Conflict Mineral Compliance Toolkit For Executives

FOR EXECUTIVES
CONFLICT MINERAL
COMPLIANCE TOOLKIT
WITH CONTRIBUTIONS FROM:
CUSTOM
COMPLIANCE
SOLUTIONS
REACH
RoHS
PROP65
CPSIA
CONFLICT MINERALS
2013

ASSENT COMPLIANCE CONFLICT MINERAL TOOLKIT 2
Introduction . 3
Assent Compliance Corporate Overview . 4
Conflict Minerals . 8
Conflict Minerals & Kübler Ross . 9
Dodd Frank Conflict Mineral Compliance in 5 Easy Steps . 10
How to Select an IT Vendor for Dodd Frank . 12
What Divisions/Departments You Need to Involve and Why . 16
Conflict Minerals and your Supply Chain . 18
Conflict Mineral Implementation Plans . 22
Partner Introduction . 30
Your Law Firm and Conflict Minerals . 31
Conflict Mineral Diligence . 35
Diligence Flow Chart . 55
Conflict Minerals: Industries and Applications . 56
For More Information. 57
Conflict Minerals and Your Accountant . 58
Categories That Trigger an Audit (Illustrative) . 64
Conflict Minerals Compliance Survey Results . 69
Analysis . 81
Lessons Learned . 82
Resource Centre . 83
TABLE OF CONTENTS

This compilation takes the position that most
compliance executives already understand the logic
behind the regulations so we do not thoroughly
cover the history and human rights aspects that
lead to its formation and passing. Rather Assent is
looking to provide readers with the salient compli-ance
information they will need to meet the May
2014 deadline for the first reporting period. If you
or your team would like background information
please see the resource section.
Thank you for reading the Assent Conflict Mineral
Toolkit E-book. If you have any questions please
feel free to contact Assent Compliance anytime.
Assent Compliance Inc.
The World Exchange Plaza
1150-45 O’Connor St.
Ottawa | ON | K1P 1A4
Canada
Toll Free: 1 866 964 6931
Fax: 1 866 391 5954
Email: info@AssentCompliance.com
With May 2014 as the first compliance deadline for
Dodd Frank Conflict Mineral Compliance require-ments
CFO’s and compliance executives across
North America are tasked with signing off on the
final fillings with the SEC. As a function of this it’s
a fundamental requirement that executives be
equipped with all the tools they need to appropriately
and affordably comply with this regulation. It’s also
important that executives don’t look at compliance
requirements for this particular regulation in a
microcosm but rather look at a holistic approach
to materials compliance which puts in place the
infrastructure to comply with current and future
restricted or controlled substance requirements.
Through development of compliance modules
that track restricted substances for a multitude of
different regulations, through the implementation
of compliance plans at Fortune 500 firms, through
open dialogs/partnerships with Big 4 accounting
firms and leading law firms Assent Compliance has
put together a comprehensive guide that will give
CFO’s and compliance executives all the tools they
need for Dodd Frank Conflict Mineral Compliance as
well as a process for compliance which can be used
for any restricted or controlled substances.
INTRODUCTION

ASSENT COMPLIANCE 2013 E-BOOK 4
We’re here to help our clients comply with environmental regulations in the
most efficient + cost effective manner possible. This is achieved through
SaaS automation of processes + working with clients to build efficient
internal compliance programs that meet global compliance requirements.
Assent delivers SaaS Environmental Compliance Services to
companies that must comply with local, national, + global
environmental regulations. Our software division is fully
supported by a team of highly experienced industry consultants
providing our clients with turnkey compliance solutions.
OUR
MISSION
WHO IS
ASSENT
?
Assent Compliance is rated among the top environmental compliance solutions in the world. Not to mention
it’s one of the only global solution providers to offer a full service solution from end to end.

Integrates with Major
ERP/PLM Systems
Built-in CRM for compliance
tasks, due diligence
reporting and audit trails
Modules to Comply with All Major
Environmental Regulations
Pulls Bill of Material (BOM) into a
centralized compliance data base or
operates as a stand-alone system.
Build IPC 1752-A FORMS.
Import/Export via XML
Allows internal Staff to Make
Engineering Override assessments
Communicates with Supply Chain in
bidirectional fashion to procure envi-ronmental
information from suppliers
Homogenize proprietary
supplier DOC formats in xml
Acts as a repository for any
compliance related material
HOW THE ASSENT COMPLIANCE
MANAGEMENT SYSTEM WORKS

OUR CLIENTS
SERVICES WE OFFER
Environmental Compliance Software for
Conflict Minerals, REACH, RoHS etc.
Internal Standard Operating
Procedure Development
Compliance Assessment Services Compliance Outsourcing Services
IT System Integration Compliance Plan Development
Assent serves clients ranging from Small Business to Fortune 500. In global supply chains companies of all
sizes must comply with environmental regulations. Regardless of size Assent has products and services to help
any sized company meet their environmental compliance obligations.

Toll Free: 1 866 964 6931
Fax: 1 866 391 5954
info@AssentCompliance.com
OTTAWA, ONTARIO
CANADA (HQ)
NEW YORK,
NEW YORK
TAIPEI,
TAIWAN
MUNICH, GERMANY
LONDON, UK
KENYA
(CONFLICT MINERALS)
BANGALORE, INDIA
OUR
GLOBAL
OFFICES
CANADA
ASSENT COMPLIANCE
The World Exchange Plaza
1150-45 O’Connor St.
Toll Free: 1 866 964 6931
Fax: 1 866 391 5954
CANADA (HEADQUARTERS)
ASSENT COMPLIANCE
56 Sparks Street | Suite 510
Canada
UNITED STATES
ASSENT COMPLIANCE
244 Fifth Avenue | Suite 1717
New York | NY | 10001 | U.S.A.
Toll Free: 1 866 964 6931
Fax: 1 866 391 5954
UNITED KINGDOM
ASSENT COMPLIANCE
3 Coborn Road, Suite 210, Docklands
London | E3 2DA | England
Phone: +44 20 3384 5801

be in effect as they were passed. This means that
all industry sectors that were currently in scope
continue to remain so.”
http://AssentCompliance.com/blog/index.php/
conflict-mineral-compliance-final-rules/
4. Depression – typically a company will tender
several requests for consultants to make sugges-tions
and to better inform internal stakeholders
on instituting a compliance process or system.
Although this phase does not effect the organization
as a whole, the compliance team itself frequently
feels incapable of undertaking the task either due
to perceived understaffing or adverse impact by
their supply chain. This stage is more of a “micro”
state, which follows the organization’s acceptance
of REACH requirements.
5. Acceptance – once organizations accept the
reality that environmental regulations are real,
enforceable and can affect their bottom line, the
typical response is an “Alright, let’s do it” approach.
As one Assent client noted: “Has our business
model changed? No? If our business model includes
selling our products globally then we’re going to
comply with these regulations. It’s simple. We’re not
afraid of challenges at this company.”
Assent Compliance global consultants have seen
North American businesses react to conflict mineral
compliance in a manner not unlike the Kübler-Ross
grief model. The five company stages break down
as follows:
1. Denial – an outright denial by some companies to
acknowledge that this regulation can affect them.
The majority of companies are beyond this stage.
2. Anger – any change from the status quo in a large
organization may cause anger in those burdened
with extra work. This can undoubtedly cause inter-nal
frustration with regard to means of compliance,
budget decisions and plans for moving forward.
During this early planning stage, companies have
trouble making decisions and typically seek advice.
3. Bargaining – with any legislation there can be
exemptions, addendums or clauses that may ab-solve
a party of some portion of their responsibility.
This can be noted in the NAM lawsuit that was
recently deliberated on where parties were in the
bargaining stage. “Industry watched closely as the
Washington D.C. District Court passed its ruling on
the Dodd Frank Conflict Mineral Rules case. The
court rejected all of the plaintiffs’ claims and denied
the plaintiffs motion for a summary judgment. The
Conflict Minerals final rules therefor continue to
CONFLICT MINERALS + KÜBLER ROSS

• Software Set Up: Industry standard to date
for the majority of companies in scope of this
regulation involve using a software platform to
manage the large amount of data and suppliers
that will be surveyed.
»» Vendor Selection
»» Decisions to integrate with ERP or
PLM Systems
»» Methodology of supplier communication
• Supplier Engagement: This portion of the
process involves communication and data
collection from the supply chain. Includes:
»» Data collection methodology
»» Reporting and analytics of the data collected
»» Corrective action and addressing
problem suppliers
• Reporting: Once data has been collected firms
enter the reporting phase to complete the
process for the first year. This process is then
replicated year over year. With the infrastructure
in place firms enter the “maintenance” phase of
compliance.
The typical approach to Dodd Frank Compliance
can be broken down into these 5 steps:
• Regulatory Assessment and Scope Analysis:
This involves examining your product portfolio
and doing an analysis of in scope VS out of
scope. It can also include:
»» Examining corporate obligations
»» Determination of key regulatory compliance
decision points
»» Creation of a conflict minerals
technical document
• Creation of a Compliance Plan: This involves
creating an end to end compliance plan and
associated processes.
»» All activities detailed in chronological order
»» Creation of application of due
diligence standards
»» Responsibilities assigned to personnel
»» Determination of compliance
communication pathways
DODD FRANK CONFLICT MINERAL
COMPLIANCE IN 5 EASY STEPS

Standard practise in the industry has also seen that firms are engaging 3-4 outside service providers.
They are usually:
1. Legal: To determine exact requirements and legal requirements. Firms like SRZ and Baker Law have been
on the front lines of Conflict Mineral Compliance.
2. Software: To provide the platform for data collection, management and analytics. Firms like Assent
Compliance, PTC and iPoint are leading vendors.
3. Accounting: To audit the data collected and ensure strong data backing the program. All 4 major accounting
firms provide Conflict Mineral services.
4. Consulting: To develop the processes, work with /train suppliers and help with data collection. Assent
Compliance and PTC provide conflict mineral compliance services.
Assisting your clients with Dodd Frank Conflict Mineral Compliance does not have to be complicated. Working
through the 5 step process above and working with other 3rd party providers makes compliance at any level easy.

