GAO: SEC conflict minerals rule; analysis of disclosures by companies

GAO: SEC conflict minerals rule

The U.S. Government Accountability Office (GAO) today issued a report on the SEC conflict minerals rule, finding that based on initial disclosures, most companies were unable to determine the source of their conflict minerals.

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According to today’s GAO release, company disclosures filed with the Securities and Exchange Commission (SEC) for the first time in 2014, in response to the SEC conflict minerals disclosure rule, indicated that most companies were unable to determine the source of their conflict minerals.

  • Companies that filed disclosures used one or more of the four “conflict minerals”—tantalum, tin, tungsten, and gold—determined by the Secretary of State to be financing conflict in the Democratic Republic of the Congo (DRC) or adjoining countries.
  • Most companies were based in the United States (87%). Almost all of the companies (99%) reported performing country-of-origin inquiries for conflict minerals used.
  • Companies cited difficulty obtaining necessary information from suppliers because of delays and other challenges in communication.
  • Most of the companies (94%) reported exercising due diligence on the source and chain of custody of conflict minerals used.
  • Most companies (67%) were unable to determine whether those minerals came from the DRC or adjoining countries (“covered countries”), and none could determine whether the minerals financed or benefited armed groups in those countries.
  • Companies that disclosed that conflict minerals in their products came from covered countries (4%) indicated that they are or will be taking action to address the risks associated with the use and source of conflict minerals in their supply chains. For example, one company indicated that it would notify suppliers that it intends to cease doing business with suppliers who continue to source conflict minerals from smelters that are not certified as conflict-free.

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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