by Cydney Posner
The AICPA has issued an FAQ that identifies, for auditors conducting Independent Private Sector Audits for inclusion in Conflict Mineral Reports, the types of management representations that auditors should consider seeking from managements of companies. Not surprisingly, the AICPA does not disappoint — the suggested reps are, shall we say, all encompassing.
As you may recall, in conflict minerals engagements, IPSAs must include audit opinions or conclusions regarding whether the design of the company’s due diligence measures conforms to the OECD framework and whether the company’s description of the due diligence performed was consistent with the due diligence actually performed. Companies may want to take a look at the types of representations suggested by the AICPA because they may well be seeing these reps (and need to be in a position to make them) in connection with IPSAs in future years.
This past year, only a few companies provided IPSAs with their CMRs, and we continue to expect IPSAs to be rare in 2015. The vast majority of companies relied on Corp Fin’s April 2014 statement, issued in light of the D.C. Circuit Court of Appeals decision that threw into limbo some aspects of conflict minerals rules, that “an IPSA will not be required unless a company voluntarily elects to describe a product as ‘DRC conflict free’ in its Conflict Minerals Report” or, alternatively, on the SEC’s “transitional“ rules, which allowed companies to conclude that their products were “conflict undeterminable” and avoid IPSAs as a result. Presumably, the Statement will be revised one way or the other once the litigation concludes. The transitional rules will continue to be available for reports due in 2015 and, for smaller reporting companies,reports due in 2015 through 2017.