DIFFERENT SOFTWARE MODELS:
1. Client Direct VS Supplier Direct.
Client Direct: In the client direct model firms pay
for a software platform either hosted or cloud
based to manage their compliance processes.
There can be a combination of licensing fees,
set up costs and if purchasing a hosted solution,
hardware costs. Typically these solutions will
have multiple modules for different restricted
substance lists, social regulations and compli-ance
requirements. For supplier data procure-ment
there are either supplier data exchanges
put in place through a portal or a wizard which
is free for suppliers to use.
When sourcing a software vendor for Dodd Frank Conflict Mineral Compliance there are several important
factors to note. In this article we will examine the methodology surrounding the approach several software
firms have taken and examine implications and processes involved with each methodology. We will also look
at salient factors that should be considered when choosing a software vendor.
HOW TO SELECT AN IT VENDOR FOR
DODD FRANK CONFLICT MINERALS
Supplier Direct: Under this model firms would pur-chase
a software platform which may be cheaper
than the client direct model but would then require
that their suppliers pay the vendor to submit data
on the platform. This model is typically only practi-cal
for Fortune 50 sized firms who have immense
leverage and control over their suppliers. Under this
data exchange, supplier direct model the platform
is usually only valid for one regulation.

Hosted: Firms offering hosted solutions require the
purchase of servers and each computer installs local
software on individual machines. When upgrades to
the software occur they must re-install on each com-puter
where the solution is running.
Cloud Based: Usually offers a lower cost and
unlimited seat licensing for a fixed monthly cost
and a onetime set up cost. Traditionally cloud based
solutions are the direction most firms are moving
because of the ease to deploy and lower costs.
2. Cloud Based VS Hosted: There are currently vendors who offer solutions that are cloud hosted meaning
there are no hardware installation costs.
Once the decision has been made on supplier direct VS client direct and hosted VS cloud then next decision
should in terms of scalability in terms of regulation. You and your client should have a discussion about
their currently regulatory and future regulatory landscape. Does your client sell into Europe? In which case
they will have to comply with REACH. Are they in electronics? They might have to comply with RoHS. It is
very important when selecting a software platform that it is both usable and affordable to use for other
regulations. Purchasing a solution that is only usable for one restricted or compliance required substance
list is inefficient.
Once the decisions have been made around how broad reaching the software solution should resemble its
time to source conflict mineral firms. The leading solution providers in each sphere are as follows:
• Cloud Based/Client Direct: Assent Compliance (www.AssentCompliance.com)
• Hosted/Client Direct: PTC (www.ptc.com )
• Cloud Based/Supplier Direct: iPoint (www.iPoint.com )

ITEMS TO NOTE WHEN SOURCING:
• Does the client have experience in your vertical?
• Is the solution usable for other regulations in the future?
• How much to add modules in the future?
• Can you outsource data analysis or supply chain work to the
vendor if warranted?
• Are there any law firms the vendor is currently working with?
WHAT TO ASK DURING AN IT PRESENTATION?
• Show us a copy of an implementation plan for your solution
• Will you come on site for a presentation
• Show how your system handles conflict mineral compliance end to end
• Please outline your process methodology and why its best for our client
• Show us how you save on supplier touch time and data analysis
• Can your solution integrate with ERP/PLM systems
CORE FEATURES THAT ARE NEEDED:
• Mechanism to gather data from suppliers
• Data analytics and reporting on collected info
• Detailed reports on supplier response rate / missing info
• Ability to attach / map tier 2-3 suppliers to tier 1
• Task assignment and CRM capabilities

Once the presentation portion of the selection process has been finalized and it comes time to select the
vendor there are several other best practises to consider:
1. Involve IT Early: Include the IT department from the beginning to ensure that the set up process
identified by the vendor is one that can work with current IT in place at the firm. Bringing IT to the table
late in the game only to find major road blocks presents a major challenge.
2. Requirements Definitions: Make sure you outline all your requirements very clearly. The last thing
anyone wants is “scope creep” which could cause more costs for your firm and more headaches for your
vendor. Be very clear when outlining requirements.
3. End User Approval: Ensure that the power users of the system who will be doing the majority of the use
time give their approval. In many cases management procures a system and the actual users disagree
with the choice. Make sure selection is agreed on internally by the major users of the platform.
AVOIDING THE CONFLICT MINERAL MICROCOSM:
At the heart of Dodd Frank Conflict Mineral Compliance is the fact that these minerals are just like any other
restricted or regulated substance. These regulations are becoming more and more prevalent. One just has to
look at the EU REACH Regulation, RoHS, Proposition 65, CEPA 99 and the list goes on. This means that as the
regulatory landscape expands that companies will need scalable platforms to manage and track RSL (restricted
or regulated substance list) substances. Looking at Conflict Minerals in a microcosm will only see your firm
scramble to meet the next RSL requirement with a new solution which all tolled would be an inefficient and
IT intensive process. For all intents and purposes the solution/firm selected for Dodd Frank should offer the
flexibility to be used for the following at a base level:
• Customizable supply chain materials data collection
• Modules or expandability to REACH RoHS and other RSL
• A holistic approach to compliance
• Proof that the module has been expanded from previous iterations

PROCUREMENT/SUPPLY CHAIN:
As the largest exercise for conflict mineral compli-ance
is the RCOI (reasonable country of origin
inquiry) from the supply chain its imperative that
procurement and supply chain divisions be included
in the compliance program from the beginning. As
with most regulated substance compliance initia-tives,
compliance/quality and procurement will
have to work hand in hand throughout the program.
LEGAL:
As conflict mineral legislation involves submissions
to the SEC most firms have opted to either develop
their program with their legal counsel or have them
review the chosen program, The legal counsel in
some cases have stewarded the entire process. In
any case it’s advisable to include legal either at the
beginning of the program or the end to ensure that
the conflict mineral compliance initiatives are in
line with your firm’s current legal position.
When your company falls in scope of an RSL (restricted/regulated substance list) there are multiple touch
points within the company. Conflict Minerals and other RSLs can include:
WHAT DIVISIONS/DEPARTMENTS YOU
NEED TO INVOLVE/INCLUDE AND WHY
QUALITY AND/OR
REGULATORY COMPLIANCE:
With most RSL’s the first stop is with the quality de-partment
or compliance department. In many larger
firms there will be both a compliance and a quality
department. In this case it’s important to ensure no
overlap in effort and keeping each division in the know
is especially important from a managerial perspective.
ENGINEERING:
Conflict mineral compliance is unique in that the
substances are not restricted. Therefor there isn’t
a large need to include engineering except to as-sist
with scope identification. Engineering will be
needed to determine the presence of 3TG’s in your
product portfolio. After the initial scope assess-ment
it is not mission critical that engineering be
involved with the conflict mineral program unless
your firm combines engineering and quality/regula-tory
into the same division.

IT:
As part of the RCOI (reasonable country of origin in-quiry)
firms must survey their supply chain. This must
also be done year over year. This means sourcing a
solution to procure that data in a scalable, repeatable
means. Doing this task manually by email is wildly
inefficient and therefor sourcing an IT solution or us-ing
an incumbent one is necessary. Involving IT early
in the process is an absolute best practise since the
program will largely be centreed around procured
data, its analysis and reporting on that data.
ACCOUNTING:
Conflict mineral compliance does involve audit which
naturally involves your accountant. Some firms have
opted to use their accountant’s management consult-ing
arms to help build their programs similar to the
steward ship process where firms have included their
legal counsel. The best practise for the higher level
professional services (namely legal and accounting)
have tended to trend towards helping set up the
program at the beginning and reviewing results at
the end. In this sense the use of legal and accounting
share some overlapping similarities.

STEP 1 – SCOPE ANALYSIS
Determining which of your suppliers are in scope
is the first step. Some companies have thousands
of suppliers but many of which are service provid-ers
(legal, accounting), provide products or articles
but they do not go into products that are sold to
consumers (janitorial supplies, print suppliers,
marketing products). Some suppliers might sup-ply
products that go into consumer facing goods
but there is no chance of them containing 3TGs
(wood and plastic suppliers for example). Doing a
thorough scope analysis usually with a member of
the engineering team and the procurement team
will start the program with the most efficiency and
eliminate contacting suppliers erroneously.
SCOPE ANALYSIS CHEAT SHEET:
»» Are they a service provide? – Delete
»» Do their products go into your end product
sold to your customers? If No – Delete
»» Does what they supply contain: Tin, Tungsten,
Tantalum or Gold? If Yes – Include
»» If Unsure – Do they supply metals?
If Yes – Include a sample usually of the
suppliers that represent the largest spend.
STEP 2 – GATHERING CONTACTS
The first challenge with conflict mineral data procure-ment
for the RCOI is obtaining the proper contacts
within your supply chain. While sales contacts usually
jump at the opportunity to speak with you, locating
compliance officers can be more challenging.
The best approach is as follows:
• Your procurement division will have the most
up to date contacts for suppliers but they are
usually a sales contact or a generic email to
place orders. (E.g.: sales@acme.com). Finding
an actual contact is the first step. If there is no
contact, starting with the contact page on the
suppliers website and associated emails does,
in most cases, get directed to the appropriate
personal it may just take longer than anticipated.
• If sales thinks noncompliance may affect getting
a PO or as a latent function, their commission
could be in jeopardy they will act quickly and
escalate the matter. Sales contacts are second
best, aside from the person directly heading
up the CM compliance initiative. (Usually in
compliance, quality or supply chain).
CONFLICT MINERALS
AND YOUR SUPPLY CHAIN

• Send your information request with delivery
method and make it as easy as possible. Keeping
in mind that some suppliers might be hearing
about CM compliance requirements for the first
time its important that this information request
give the suppliers all the tools they need to
quickly and easily comply in a fashion that is
congruent with your program. For example: If
you have elected to have suppliers submit info
through a web portal or fill out a custom survey
it is important that they are made aware they
can’t email you a MS word document.
This email should include:
»» Polite info request with reason
»» Form or survey link
»» Education link
»» Example of a correctly filled out form or survey
»» Clear instructions on how to complete and
how not to complete (Responses delivered
via “X” will not be accepted)
»» Contact person for question
»» Links to resources
• A central database should be established where
contacts can be updated and shared among
divisions for maximum efficiency
»» Procurement
»» Engineering / Design
»» Compliance
STEP 3 – CONTACTING SUPPLIERS
• Once the correct contacts have been found,
contacting suppliers is the next step. This step
can involve massive amounts of data depending
on your supply chain. This step is also the most
useful to use a software application to manage
the process.
The ideal steps are as follows:
• Send a notification email noting that you will
be requesting CM compliance info in the near
future. If you are using a third party vendor to
manage this process this notification email is
essentially an authorization email. (See example
in Resources section). This ensures:
»» You have the right contact
»» That there are no surprises when you make
your request
»» That your compliance vendor (if you have
elected to use one) has your authorization
to procure this data from your supply chain
»» That suppliers know what format or means
of delivery you want the data submitted
(through a portal, in the GESI form, COC PDF,
custom survey etc.)

