers,
tracking supplier response status, and
consolidating responses including:
■■ Reviewing material content
data forms, declaration forms,
engineering specifications, bills
of materials, product part codes,
and other necessary information
■■ Determining if conflict minerals are
necessary to product functionality
■■ Identifying and documenting
product-part-supplier linkages
■■ Querying every level and type of
supplier up and downstream
■■ Generating consistent communication
about requirements and expectations
■■ Addressing intellectual property
and privacy concerns
5. 5www.crowehorwath.com/conflict-minerals
Conflict Minerals Compliance:
Mining Benefits With
Proactive Disclosure
OECD Five-Step Framework
for Risk-Based Due Diligence
in the Mineral Supply Chain
Step 1. Establish strong company
management systems.
Step 2. Identify and assess risk in
the supply chain.
Step 3. Design and implement
a strategy to respond to the
identified risk.
Step 4. Carry out independent
third party audits of supply chain
due diligence at identified points of
the chain.
Step 5. Report on supply chain due
diligence.
Source: www.oecd.org/daf/inv/mne/
GuidanceEdition2.pdf
Exploring Layers of Compliance Requirements
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” (OECD guidance) provides a
framework for companies to consider
when planning and executing their
conflict minerals due diligence process.
Currently, the OECD’s “Five-Step
Framework for Risk-Based Due
Diligence in the Mineral Supply Chain”
is the only nationally or internationally
recognized framework companies can
follow when planning and implementing
their due diligence procedures.
Crowe Horwath LLP conflict minerals
specialists mapped the OECD guidance
to our proven risk management framework
to develop a step-by-step, repeatable
approach to compliance. The framework
includes the following general steps:
1. Use the SEC flowchart in SEC Final
Rule, “Conflict Minerals,” Release
No. 34-67716, Flowchart Summary
of the Final Rule, page 33 (shown on
the following page) to determine if the
conflict minerals rule applies.
2. Form a team of internal and external
specialists to develop a response plan.
3. Conduct a reasonable country-
of-origin inquiry (RCOI) to
determine materials sourcing.
■■ If 3TG is not sourced from
the DRC or other covered
countries, file Form SD.
■■ Otherwise, conduct due diligence
to determine the source and
chain of custody for use.
4. Prepare and file an independently
audited Conflict Minerals Report.
5. Make the appropriate
public disclosures.
6. 6
Crowe Horwath LLP
The Conflict Minerals Report must also include an independent private sector audit report, which
expresses an opinion or conclusion as to whether the design of the issuer’s due diligence measures is in
conformity with the criteria set forth in the due diligence framework and whether the description of the
issuer’s due diligence measures is consistent with the process undertaken by the issuer. Also, include a
description of the products that have not been found to be DRC Conflict Free, the facilities used to process
the necessary conflict minerals in those products, the country of origin of the minerals and the efforts to
determine the mine or location of origin of those minerals with the greatest possible specificity.
Y Y
Y
N
Y N
N
Y
N
Y
Y N
Does the issuer manufacture or
contract to manufacture products?
Exercise due diligence on the source
and chain of custody of its conflict
minerals following a nationally or
internationally recognized due diligence
framework, if such framework is
available for a specific conflict mineral.
In exercising this due diligence, does the
issuer determine the conflict minerals
are not from the covered countries
or are from scrap or recycled?
The Conflict Minerals Report must also
include a description of products that
are “DRC Conflict Undeterminable” and
the steps taken or that will be taken, if
any, since the end of the period covered
in the last Conflict Minerals Report to
mitigate the risk that the necessary
conflict minerals benefit armed groups,
including any steps to improve due
diligence. No audit is required.
END
END
Rule does not apply.
END
Based on a reasonable country of
origin inquiry (RCOI), does the issuer
know or have reason to believe
that the conflict minerals may have
originated in the DRC or an adjoining
country (the covered countries)?
File a Form SD that discloses the issuer’s
determination and briefly describes the
RCOI and the results of the inquiry.
END
File a Form SD that discloses the issuer’s
determination and briefly describes
the RCOI and due diligence measures
taken and the results thereof.
END
Does the issuer file reports with the SEC
under Sections 13(a) or 15(d) of
the Exchange Act?
START
Based on the RCOI, does the issuer know
or reasonably believe that the conflict
minerals come from scrap or recycled?
