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This memo summarizes the AICPA’s recent additional guidance for independent private sector audits (IPSA) contemplated by the Conflict Minerals Rule. The additional guidance suggests a fairly robust list of representations for auditors to consider including in the IPSA management rep letter, and addresses the auditor’s responsibility for understanding and testing the company’s internal controls.

As noted in Cydney Posner’s recent blog, in view of Corp Fin’s 2014 Statement following the US Court of Appeals decision in the conflict minerals litigation and the rule’s temporary transition period, few companies provided IPSAs last year.

Access previously issued AICPA guidance on these topics:

– Auditor independence
– Differences & similarities between attestation engagements and performance audits
– IPSA objectives, criteria for IPSA as an attestation examination engagement, evaluations outside the scope of an IPSA, sample procedures for IPSA and subjects relevant to an IPSA
– Form of the audit report

We have oodles of additional resources available in our “Conflict Minerals” Practice Area.

Study: Market Impact of Conflict Minerals Rule

A 2014 Tulane University Law School study investigating the market impact of the conflict minerals rule reveals that each company that filed a Form SD invested an average of approximately $546,000 (approximately $190,000 for small issuers < $100 million) worth of time and effort to comply with the law – largely consisting of in-house corporate time, external human resources, an IT evaluation and IT system expenses. In the aggregate, companies reportedly incurred a total of approximately $710 million to establish conflict minerals programs to furnish the required information by the law’s June 2, 2014 deadline.

Companies that participated in the survey most frequently cited these reservations about the rule:

– The law renders affected companies less competitive due to the heavy cost burden
– It is unlikely the desired impact is being achieved in the DRC
– The law is unfair in that it is trying to fight a war in the business world with only public companies
– The SEC is not intended as a regulator of social responsibility

Another survey targeting the balance of the 3TG (Tin, Tantalum, Tungsten and Gold) supply chains is planned to be conducted this Spring.

January-February Issue of “The Corporate Executive”

We have mailed the January-February Issue of The Corporate Executive, which includes pieces on:

– ISS’s New Equity Plan Scorecard – A Closer Look
– Rate Your Plan with Our Sample Scorecard
– The Cost Basis Reporting Trap
– Final Section 162 (m) Rules for CHiPs

Act Now: Get this issue rushed to when you try a 2015 No-Risk Trial to The Corporate Executive.

– by Randi Val Morrison