STEP 4 – TRACK YOUR PROGRESS AND ANALYZE YOUR DATA
Supplier Responds but does not provide info: This
is common at the beginning phases of any new
controlled substance. Notes should be made to
follow up with this supplier at a mutually agreed
upon date. If this is the correct contact it should
also be noted for future compliance requests.
Supplier does not respond: This means that you
either have the wrong contact, the email did not
go through (spam filter) or they are working on
finding the information but didn’t reply. In most
escalation cases there is a finite window and
then a second email is sent with a new contact
added as CC (carbon copy)
Supplier does not respond (second request):
After the window has lapsed and a second
contact has been added typically these sup-pliers
are escalated and a phone call is made.
These responses should be tracked in a CRM
or compliance management system that allows
notes to be made on suppliers and their status.
Delinquent: If 2 emails have been sent to
multiple contacts and a call has been made a
supplier then typically becomes delinquent. This
is where a business decision must be made to
continue purchasing from this supplier, attempt-ing
to procure the data alternatively (checking
their website, data mining) or assuming the risk
of having a gap in the program.
TRACK YOUR SUPPLIER PROGRESS
When dealing with supply chains you will have
waves of responses depending on the size and
readiness of the suppliers.
»» Centralized information will help you com-pliance
team increase efficiency in contact-ing
all suppliers
»» When a supplier has provided the informa-tion
make sure it’s noted so that the same
supplier isn’t contacted multiple times for
information they already have provided.
»» Ensure that you measure the touch time
required and look at automated solutions
for supply chains larger than 100 suppliers.
»» Ensure that your process can be replicated
easily in the event that there is a new re-stricted
or regulated substance(s)
DEALING WITH RESPONSES:
Typically companies follow an escalation process.
(See attached Process Maps). Responses can typi-cally
be broken down into the following categories:
Supplier responds appropriately: This is the
ideal situation. Data should be stored and a pro-cess
for replicating this data collection means
should be saved. (I.e.: We deal with Dave at Acme
for compliance. In the future email Dave who
knows about compliance program and knows
how to respond appropriately). Typically noting
this in your data collection platform is ideal.

ANALYZE YOUR DATA:
It is easiest and most efficient to monitor and analyze your data as it is procured rather than at the end of the
process. The best way to approach analysis is through a data aggregator that will show en mass the responses
to your survey or questions. (E.g.: Show me everyone who responded “X” to Question “2” on the survey). Then
follow up accordingly.
If you do not have this mechanism in place then manual review and a tracking/analysis process must be established.

22
CONFLICT
MINERAL
IMPLEMENTATION
PLANS
ASSENT COMPLIANCE CONFLICT MINERAL TOOLKIT

WHAT A CM PROGRAM
IMPLEMENTATION PLAN LOOKS LIKE
PHASE 1A
Regulatory Assessment
and Technical Document
PHASE 1B
Onsite Workshop
PHASE 1C
Creation of
Compliance Plan
PHASE 2
Software Set-Up
PHASE 3
Supplier Engagement
PHASE 4
Reporting
IMPLEMENTATION PLAN OVERVIEW

REGULATORY ASSESSMENT AND TECHNICAL DOCUMENT
PHASE 1A
PHASE 1A
Regulatory
Assessment
& Technical
Document
Assent
As needed
ASSENT
A. Client communication and applicable question-naires
for detailed product line evaluations
B. Evaluation of responses, clarification and feedback
C. Examination of scope and risk
D. Corporate level requirements
E. Determination of regulatory requirements
F. Determination of business requirements
G. Comparison to industry standards and best practices
H. Recommendations for compliance
I. Determination of key regulatory compliance
decision points
J. Creation of Conflict Minerals Technical Document
PHASE 1B
Onsite
Workshop
Quality
• Weekly CC
• 4-6 hours
Q&A
Resolution Committee
• Issues addressed on case-by-case basis
ACME Corp.
A. Communication of ACME
Corp. product, corporate and
supply chain information to
Assent Compliance
B. Q&A discussions
C. Participation by Regulatory
Compliance and Legal in
PHASE 1C
Creation of
Compliance Plan
Regulatory
Compliance
• Weekly CC
• 14-16
hours Q&A
PHASE 2
Software
Set-Up
Engineering
• Weekly CC
• 4-6 hours
Q&A
PHASE 3
Supplier
Engagement
Procurement/
Supply Chain
• Weekly CC
• 14-16 hours
Q&A
PHASE 4
Reporting
Legal
• Weekly CC
• 14-16 hours
Q&A
Finance
• Weekly CC
• 14-16 hours
Q&A
C&A
>3 weeks: Weekly
CCs necessary for
all groups?
Resources Phases
Legend: CC: Conference Call | C&A: Check and Adjust
Deliverables: Conflict Minerals Technical Document
Roles & Responsibilities

ONSITE WORKSHOP
PHASE 1B
PHASE 1A
Regulatory
Assessment
& Technical
Document
Assent
As needed
ASSENT
A. Regulatory education/training
B. Review of Technical Document findings
• Compliance activity training
• Reviewing COCs
• Applications of OECD due diligence
• Test report review
• Supplier engagement
C. Questions and answers
D. Discussion and resolution of key decision points
E. Begin Compliance Plan outline
PHASE 1B
Onsite
Workshop
Quality
• 8 hours
ACME Corp.
A. Communication of ACME Corp. product,
corporate and supply chain information
to Assent Compliance
B. Appropriate personnel at workshop to
decide on key program decision points
PHASE 1C
Creation of
Compliance Plan
Regulatory
Compliance
• 8 hours
PHASE 2
Software
Set-Up
Engineering
• 8 hours
PHASE 3
Supplier
Engagement
Procurement/
Supply Chain
• 8 hours
PHASE 4
Reporting
Legal
• 8 hours
Finance
• 8 hours
Resources Phases
Deliverables: Conflict Minerals Education and Planning

CREATION OF COMPLIANCE PLAN
PHASE 1C
PHASE 1A
Regulatory
Assessment
& Technical
Document
Assent
As needed
ASSENT
A. Creation of end-to-end compliance process
B. Documentation of all ACME Corp. compliance activities by
regulation
C. All activities detailed in chronological order from beginning to end
D. Activities assigned to specific internal personnel
E. Creation and application of due diligence standards
F. Responsibilities assigned for creation of SEC compliance
documentation
G. Determination of compliance communication pathways
H. Scheduled annual Compliance Plan review as part of due dili-gence
and optimization for new business
PHASE 1B
Onsite
Workshop
Quality
• Weekly CC
• 4-6 hours
Q&A
ACME Corp.
A. Communication of ACME Corp. product,
corporate and supply chain information to
Assent Compliance
B. Occasional Q&A on day-to-day Conflict
Minerals activities
C. Participation by Regulatory Compliance
and Legal in Resolution Committee
PHASE 1C
Creation of
Compliance Plan
Regulatory
Compliance
• Weekly CC
• 14-16
hours Q&A
PHASE 2
Software
Set-Up
Engineering
• Weekly CC
• 4-6 hours
Q&A
PHASE 3
Supplier
Engagement
Procurement/
Supply Chain
• Weekly CC
• 14-16 hours
Q&A
PHASE 4
Reporting
Legal
• Weekly CC
• 14-16 hours
Q&A
Finance
• Weekly CC
• 14-16 hours
Q&A
Resources Phases
Legend: CC: Conference Call
Deliverables: ACME Corp. Conflict Minerals Standard Operating Procedures

SOFTWARE SET-UP
PHASE 2
PHASE 1A
Regulatory
Assessment
& Technical
Document
Assent
As needed
ASSENT – Project Manager
A. Communication with client
B. Establish/meet project objectives
C. Maintain timelines and manage
implementation process
D. Assign and manage work flow
E. Provide updates to ACME on any
changes to regulatory require-ments
affecting ACME products
ASSENT – Data Administration
A. Maintain and update database with
changes to suppliers/supply chain
B. Update database with pertinent
regulatory changes
C. Help desk support for internal and
external users
D. Assent Compliance will maintain
and update ACME Corp.’s database
with changes to suppliers via AP
Integration with PDMs and ICCS
E. Database integration and security
F. Formatting set-up
G. Interface configuration
PHASE 1B
Onsite
Workshop
ACME Corp.
A. IT permission for ERP/PLM access
B. Extraction of supplier and product
data for submission to Assent
Compliance’s database
C. Feedback on configurations
D. Occasional Q&A on day-to-day
Conflict Minerals activities
E. Participation by Regulatory
Compliance and Legal in
PHASE 1C
Creation of
Compliance Plan
Regulatory
Compliance
• Weekly CC
• 15-20 hours
Q&A
PHASE 2
Software
Set-Up
PHASE 3
Supplier
Engagement
Procurement/
Supply Chain
• Weekly CC
• 15-20 hours
Q&A
PHASE 4
Reporting
Legal
• Weekly CC
• 2 hours
Q&A
IT
• Weekly CC
• 25-40 hours
Q&A as well
as providing
SAP Access
Resources Phases
Legend: CC: Conference Call
Deliverables:
A. Project management and database administration
B. Database integration and security
C. Interface configuration