Are conflict minerals necessary
to the functionality or production
of the product manufactured or
contracted to be manufactured?
YN
Is it less than two years after
effectiveness of the rule (four years
for Smaller Reporting Companies)?
N
N N
Y
if newly mined if potentially scrap or recycled
N
Were the conflict minerals outside the
supply chain prior to January 31, 2013?
Source: SEC Final Rule, “Conflict Minerals,”
Release No. 34-67716, Flowchart Summary
of the Final Rule, page 33
Flowchart Summary of the Final Rule – Conflict Minerals
File a Form SD with a Conflict Minerals
Report as an exhibit, which includes a
description of the measures the issuer
has taken to exercise due diligence.
ln exercising the due diligence, was
the issuer able to determine whether
the conflict minerals financed or
benefitted armed groups?
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7. 7www.crowehorwath.com/conflict-minerals
Conflict Minerals Compliance:
Mining Benefits With
Proactive Disclosure
Crowe Conflict Minerals Tracker Solution
Streamlining Compliance Through Innovation
Crowe conflict minerals specialists developed the Crowe Conflict Minerals Tracker
solution as a tool for assisting companies with RCOI surveys and supplier due
diligence. The solution is designed to provide an efficient and thorough method
for administering the supplier query, data collection, and reporting processes.
Using the Crowe Conflict Minerals Tracker solution as part of a comprehensive
approach to conflict minerals compliance simplifies data collection, analysis, and
reporting to enhance efficiency and strengthen results. The solution includes:
■■ A disciplined and automated
approach to centralized data
collection – designed to reduce
duplicative requests, large
spreadsheets, and repetitive tasks
■■ Functionality to integrate product-
part-supplier relationships
■■ A “parts wizard” function to
identify products or components
requiring an RCOI
■■ Peer-group benchmarking to establish
a framework to initiate risk analysis
■■ User-friendly, straightforward
questions to help expedite
supplier responses
■■ Web-based questionnaire
distribution to simplify tracking
and communication
■■ A risk analysis dashboard
to help you easily delegate
assignments, track progress, and
review progress in real time
■■ Export capabilities to facilitate the
transfer of data to the Form SD
and the Conflict Minerals Report
■■ Roll-up reporting to prepare
for audit, as needed
The Crowe Conflict Minerals
Tracker solution provides:
■■ Dynamic survey and review
■■ Real-time progress
reporting and statistics
■■ Selective and expandable
questions with multiple
formats available
■■ Back-end capture and analysis
■■ Risk analysis dashboards
■■ Easy data export and
ad-hoc reporting
■■ Built-in training video
tutorials to educate users
8. Crowe Horwath LLP
Advantages of the Crowe Conflict Minerals Tracker Solution
Reasonable Country of Origin Inquiry (RCOI) and Supply Chain Due Diligence
Without Crowe
11 Save all supporting
documentation in a location
that only can be accessed
by those associated with the
compliance program. Ensure
that the data is maintained in
a way to preserve its integrity.
1 Determine which employees
will devote their time to
implementing the process.
Consider hiring additional
employees.
2 Collect internal
data.
3 Determine which products
will be affected by issuing
internal requests for data.
4 Establish a listing of
supplier personnel that
should receive CM-
related communication.
5 Create supplier
questionnaires.
6 Send questionnaires
to suppliers that
supply parts for the
affected product.
7 Suppliers complete
questionnaires.
10 Track progress of supplier
responses manually.
Determine if an in-house
software tool can be used to
store suppliers’ responses.
If so, manually import each
questionnaire that is received.
12 Update supplier responses
and supporting documentation
as new information is provided
from suppliers. Track the
changes made manually.
13 Decide how you will perform
due diligence to validate and
assess the risk associated
with suppliers’ responses and
supporting documentation.
14 Request additional
information from sup-
pliers based on the due
diligence performed.
15 Gather additional
internal data and
perform additional
procedures to answer
customers’ requests for
CM-related information on
supplied products.
17 If an independent
audit is required, work
with the auditors to
provide necessary
information for them
to conduct the audit.
Project Manager
Where do we start?
The SEC’s final rule
is 356 pages!
We don’t have contact
information for half
of these suppliers!
We need more
information.
You already
asked us for that
information!
Did you read
the guidance
I sent you?
What are
conflict minerals?
Data overload!
Where do
we start?