SUPPLIER ENGAGEMENT
PHASE 3
PHASE 1A
Regulatory
Assessment
& Technical
Document
Assent
As needed
ASSENT
A. Supplier portal set-up
B. Supplier portal maintenance
C. Supplier education
D. Supplier support
E. Supplier training
F. Reasonable country of origin inquiry ( RCOI)
G. Data gathering and analysis
H. Supply chain mapping
I. Application of OECD Due Diligence audit trails
J. Task management
PHASE 1B
Onsite
Workshop
Quality
• Monthly
RMC CC
• 15-20
hours Q&A
ACME Corp.
A. Participation by appropriately assigned ACME Corp. staff
members in monthly Conflict Minerals Risk Mitigation
Committee
B. Occasional Q&A on day-to-day Conflict Minerals activities
C. Participation by Regulatory Compliance and Legal in
PHASE 1C
Creation of
Compliance Plan
Regulatory
Compliance
• Monthly
RMC CC
• 15-20
hours Q&A
PHASE 2
Software
Set-Up
Engineering
• Monthly
RMC CC
• 5-10 hours
Q&A
PHASE 3
Supplier
Engagement
Procurement/
Supply Chain
• Monthly
RMC CC
• 40-60 hours
Q&A
PHASE 4
Reporting
Legal
• Monthly
RMC CC
• 5 hours
Q&A
Resources Phases
Legend: CC: Conference Call | RMC: Risk Mitigation Committee
Deliverables: A. Supplier portal setup and maintenance
B. Supplier education, support and training
C. Reasonable Country of Origin Inquiry
D. Application of OECD due diligence audit trails
Finance
• Monthly
RMC CC
• 5 hours
Q&A

REPORTING
PHASE 4
PHASE 1A
Regulatory
Assessment
& Technical
Document
ASSENT –Form SD Completion
A. Disclosure of Conflict Minerals determination
B. Description of Reasonable Country of Origin methodology
C. Description of applied OECD due diligence standards
D. Description of applied corrective actions
E. Description of Conflict Minerals compliance process and plan
F. Disclosure of internet website address where this information can be accessed publicly
G. Conflict Minerals report creation
ASSENT –Form SD Completion
A. The products manufactured or con-tracted
to be manufactured that have
been found to be not “DRC Conflict Free”
B. The facilities used to process the conflict
minerals in those products
C. The country of origin of the conflict
minerals in those products
D. The efforts to determine the mine or
location of origin with the greatest
possible specificity
DRC Conflict Undeterminable
A. Its products manufactured or contracted to be manufactured
that are “DRC Conflict Undeterminable”
B. The facilities used to process the Conflict Minerals in those
products, if known
C. The country of origin of the Conflict Minerals in those products,
if known
D. The efforts to determine the mine or location of origin with the
greatest possible specificity
E. The steps it has taken or will take, if any, since the end of the
period covered in its most recent Conflict Minerals report to
mitigate the risk that its necessary conflict minerals benefit
armed groups, including any steps to improve due diligence
PHASE 1B
Onsite Workshop
ACME Corp.
A. Occasional Q&A on day-to-day Conflict
Minerals activities
B. Participation by Regulatory Compliance
and Legal in Resolution Committee
C. Sign-off on Form SD and Conflict Minerals
Report by Legal and Finance
PHASE 1C
Creation of
Compliance Plan
PHASE 2
Software Set-Up
PHASE 3
Supplier
Engagement
PHASE 4
Reporting
Assent
As needed
Quality
• Monthly
RMC CC
• 5 HRS Q&A
Regulatory
Compliance
• Monthly RMC CC
• 5-10 HRS Q&A
Engineering
• Monthly
RMC CC
• 5 HRS Q&A
Procurement/
Supply Chain
• Monthly RMC CC
• 5-10 HRS Q&A
Legal
• Monthly RMC CC
• 20-25 HRS Q&A
• Form SD Sign Off
Finance
• Monthly RMC CC
• 20-25 HRS Q&A
• Form SD Sign Off
Resources Phases
Deliverables: A. Form SD Completion
B. Conflict Minerals Report Creation
Legend: CC: Conference Call | RMC: Risk Mitigation Committee
What is Conflict
Minerals
Determination
DRC Conflict Free
INDEPENDENT PRIVATE SECTOR AUDITOR – CONFLICT MINERALS REPORT AUDIT
A. Independent private sector audit of the Conflict Minerals report
B. Certification of audit
C. The audit report
D. Identity of the auditor

Assent Compliance has been fortunate enough to work with some of the world’s leading
Accounting/Audit and Law Firms. Our legal and accounting partners have each had unique perspectives on compliance and have dealt with a wide variety of clients in many different sectors. We’ve asked that our partners examine Conflict Mineral Compliance from their own lens and provide executive readers with the “need to know” information when it comes to compliance.
We’d like to thank our partners for their contributions.
PARTNER
INTRODUCTION
30

When Congress passed Section 1502 of the “Dodd-
Frank Wall Street Reform and Consumer Protection
Act” in 2010, it, no doubt, thought it was adopting
an approach to address the use of “conflict minerals”
(tin, tantalum, tungsten, and gold (“3TG”)) originat-ing
in the Democratic Republic of the Congo (“DRC”)
or its adjoining countries to fund conflict there that
would result, relatively quickly, in the Securities
and Exchange Commission (“SEC”) adopting final
implementing regulations, and in companies mov-ing
forward to comply with their requirements. Fast
forward more than three years later to see that in
light of the host of critical implementing issues left
unresolved by the statutory language, and the vast
numbers of public comments that were submitted
on the proposed regulations:
By: Melvin Schwechter of Baker Hostetler1
YOUR LAWYER’S ROLE IN COMPLYING WITH THE SEC’S
CONFLICT MINERALS REPORTING REQUIREMENTS
YOUR LAW FIRM & CONFLICT MINERALS
1 Melvin Schwechter is the National Team Leader of Baker Hostetler’s International Trade – Compliance Practice.
i. It took the SEC until August 2012, more than 15
months beyond the original April 2011 dead-line,
to issue final implementing regulations;
ii. Litigation, so far unsuccessful, was brought
against the SEC to overturn the final regula-tions
that were issued; and
iii. Most importantly, some companies subject
to the new regulations have reportedly not
yet begun, in any serious way, to undertake
to gather the information needed for them
to file the first required conflicts minerals
disclosure report to the SEC by the May 31,
2014 deadline.

3. When are conflict minerals necessary to the
functionality or production of a product?
Reporting is required only for 3TG that are
necessary to the functionality or production
of a product a company manufactures or
contracts to manufacture. The regulations
adopt a facts and circumstances test, outlin-ing
a variety of factors that point either to
the conflict minerals being necessary, or not
necessary, to the functionality or production
of the product. Disclosing companies need
to know how to interpret those factors and
properly apply them to a specific set of
facts—assistance their counsel can provide.
4. What constitutes a reasonable country of
origin inquiry? The regulations require that
where the subject minerals are necessary to
the functionality or production of a product,
manufactured or contracted to be manufac-tured
by the reporting company, a “reason-able”
country of origin inquiry be undertaken
to determine whether the minerals origi-nated
in the DRC or adjoining countries, or
are from recycled or scrap sources. The SEC’s
regulations again adopt a facts and circum-stances
approach, requiring companies to
take into account such things as the issuer’s
size, products, relationships with suppliers,
or other factors and the available infrastruc-ture
at any given time. What is “reasonable”
is an issue on which experienced attorneys
can provide needed advice.
When they do begin this effort, they will quickly
discover that they will need the assistance, not only
of consultants who can reach out to suppliers to
gather the information the companies will need to
include in their reports to the SEC on the use and
origin of 3TG, and assemble it, as required, but also
of attorneys to advise them on the myriad of legal
issues that arise in complying with the new regula-tions.
These include:
1. Who is required to report? While the regula-tions
apply to SEC “issuers”, the questions of
who exactly is an “issuer” and to what extent
do the activities of domestic and foreign
related companies and affiliates have to
be included in the disclosure requirements,
need to be addressed.
2. What is “contracting to manufacture”? While
the regulations require disclosure of the
use/origin of 3TG in products manufactured
or contracted to be manufactured by the
reporting entity, there is little detailed
guidance as to what constitutes “contracting
to manufacture.” The regulations indicate
that a contracting to manufacture scenario
will exist if the issuer exerts some actual
influence over a product’s manufacture, and
provide a few examples of certain activities
that do not involve contracting to manu-facture—
slim guidance indeed, particularly
for companies in the business of retailing
that enter into a variety of different kinds of
relationships with vendors.

8. Preparing the submission to the SEC – Once
all the required information flowing from
the reasonable country of origin inquiry and
related due diligence, as well as the results
of any outside audit, if necessary, has been
gathered, the issuer needs to (i) prepare a
submission to the SEC by May 31, 2014 (cov-ering
2013 activities), and annually there-after,
and (ii) include the information on its
internet website. Guidance of counsel will
be important in making sure the submission
contains the required information and the
proper justifications for the conflicts miner-als
determinations the issuer must make.
9. What will happen if an issuer fails to gather
and report all information needed to comply
fully with its disclosure obligations? The
submission to the SEC of false or incom-plete
information can result in a variety of
responses/enforcement actions. Advice as
to what is likely to happen in each kind of
situation is a uniquely legal function.
Thus, a company subject to the conflicts minerals
regulations needs to put together a proper multi-disciplinary
team to include not only software data-base
consultants, but attorneys, as well, to address
their requirements. In addition to helping issuers
meet their compliance obligations under the SEC’s
regulations, there are two other critical roles coun-sel
can play in the conflicts minerals space.
5. When must due diligence be undertaken?
The SEC regulations require that, if, after
a reasonable country of origin inquiry is
undertaken, the issuer knows or has reason
to believe its 3TG minerals may have origi-nated
in the DRC/its adjoining countries and
may not have come from recycled or scrap
sources, the issuer “must exercise due dili-gence
on the source and claim of custody”
of the minerals. Here again, experienced
counsel, particularly those with supply chain
experience, can assist in determining when
the required legal standard is met.
6. What is involved if due diligence must be
undertaken? Due diligence must follow a
nationally or internationally recognized due
diligence framework for the 3TG in question.
Counsel can help their clients identify such
a framework, whether that provided by the
OECD, or other, and advise the reporting entity
how such diligence needs to be conducted.
7. When and how must an outside audit of
due diligence findings occur? A certified
independent private sector audit of the
due diligence findings is required, unless
such findings result in a determination that
the 3TG did not originate in the DRC or an
adjoining country, or are from recycled or
scrap sources. Here again, attorneys can
work with their “issuer” clients to prepare
for the audit and advise regarding outside
audit requirements.

First, while not specifically prohibiting/penaliz-ing
the use of 3TG from the DRC or its adjoining
countries, Congress has clearly signaled that their
use is to be strongly discouraged. As a result, many
companies, whether issuers or not, are reviewing, in
conjunction with their lawyers, their policies in this
area and establishing new ones.
Second, where a contracting to manufacture
scenario exists, issuers need to reach out to their
suppliers to gather the information they will need
for purposes of their submissions to the SEC. In
many cases, these suppliers will not themselves
be issuers and, particularly where they are based
overseas, may be unfamiliar with, or not understand,
the reasons why their customers are seeking the
subject information. In these cases, US counsel can
provide the necessary explanations, clarifications,
and context, and advise the vendors as to the most
effective and efficient ways to meet their custom-ers’
requests and expectations.

Michael Littenberg and Farzad Damania, Schulte Roth & Zabel LLP, with Practical Law Corporate & Securities
This article provides an overview of the Conflict Minerals Rule and its requirements for legal, supply chain, corporate social responsibility and other professionals involved with Conflict Minerals Rule compliance.
CONFLICT
MINERAL
DILIGENCE
35

MICHAEL LITTENBERG AND FARZAD DAMANIA, SCHULTE ROTH
& ZABEL LLP, WITH PRACTICAL LAW CORPORATE & SECURITIES
This Note explains and offers guidance on the diligence required by the Securities and Exchange
Commission’s final rule (Rule 13p-1 under the Exchange Act) implementing Section 1502 of the Dodd-
Frank Act, the conflict minerals provision.
The sale of these minerals, which Section 1502
defines collectively as conflict minerals (regardless
of their origin), is believed to be financing conflict
in the Democratic Republic of the Congo (DRC). The
intent of Section 1502 is to reduce a significant
source of funding for armed groups that are com-mitting
human rights abuses and contributing to
conflict in the DRC.
Under the SEC’s rule implementing Section 1502,
Rule 13p-1 (the conflict minerals rule) under the
Securities Exchange Act of 1934 (Exchange Act),
companies that manufacture or contract to manufac-ture
products that contain conflict minerals generally
must conduct diligence on the source and chain of
custody of the applicable conflict minerals. In some
cases, the company will be required to publicly
disclose that its products containing the minerals
have not been found to be “DRC conflict free.”
CONFLICT MINERALS DILIGENCE
This is just one example of the many online resources Practical Law Company offers.
To access this resource and others, visit www.practicallaw.com.
Section 1502 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act requires a significant
number of SEC reporting companies to make spe-cialized
disclosure and conduct related diligence
concerning specified minerals and their derivative
metals contained in the companies’ products. The
minerals and metals covered by the rule, which are
included in many common products, include:
• Cassiterite
• Columbite-tantalite (coltan)
• Wolframite
• Tin, tantalum and tungsten, which are
derivatives of these minerals. These metals
are often referred to as the “three Ts.”
• Gold
• Other minerals or derivatives the US Secretary
of State may designate in the future.

COVERED COMPANIES
AND EFFECTIVE DATE
This section discusses the broad range of compa-nies
that are affected by the conflict minerals rule
and details when compliance obligations begin.
WHO MUST CONDUCT CONFLICT
MINERALS DILIGENCE?
The conflict minerals rule applies only to reporting
companies, meaning companies that file reports with
the SEC under Section 13(a) or 15(d) of the Exchange
Act. This includes voluntary filers, but excludes
companies exempt from Exchange Act reporting
requirements under Rule 12g3-2(b). Unlike some
other Dodd-Frank rule-making initiatives, the conflict
minerals rule does not exempt foreign private issu-ers
(FPIs) or smaller reporting companies (SRCs). The
conflict minerals rule also does not offer any special
relief for emerging growth companies, although
a newly public company is only required to start
reporting for the first calendar year that begins no
sooner than eight months after the effective date of
the company’s IPO registration statement (see When
Must Companies Conduct Diligence and Make
Disclosure?). A reporting company must conduct
conflict minerals diligence and make disclosure with
respect to its operations and the operations of its
consolidated subsidiaries (Question 3, Dodd-Frank
Wall Street Reform and Consumer Protection Act
Frequently Asked Questions: Conflict Minerals
(May 30, 2013) (conflict minerals FAQs)). In this
Note, the term “company” refers to a company and its
consolidated subsidiaries.
When possible, companies are expected to pre-emptively
make changes to their supply chains in
response to the rule to avoid having to disclose
that their products have not been found to be DRC
conflict free.
This Note discusses:
• Which companies are affected by the conflict
minerals rule.
• The effective date of the rule’s diligence and
disclosure requirements.
• The three main steps of conflict minerals
diligence that reporting companies may
need to conduct depending on whether
their products contain conflict minerals and,
if so, the minerals’ country of origin.
• The independent private sector audit that the
rule requires under certain circumstances.
For information on resources that may assist com-panies
in their conflict minerals rule compliance
programs, see Practice Note, Conflict Minerals Rule
Compliance Resources:
http://us.practicallaw.com/5-523-8315
For a checklist that suggests action items for
companies preparing to comply with the conflict
minerals rule, see Preparing for Conflict Minerals
Compliance: Company Action Items Checklist:

non-reporting companies also must be familiar
with the conflict minerals rule.
WHEN MUST COMPANIES CONDUCT
DILIGENCE AND MAKE DISCLOSURE?
Under the conflict minerals rule, all affected compa-nies,
regardless of their fiscal year, must make conflict
minerals disclosure for the first time by May 31, 2014.
This disclosure must cover the 2013 calendar year.
Some newly public companies will be able to take
advantage of a one-year extension (see Acquired
and New Public Company Extension). Affected
companies must make conflict minerals disclosure
annually thereafter by May 31 of each year, covering
the most recently-completed calendar year.
Disclosure Requirements
The conflict minerals rule requires affected compa-nies
to make disclosure on Form SD, and in some
cases on an exhibit to the form. Both Form SD and
this exhibit must be filed, rather than furnished,
with the SEC. This means companies have potential
liability under Section 18 of the Exchange Act for
heir conflict minerals disclosure.
Form SD will not, however, be incorporated by refer-ence
into a company’s registration statements un-der
the Securities Act of 1933 unless the company
elects to do so. In addition, failure to timely file a
Form SD does not impact a company’s eligibility to
use Form S-3 (Question 12, conflict minerals FAQs).
For more information on S-3 eligibility, see Practice
Note, Registration Statement: Form S-3: Eligibility
Requirements for Form S-3.
Because every reporting company must determine
whether it uses conflict minerals in a way that trig-gers
the rule (see Diligence Step 1: Ascertain the
Company’s Use of Conflict Minerals), all reporting
companies must conduct some level of inquiry un-der
the conflict minerals rule. By the SEC’s estimate,
approximately 6,000 reporting companies will need
to conduct a “reasonable country of origin inquiry”
concerning the conflict minerals they use and make
some disclosure on new SEC Form SD and on their
website (see Diligence Step 2: Determine Minerals’
Country of Origin). The SEC has further estimated
that 75%, or approximately 4,500, of those compa-nies
will also need to conduct more detailed supply
chain due diligence and prepare a conflict minerals
report to be filed as an exhibit to Form SD, among
other requirements (see Diligence Step 3: Detailed
Due Diligence and Reporting on Supply Chain). In
this Note, companies that are required to make any
form of conflict minerals disclosure because they
use the minerals in a way that triggers the rule are
referred to collectively as affected companies.
Although the conflict minerals rule techni-cally
applies only to reporting companies, it also
significantly impacts non-reporting companies
worldwide that are directly or indirectly a part of
the supply chains of reporting companies. This is
because affected reporting companies must collect
information from companies in their supply chains.
Some estimates place the number of affected non-reporting
companies in the hundreds of thousands,
ranging from small businesses to large companies
and both domestic and foreign. Therefore, many

This means that, for purposes of the first required
conflict minerals disclosure due May 31, 2014, com-panies
generally must conduct diligence and report
on conflict minerals in their products that had a
completion of manufacture date between January
1, 2013 and December 31, 2013.
Acquired and New Public Company Extension
The conflict minerals rule provides relief to any report-ing
company that acquires a target company that both:
• Uses conflict minerals in a way that
triggers the rule.
• Was not, before the acquisition, required to
make conflict minerals disclosure (for example,
because it was not a reporting company).
In this situation, the acquirer is not required make
conflict minerals disclosure about the target com-pany’s
conflict minerals until the end of the first
calendar year beginning eight months or more after
the effective date of the acquisition (Instruction 3
to Item 1.01, Form SD).
The staff of the SEC’s Division of Corporation
Finance (staff) has stated that it will not object if a
newly public company begins making conflict min-erals
disclosure on this same timeline (Question
11, conflict minerals FAQs). In other words, a new
public company can make its first conflict minerals
disclosure for the first calendar year that begins
eight months or more after the effective date of
its IPO registration statement. This means that a
company that goes public any time after May 1 of a
Affected companies also must post certain conflict
minerals disclosure on their websites. The rule re-quires
increasing levels of diligence and disclosure
depending on a company’s use of conflict minerals
and country of origin of the minerals (see Box,
Diligence Flow Chart, pg 55).
Diligence Requirements
Under the rule, an affected company must make
disclosure about conflict minerals contained in
the company’s applicable products that were
manufactured during the calendar year covered by
the report (Instruction 5 to Item 1.01, Form SD). The
key date here is the day that the manufacture of
each finished product containing conflict minerals
is completed. Therefore:
• A company that manufactures its own
products must look to the date it completes
manufacture of each product containing con-flict
minerals. Even if the conflict minerals in a
company’s product are included in component
parts of the product that were themselves
manufactured by a third party, a company
must always look to the date the manufacture
of its own final product was completed.
• A company that is required to report on con-flict
minerals manufactured by a third-party
contract manufacturer must look to the date
that third party manufacturer completes
manufacture of the company’s product, and
not to the date of delivery.