I wish there
was a better
way.
We’ve received responses
from half of our suppliers. Of
those, only half of the question-
naires were complete.
What’s the status on
supplier responses and our
due diligence efforts?
A key customer is asking
if our products contain
conflict minerals.
That type of
information will
take weeks!
16 Prepare Form SD
and Conflict Minerals
Report, if applicable,
based on the
aggregated data.
8 Questionnaires
are received. Check
for completion.
9 Additional information
requests are sent to
suppliers.
Where is all of
our documentation
saved?
8
Adjoining
Countries
W
Tungsten
9. Conflict Minerals Compliance:
Mining Benefits With
Proactive Disclosure
The Crowe Solution
Roll-up reports. Ability to prepare and export the following
reports based on the aggregated supplier responses:
„„ Form SD
„„ Conflict Minerals Report
„„ EICC-GeSI template (companywide and by product)
„„ Product-specific conflict minerals reports
„„ Progress reports
Parts wizard used to filter on
parts that will require a RCOI.
Peer groups established for
the subsequent risk analysis.
2 A listing of affected parts,
suppliers, and products is
developed and uploaded to
the platform.
3 Supplier surveys are
transmitted electronically.
4 From the platform,
suppliers are educated
on expectations and
complete survey.5 Progress of suppliers’
responses is
monitored through the
response dashboard.
6 The results of a risk-based
assessment of supplier
responses are reported in a
risk analysis dashboard by risk
categories and in scorecards.
7 The Form SD and Conflict
Minerals Report, if applicable,
are exported from the platform.
8 If applicable, independent
auditors are provided with
information neccessary to
form an opinion.
1 Crowe is provided with
requested raw data.
„„ Dynamic survey
„„ Delegation feature
„„ EICC-GeSI
compatible
„„ Multiple languages
supported
„„ Built-in training
video and resources
„„ User friendly
„„ Based on the recommended
OECD due diligence guidance
„„ Auditable, scalable and
repeatable process
Web-based platform automates
manual, time-intensive and non-
value-added activities.
„„ Real-time progress
reporting and statistics
„„ Easy export of data offers
flexibility for later use
Parts
Data
Project Manager
When does
Crowe arrive?
Perfect!
It’s on track!
That was
easy!
Secure Central
Data Repository
Parts
Data
Supplier
Listing
Bills of
Materials
9
All the
documentation
is here!
AuSnTa
GoldTinTantalum
Democratic
Republic of
the Congo
n
11. 11
Conflict Minerals Compliance:
Mining Benefits With
Proactive Disclosure
Gaining Efficiency Through
Smarter Approaches
Complying with the conflict minerals
rule is not easy, but a structured and
risk-based approach can help make
the task more efficient and lead to
short- and long-term benefits including:
■■ Preparing for enforcement and
reducing the risk of penalties
or damage to reputation
■■ Demonstrating social responsibility
for customers and investors
■■ Leveraging the process
to improve supply chain
transparency and performance
■■ Enhancing your brand and reputation
as a conflict-free organization
As one of the largest public accounting
and consulting firms in the United
States, Crowe Horwath LLP provides
services to public and private sector
organizations and works with a variety
of manufacturers, across multiple
industries, to address the compliance
requirements created by conflict
minerals disclosure requirements.
With more than seven decades of
delivering credible, independent,
and objective audit services, Crowe
is experienced in the management
of complex and multifaceted
assignments, and we understand
the time-sensitive and confidential
nature of regulatory compliance.
Our skills in forensic investigations
provide a foundation for assisting clients
with their conflict minerals-related
needs – from planning to data collection,
due diligence, and reporting. And our
industry expertise includes serving more
than 1,000 domestic and international
manufacturing organizations.
Crowe conflict minerals compliance
expertise is enhanced through daily
discussions with companies about
best practices for responding to
due diligence requirements and
preparing for an independent private
sector audit (IPSA) of compliance
programs. Our professionals share
their expertise by crafting white papers,
publishing articles, and participating
in professional organizations such
as the IPC – Association Connecting
Electronics Industries and International
Council on Mining and Metals (ICMM).
For more information about the Crowe
Conflict Minerals Tracker solution,
conflict minerals thought leadership, and
links to regulations, industry insights,
and best practices, visit the Crowe
Conflict Minerals Resource Center at
www.crowehorwath.com/conflict-minerals.