rule and Section 1502 under the First Amendment
to the US Constitution. On July 23, 2013, the District
Court granted summary judgment to the SEC, reject-ing
the challenge to the conflict minerals rule and
Section 1502. The decision means that the conflict
minerals rule continues in effect as adopted.
On August 13, 2013, the business organizations
appealed to the Court of Appeals (National
Association of Manufacturers, et al. v. U.S. Securities
and Exchange Commission, No. 13-5252 (D.C. Cir.,
filed Aug. 13, 2013)). The Court of Appeals is con-sidering
the appeal on an expedited schedule that
requires the reply brief to be filed by November 13,
2013.
For more information on the litigation and links to
and summaries of key court documents, see Practice
Note, Conflict Minerals Rule Challenge: Litigation
Tracker (http://us.practicallaw.com/3-523-0933).
Considering a Possible Appeal in Compliance Planning
The Court of Appeals could disagree with the
District Court and vacate the conflict minerals
rule on appeal. Companies naturally might want
to wait until the appeal is resolved to begin their
compliance efforts. However, considering that the
first Form SD is due on June 2, 2014, companies are
unlikely to have enough of a cushion to wait for
resolution of the appeal before implementing their
compliance programs.
given calendar year will not have to make conflict
minerals disclosure for that year.
Company Compliance Progress
Companies remain at different stages of the com-pliance
implementation process.
For a detailed list of actions companies in the earlier
stages of implementing their conflict minerals rule
compliance program should consider, see Preparing
for Conflict Minerals Rule Compliance: Company Action
Items Checklist ( http://us.practicallaw.com/0-510-
7468). For a summary of disclosure discussing com-pliance
efforts that some companies have included
in their periodic reports, see Practice Note, What’s
Market: Disclosure on Conflict Minerals Risks 2013
(http://us.practicallaw.com/6-531-1206).
LEGAL CHALLENGE TO SECTION 1502
AND THE CONFLICT MINERALS RULE
In October 2012, a group of business organizations
filed suit in the US Court of Appeals for the District
of Columbia Circuit against the SEC (National
Association of Manufacturers, et al. v. U.S. Securities
and Exchange Commission, No. 12-1422 (D.C.
Cir., filed October 19, 2012)). On May 2, 2013, the
case was transferred to the US District Court for
the District of Columbia (National Association of
Manufacturers, et al. v. U.S. Securities and Exchange
Commission, 1:13-cv-00635-RLW (D.D.C., trans-ferred
May 2, 2013)). The suit sought to vacate or
modify the conflict minerals rule, arguing that it is
arbitrary and capricious under the Administrative
Procedure Act. The suit also challenged both the

DILIGENCE STEP 1: ASCERTAIN THE
COMPANY’S USE OF CONFLICT MINERALS
Step 1 of the diligence process involves determin-ing
whether conflict minerals are contained in
products manufactured or contracted to be manu-factured
by the company and, if so, whether those
conflict minerals are necessary to the functionality
or production of the products. If they are not, the
company has no obligations to make disclosure or
conduct further diligence under the rule. This ques-tion
can be broken down into three separate dili-gence
inquiries, discussed in this section.
If the company answers all three of these questions
affirmatively, it must move on to diligence Step 2
(see Diligence Step 2: Determine Minerals’ Country
of Origin) unless the relevant minerals qualify for
a limited exception based on the fact they were
refined or removed from the DRC region before
January 31, 2013 (see Outside the Supply Chain
Exception).
Does the Company Manufacture or Contract to
Manufacture Products?
The conflict minerals rule only applies to compa-nies
that “manufacture or contract to manufacture”
products. The rule does not define these terms, and
the adopting release notes the term manufacture
is generally understood. Companies engaged in
fabricating products are clearly covered by the rule,
even if the products they make contain components
themselves manufactured by third parties. However,
it is less clear whether companies that sell prod-ucts,
but do not make them, are covered. These
Companies may also wish to consider that even
if the conflict minerals rule is eventually struck
down on appeal, some level of diligence into the
source of minerals in company products may still
be necessary:
• To address customer “conflict free” supply
chain initiatives and supply chain mapping.
• To protect the company’s reputation
and brand image.
• In light of the expected demand for conflict
free sourcing by many non-governmental
organizations (NGOs), socially responsible
investors and consumer groups.
Companies that have already expended significant
effort to establish conflict free supply chains will
likely continue these initiatives regardless of the
litigation’s outcome. Other companies are expected
to remain focused on creating a conflict free supply
chain as part of their broader corporate social respon-sibility
program, to obtain a competitive advantage
in the marketplace or to avoid adverse publicity.
STEPS OF THE CONFLICT
MINERALS DILIGENCE PROCESS
This section discusses the steps of the conflict
minerals diligence process. Depending on what the
company learns in each step, the rule may or may not
require the company to continue to the next step.
For a flow chart depicting the three steps of conflict
minerals diligence, see Box, Diligence Flow Chart.

The release goes on to specify that a company
generally has not contracted to manufacture a
product if it does no more than:
• Specify or negotiate contract terms with a
manufacturer that do not directly relate to
the manufacturing of the product (for example,
technical support or indemnity terms).
• Affix the company’s brand, marks, logo or
label on a generic product manufactured by a
third party, including contracting to have the
company’s logo etched into a generic product
(see additional guidance in Question 4 of the
conflict minerals FAQs).
• Service, maintain or repair a product manu-factured
by a third party.
Mining companies should note that, under the
rule, companies that mine conflict minerals or
contract for conflict minerals to be mined are not
covered by the rule solely because of their mining
activities (Instruction 1 to Item 1.01, Form SD). The
staff has confirmed that companies that engage in
certain activities associated with mining (such as
transporting, crushing and milling ore) are also not
covered by the rule solely because of these activi-ties
(Question 2, conflict minerals FAQs).
While the term “product” is not defined in the con-flict
minerals rule, the staff has offered guidance on
its meaning. The guidance clarifies that packaging or
containers used in the display, transport or sale of a
product are not considered part of the product under
companies, including retailers, must determine
whether they “contract to manufacture” products
using the guidance in the adopting release.
According to the adopting release, whether a
company has contracted to manufacture a product
depends on the degree of influence the company
exercised over the product’s manufacture, meaning
its materials, parts, ingredients or components.
While this standard is not triggered by the company
having simply “any” influence over the manufacture,
it can be triggered by a level of influence less than
“substantial.” For example, a telephone network
operator that orders telephones from a third
party manufacturer probably has not contracted to
manufacture those telephones if it simply tells the
third party the phones must work on the operator’s
network (even though the company has exercised
some influence over the manufacturing). However, a
retailer that specifies that gold must be included in
a product it orders from a third party manufacturer
would have contracted to manufacture the product
(even though this might not constitute “substantial”
influence over the manufacturing). Furthermore,
there is no distinction between the components of
a product that a company directly manufactures or
contracts to manufacture and generic components
that are included in a product. Therefore, a company
would have to conduct a reasonable country of
origin inquiry with respect to the conflict miner-als
included in generic components included in a
product to the extent the product and the conflict
minerals are otherwise in scope (Question 5, con-flict
minerals FAQs).

Are Conflict Minerals Contained in the Products?
A company must next determine if any conflict min-erals
are contained in the products it manufactures
or contracts to be manufactured. The question of
whether a product the company makes or contracts
to be made contains conflict minerals may not be
obvious from a visual analysis. In some cases, this
information will be available in:
• Material content data forms.
• Company declaration forms.
• Engineering specifications.
• Bills of materials.
• Product part codes.
However, in many cases, companies do not have
information on all of the materials in their products
because they purchase component parts of their
products from third parties, or are not familiar with
all of the component materials contained in prod-ucts
manufactured for them. A company may not
have the internal resources to determine whether
a component or contract manufactured product the
company purchases contains conflict minerals. A
company in that situation may need to:
• Survey its suppliers directly to inquire whether
relevant products contain conflict minerals.
• Hire consultants to assist it with
supply chain diligence.
the rule. The guidance states that this is true even
when a product’s packaging is necessary to preserve
the product up to and following the product’s pur-chase.
The guidance notes that “once the consumer
starts to use a product, the packaging is generally
discarded” (Question 6, conflict minerals FAQs).
In addition, the guidance states that a company’s
used capital equipment that it later sells is not con-sidered
to be the company’s product for purposes of
the rule (Question 8, conflict minerals FAQs). The
guidance also clarifies that equipment a company
uses to provide a service to its customers is not
considered a product to the extent that the equip-ment
is retained by the service provider, is to be
returned to the service provider or is intended to be
abandoned by the customer following the terms of
service. Therefore, for example, a cruise line opera-tor
(the example included in the FAQ) would not be
required to report on conflict minerals contained in
its ships (Question 7, conflict minerals FAQs).
While the conflict minerals FAQs resolved several
uncertainties about the meaning of product for pur-poses
of the rule, many companies will face addi-tional
interpretive questions when applying these
concepts to their operations. Resolving these ques-tions
will necessarily be fact-specific. Companies
should discuss these issues with counsel.

that, in making this determination, companies
should consider whether the conflict minerals in
the product:
• Were intentionally added (as opposed to
being naturally occurring by-products or
contaminants). For example, tin is often
found as an unintentional contaminant in
some forms of steel, even though it is not a
specification of the steel.
• Are necessary to the product’s gener-ally
expected function, use or purpose. The
adopting release notes that a product may
have multiple generally accepted functions
(for example, a smartphone’s functions may
include making and receiving calls, checking
e-mail, browsing the internet and listening to
stored music).
• If mainly in the product for decorative
purposes, whether decoration is the primary
purpose of the product itself. For example,
gold in a gold necklace would be necessary
to the necklace’s functionality.
The rule also does not define the concept of
necessary to the production of a product, and,
according to the adopting release, this is also a
facts and circumstances determination. Importantly,
the adopting release indicates that even if a
conflict mineral was used in, and necessary to, the
product’s production process, the rule will not be
Any survey of suppliers at this stage of the diligence
process should, for the sake of efficiency, also in-clude
the additional inquiries that may be required
under the latter two steps of the conflict minerals
diligence process.
Conflict minerals are used in a diverse range of
products and in many industries. For a table list-ing
common uses of conflict minerals, see Box,
Conflict Minerals: Industries and Applications. Many
companies that assumed their products would not
fall within the scope of the rule have discovered
after a preliminary inquiry that at least some of
their products contain conflict minerals. Reporting
companies therefore should not assume that they
are not covered by the rule. Most public companies
will need to conduct some supply chain diligence.
Are Conflict Minerals Necessary?
Conflict minerals contained in a product will not
trigger the rule unless the minerals are either:
• Necessary to the product’s functionality.
• Necessary to the production of the product.
Companies must determine whether their products
that contain conflict minerals meet either standard.
The conflict minerals rule does not contain a
bright-line definition of when a conflict mineral
is necessary to the functionality of a product. The
adopting release indicates that this is a facts and
circumstances determination. The release states

Conflict minerals are considered outside the supply
chain if, by January 31, 2013, the minerals were either:
• Fully smelted (in the case of the three Ts
and their corresponding minerals) or refined
(in the case of gold).
• Located outside the covered countries (for a
discussion of this term, see Diligence Step 2:
Determine Minerals’ Country of Origin).
(Item 1.01(d)(7) and Instruction (4) to Item 1.01,
Form SD).
This exception recognizes that determining the
origin of minerals already at those points in the
supply chain will probably be impossible. Further,
requiring companies to conduct diligence and make
disclosure on these minerals will not further the
policy goal of Section 1502, since the proceeds of
minerals already at those points in the supply chain
can no longer benefit armed groups in the DRC.
To the extent it is still possible, companies should con-sider
taking steps to ensure they can take advantage
of the outside the supply chain exception, including:
• Taking an inventory of all conflict miner-als
and relevant products they already
possessed before January 31, 2013.
• Requesting certifications from suppliers
identifying minerals and relevant products
that are outside the supply chain that the
company receives from the suppliers on or
after January 31, 2013.
triggered by this use unless the conflict mineral is
also contained in the final product. This guidance
recognizes that it may be impossible for a company
to determine whether a conflict mineral was used
in the production process of a product when the
product no longer has any physical trace of this use.
This guidance means that using a conflict mineral
(such as gold) as a catalyst in a product’s production
process will not, standing alone, trigger the rule. In
addition, the rule is not triggered by the fact that a
physical tool or machine used to produce a product
itself contained conflict minerals. This prevents the
rule from being triggered solely by the fact that, for
example, capital equipment used in the production
of a product contains conflict minerals. Likewise, in-direct
equipment containing conflict minerals, such
as power lines and computers used in a production
process, will not trigger the rule.
The rule has no de minimis exception for very small
amounts of conflict minerals included in a product
that otherwise meet this standard.
Outside the Supply Chain Exception
If the company answers all three of the above ques-tions
affirmatively, it must move on to diligence
Step 2 unless it qualifies for the so-called “outside
the supply chain” exception. If this exception applies
to the conflict minerals in a company’s products, the
company does not have to make any conflict miner-als
disclosure or take any further action concerning
those conflict minerals.

consider its conflict minerals to be from recycled
or scrap sources if the minerals meet the detailed
definition in Item 1.01(d)(6) of Form SD. Generally,
the minerals must be from reclaimed end-user or
post-consumer products or scrap processed metals
created during product manufacturing, and cannot
be partially processed or unprocessed minerals, or
minerals that are a by-product from another ore.
Reasonable Country of Origin Inquiry
The rule does not contain a bright-line standard for
conducting the reasonable country of origin inquiry.
The adopting release indicates that the specific
steps of the inquiry will depend on:
• The issuer’s facts and circumstances, includ-ing
its size, products, relationships with
suppliers and other factors.
• The available infrastructure at the time.
However, in order to satisfy the rule, the inquiry must be:
• Reasonably designed to determine whether
the conflict minerals originated in a covered
country or are from recycled or scrap sources.
• Performed in good faith.
(Item 1.01(a), Form SD).
The adopting release specifically notes that one
way a company could conduct the inquiry would be
for the company to obtain a representation from
the facility that processed the conflict minerals (the
smelter or, in the case of gold, the refiner) about
DILIGENCE STEP 2: DETERMINE
MINERALS’ COUNTRY OF ORIGIN
If a company determines in diligence Step 1 that
conflict minerals contained in its products are nec-essary
to their functionality or production, and the
outside the supply chain exception does not apply,
the company must move on to diligence Step 2. In
Step 2, the company must conduct a “reasonable
country of origin inquiry” to determine whether its
conflict minerals originated in the DRC or an ad-joining
country (a covered country) or whether the
minerals originated from recycled or scrap sources.
The covered countries include:
• The DRC
• Angola
• Burundi
• Central African Republic
• The Republic of the Congo
• Rwanda
• South Sudan
• Tanzania
• Uganda
• Zambia
Recycled and scrap conflict minerals are given
special treatment under the rule, and a company is
not required to trace their origin further back than
the determination that they come from recycled or
scrap sources. This recognizes that it is impossible,
as a practical matter, to trace the source of minerals
past the recycling or scrap process. A company can

The conflict minerals rule may create an incentive
for some companies to seek to structure their supply
chain so that they can affirmatively determine that
their conflict minerals originated outside of the
covered countries (see Next Steps). Putting aside
the practical implementation and other potential
issues presented by this approach, a company could
seek to do this by requiring that its suppliers of
conflict minerals, or component parts or products
containing conflict minerals, purchase them only
from sources ultimately traceable to smelters and/
or refiners who source only from outside the cov-ered
countries. Most of the companies participating
in the OECD’s downstream pilot program indicated
that they do not intend to embargo conflict min-erals
from the covered countries. Instead, they
have indicated that the intend to source minerals
responsibly from these in accordance with avail-able
international standards contained in the OECD
guidance, working through various means such as
industry programs and constructive engagement
with suppliers.
For more information on the OECD downstream
pilot program, see Practice Note, Conflict Minerals
Compliance Resources, Pilot Implementation
Program (http://us.practicallaw.com/5-523-8315).
Under either approach, companies should consider
requiring their direct suppliers to include “flow-down”
clauses in their contracts with sub-suppliers.
Flow-down clauses obligate the sub-suppliers to
abide by the same requirements that the company
is requiring of the direct supplier.
the source of the minerals. The company could
obtain this directly from the processor or indirectly
from immediate suppliers in its supply chain. The
company would need to have a reason to believe
a processor’s representation is true given all facts
and circumstances, including any red flags that
raise doubt. The release notes that a company
would have reason to believe a representation is
true if the processor was identified as processing
only DRC conflict free minerals by a recognized
industry group that requires an independent audit
of processors (or the processor had independently
obtained an audit of it sourcing operations).
This approach is consistent with the Organization
for Economic Cooperation and Development’s
(OECD) diligence guidance for downstream
companies (see Practice Note, Conflict Minerals
Rule Compliance Resources: OECD Guidance and
Related Resources (http://us.practicallaw.com/5-
523-8315)). Companies pursuing this approach
might be able to rely in part on the Electronic
Industry Citizenship Coalition (EICC) and the Global
e-Sustainability Initiative (GeSI) conflict free smelt-er
program (see Practice Note, Conflict Minerals
Compliance Resources: EICC-GeSI Resources
(http://us.practicallaw.com/5-523-8315)) to satisfy
the reasonable country of origin inquiry. Notably, the
adopting release states that a company is not neces-sarily
required to receive representations covering
all of its conflict minerals in order for its inquiry to
be reasonable and in good faith.

A company must go on to Step 3 of the diligence
process if either:
• It knows that its conflict minerals originated
in a covered country and did not come from
recycled or scrap sources.
• Based on its reasonable country of origin
inquiry, it has reason to believe that its
conflict minerals may have originated in
a covered country and may not have come
from recycled or scrap sources.
DILIGENCE STEP 3:
DETAILED DUE DILIGENCE AND
REPORTING ON SUPPLY CHAIN
The conflict minerals rule requires heightened due
diligence and disclosure if, based on the company’s
reasonable country of origin inquiry (Step 2), it
knows that any of its conflict minerals originated
in a covered country and were not from recycled
or scrap sources, or if it has reason to believe that
any of its conflict minerals may have originated in
a covered country and that they may not be from
recycled or scrap sources.
Purpose and Design of the Diligence
The goal of diligence Step 3 is to gather information
on the source and chain of custody of the company’s
conflict minerals that did or it has reason to believe
may have originated in the covered countries.
Under the rule, a company is required to conduct
diligence Step 3 in conformance with a nation-ally
or internationally recognized due diligence
Next Steps
A company does not need to go on to Step 3 of the
diligence process if either:
• It affirmatively determines that its conflict
minerals originated outside the covered coun-tries
or came from recycled or scrap sources.
• Based on its reasonable country of origin
inquiry, it has no reason to believe that its
conflict minerals may have originated in a
covered country or it reasonably believes
that its conflict minerals are from recycled
or scrap sources.
However, the company must file a Form SD that
discloses its determination and briefly describes its
reasonable country of origin inquiry. The adopting
release recognizes that the length and content of
this description will vary among companies and will
vary over time as visibility of mineral supply chains
improves. The release indicates the purpose of the
description is to allow stakeholders to assess, track
the progress over time of and form their own views
on, the company’s efforts. The adopting release
also states that this description must include a
discussion of the company’s conflict mineral sourc-ing
policies. The company must include this same
disclosure on its website, and include a link to its
website in the Form SD.

that framework until the second calendar year after
the framework becomes available to provide a full
calendar year before implementation.
As the adopting release highlights, Section 1502
gives the SEC the ability to determine that a par-ticular
due diligence process is unreliable. If the SEC
makes this determination, the company’s conflict
minerals report will not satisfy the requirements
of the conflict minerals rule. This would subject
the company to potential liability for violations of
Sections 13(a) or 15(d) of Exchange Act.
Results of the Diligence
A company has an easier disclosure burden if, after
Step 3 diligence, it determines or has reason to
believe that its conflict minerals either:
• Did not originate in a covered country.
• Did come from recycled or scrap sources.
In this situation, the company only must file a Form
SD that discloses its determination and briefly
describes its Step 2 and Step 3 diligence efforts
and their results. This description must include a
discussion of the company’s conflict mineral sourc-ing
policies. The company must include this same
disclosure on its website, and include a link to its
website in the Form SD.
If the company’s Step 3 due diligence leads to
any other conclusion, the company must prepare a
conflict minerals report and file it as an exhibit to
its Form SD (see Conflict Minerals Report).
framework, if one is available for the relevant
conflict mineral. The adopting release notes that,
currently, the only general framework that satisfies
this standard is the OECD guidance (see Practice
Note, Conflict Minerals Rule Compliance Resources:
OECD Guidance and Related Resources (http://
us.practicallaw.com/5-523-8315)).
The OECD’s general guidance and mineral-specific
supplements can be used to conduct Step 3 due
diligence. Currently, the OECD’s gold supplement is
the only recognized guidance for conducting due
diligence to determine whether minerals come
from recycled or scrap sources. This means that,
currently, there is no nationally or internationally
recognized due diligence framework for other types
of conflict minerals to determine whether they
come from recycled or scrap sources. Under the
rule, companies that must conduct due diligence in
this or another circumstance in which there is no
recognized standard still must exercise appropri-ate
due diligence, but they must do so without the
benefit of a recognized due diligence framework.
The rule includes transition provisions that specify
when a company must switch to using a recognized
framework after one becomes available. If a nation-ally
or internationally recognized due diligence
framework becomes available for the necessary
conflict mineral prior to June 30 of a calendar year,
the company must use that framework in the subse-quent
calendar year. If the due diligence guidance
does not become available until after June 30 of a
calendar year, the company is not required to use

CONFLICT MINERALS REPORT
Companies that must prepare a conflict minerals report must file it as an exhibit to the Form SD and make the report
available on the company website. The body of the Form SD must disclose that a conflict minerals report is being filed
and include a link to the company website. The report must describe the company’s diligence process (see Diligence
Description), include certain disclosures about the company’s products containing conflict minerals and the origin of
those minerals (see Disclosure about Company’s Products and Conflict Minerals Origin) and include, subject
to limited exceptions, an independent private sector audit report and certain statements about the audit (see Audit
Report Disclosure).
Diligence Description
The conflict minerals report must describe the measures the company took to exercise due diligence on the source
and chain of custody of the company’s conflict minerals. As discussed, under the rule, the company is required to
conduct due diligence in conformance with a nationally or internationally recognized due diligence framework, if
available (see Purpose and Design of the Diligence).
Disclosure about Company’s Products and Conflict Minerals Origin
Depending on the results of the company’s Step 3 due diligence, the conflict minerals report must include one or
more of the following disclosures about the company’s products containing conflict minerals for which Section 3 due
diligence was required:
• DRC conflict free products: If a company affirmatively determines that the conflict minerals in the
products did not directly or indirectly finance or benefit an armed group (as defined in Form SD) in a
covered country, it may describe the products as DRC conflict free. It is not, however, required to specifically
identify which of its products contain the minerals (Question 10, conflict minerals FAQs).

• DRC conflict undeterminable products: This is a temporary designation that any company may take advantage
of in its conflict minerals report for calendar years 2013 and 2014, and SRCs can take advantage of in their
conflict minerals reports for calendar years 2013-2016. A company can categorize products as DRC conflict
undeterminable if, after conducting Step 3 due diligence, the company is unable to determine whether or not
the products are DRC conflict free. With respect to these products, the company must describe:
»» The products containing the relevant minerals. The rule gives companies flexibility on how to
identify the specific products.
»» The steps it has taken or will take since the end of the period covered by its last conflict miner-als
report to mitigate the risk that its conflict minerals benefit armed groups, including any steps
to improve the company’s due diligence.
»» If known, the smelter or refiner used to process the conflict minerals in those products, the country
of origin of the minerals and the efforts to determine the mine or location of origin with the
greatest possible specificity.
• Not DRC conflict free/not been found to be DRC conflict free products: If the company determines that
the conflict minerals in its products did directly or indirectly finance or benefit an armed group in a
covered country, it must describe its products containing the minerals as “not DRC conflict free.” If, after
the DRC conflict undeterminable option is no longer available to a company, that company cannot
determine whether its products are DRC conflict free, it can describe its products containing the miner-als
as “not been found to be DRC conflict free,” rather than not DRC conflict free. Companies are permitted
to include explanatory disclosure explaining what RC conflict free means, and why the company is unable to
say that its products meet the definition. The adopting release includes model disclosure for this scenario.

CONFLICT MINERALS AUDIT
As discussed, each company that is required to file a con-flict
minerals report must also obtain an independent
audit, unless the company is taking advantage of the
temporary DRC conflict undeterminable category for all
of its conflict minerals (see Conflict Minerals Report).
The objective of the audit is to express an opinion or
conclusion on whether, for the covered period:
• The design of the company’s due diligence
process described in its conflict miner-als
report is in conformity in all material
respects with the recognized due diligence
framework used by the company.
• The company’s description of the due
diligence measures that it performed is
consistent with the due diligence process
that it undertook.
Under the rule, an audit is not required for any por-tion
of the conflict minerals report dealing with
company due diligence on conflict minerals for which
a recognized due diligence framework does not exist
(as discussed, this would apply if a company had done
Step 3 diligence on certain recycled or scrap metals).
Notably, the rule does not require the auditor to
express an opinion on the company’s conclusion in
the conflict minerals report on whether its products
are DRC conflict free.
The audit must be performed in accordance with ex-isting
Government Auditing Standards established
In either case, the company must go on to describe the
smelter or refiner used to process the conflict minerals
in those products, the country of origin of the minerals
and the efforts to determine the mine or location of
origin with the greatest possible specificity. The adopt-ing
release recognizes that, as a practical matter, it is
very difficult or impossible to trace conflict minerals to
their mine or other location of origin after they have
been smelted or refined.
The staff has given additional guidance on how a
company is required to identify products that are “DRC
conflict undeterminable” or “not been found to be
DRC conflict free.” It has clarified, among other things,
that the company is not required to provide model
numbers of these products. A company may describe
its products based on the company’s own facts and
circumstances and in terms commonly understood in
its industry (Question 9, conflict minerals FAQs).
Audit Report Disclosure
The company’s conflict minerals report generally must
be audited (for detailed information about the conflict
minerals audit, see Conflict Minerals Audit). The con-flict
minerals report must state that the company has
obtained the audit, identify the auditor if the auditor
is not identified in the audit report and provide the
audit report prepared by the auditor. A company does
not need to obtain a conflict minerals audit regarding
the conflict minerals in any products described as DRC
conflict undeterminable. This means that, if all of the
company’s conflict minerals fall with this category in a
given year, it would not need to obtain the audit of its
conflict minerals report for that year.

doing business in California that have annual gross
worldwide receipts exceeding $100 million. Under
this legislation, a company is “doing business”
in California if it meets one of the requirements
of Section 23101 of the California Revenue and
Taxation Code.
In addition, California’s SB 861, which became ef-fective
in August 2012, bars companies that commit
certain violations of Section 1502 from submitting
to California state agencies bids to provide goods or
services that are related to products or services that
are the reason the company must comply with the
rule. Maryland has enacted a similar law. Maryland’s
HB 425, which became effective in October 2012,
prohibits state agencies from obtaining supplies
from companies that violate Section 1502.
The Pittsburgh City Council unanimously passed
a proclamation on conflict minerals on April 19,
2011, calling for electronic companies and other
industries to take the necessary steps to remove
conflict minerals from their supply chain. The
proclamation urges the US executive leadership to
help establish an international certification system
for minerals coming from Central Africa to ensure
they are not contributing to conflict. The city of St.
Petersburg, Florida passed a resolution in October
2011 favoring verifiably conflict free products in
future purchasing and investment decisions.
The Business Transparency on Trafficking and
Slavery Act, H.R. 2759, was proposed in the US
by the Government Accountability Office (GAO). The
standards for either performance audits or attestation
engagements may be used for the audit. Therefore,
auditors other than certified public accountants may
perform the audit. However, the auditor must comply
with the independence standards established by the
GAO. The adopting release notes that the GAO will be
responsible for responding to question or concerns
about the application of its standards to the conflict
minerals audit.
According to the adopting release, it is not inconsis-tent
with the auditor independence requirements
in Rule 2-01 of Regulation S-X for the company’s
independent public accountant to also perform the
conflict minerals audit. The release notes, however,
that the conflict minerals audit would be considered
a non-audit service and therefore subject to the
pre-approval requirements for non-audit services.
OTHER SUPPLY CHAIN LEGISLATION
Companies affected by the conflict minerals rule
should also be aware of similar legislative initia-tives
at the federal, state and municipal levels.
The California Transparency in Supply Chains Act,
which became effective in January 2012, requires
companies to disclose on their website (or on
request, if they have no website) their efforts to en-sure
that their supply chains are free from slavery
and human trafficking. This legislation applies to
retail sellers and manufacturers, public or private,

House of Representatives during the 2011-2012 session. This bill, which had received bipartisan support,
would require reporting companies with over $100 million in worldwide receipts to disclose in their annual
reports any steps they have taken to identify and address child and forced labor in their supply chains. This
bill was not voted on in committee and no decision has been made with respect to the bill being reintroduced.
If reintroduced and enacted, this bill is likely to require many companies to conduct supply chain diligence
similar to the requirements under the conflict minerals rule.

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