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A Golden Opportunity: Performing IPSAs of Conflict Minerals Reports

Mound-of-goldHave you read about conflict minerals in the news? Apple Inc. recently stated in its supplier responsibility report that the company’s entire supply of tantalum used in its products was verified as conflict free, as reported by the Los Angeles Times. The report also noted that “we’re pushing our suppliers of tin, tungsten, and gold just as hard to use verified sources.”

This news relates to the U.S. Securities and Exchange Commission’s final rule issued in August 2012 which required public companies to disclose their use of “conflict minerals” in their manufacturing processes and supply chains. The term “conflict minerals” describes certain minerals—tantalum, tungsten, tin and gold—that are mined in the Democratic Republic of the Congo and its surrounding areas. Public companies might be required to file a Conflict Minerals Report, which may also be subject to an Independent Private Sector Audit. As a CPA, you are the premier provider of such an audit and the AICPA provides resources to help with inquiries you may be receiving from your clients.

The IPSA is required to be performed in accordance with the Government Accountability Office’s “Yellow Book” and can be conducted as either an examination attestation engagement or a performance audit.

The IPSA is not your typical audit. It has two objectives:

  1. Opining as to whether an issuer’s due diligence framework is designed in conformity with the criteria set forth in a nationally or internationally recognized due diligence framework. The Organisation of Economic Co-Operation and Development Due Diligence Guidance is the only framework currently recognized; and
  2. Opining as to whether the issuer performed the due diligence measures as they were described (in other words, did the issuer actually do what they said they did).

The IPSA does not include comparing:

  • the issuer’s description of the due diligence measures it performed or
  • the due diligence process that the issuer undertook,


  • the design of the issuer’s due diligence framework or
  • the criteria set forth in the OECD Due Diligence Guidance.

In addition, the IPSA does not address the issuer’s conclusions about any of the matters that the rule requires the issuer to determine, including whether its products contain conflict minerals, are free of conflict minerals or whether no determination could be made regarding the presence of conflict minerals.

Companies will file their first Conflict Minerals Reports, which will include the auditor’s report on the IPSA if required, by June 2 for the 2013 calendar year.

One of the challenges for CPAs entering engagements to perform IPSAs is that clients are in the process of drafting their Conflict Minerals Reports, which makes it hard to bid, since you haven’t seen what you’ll be auditing!

The AICPA has convened the Auditing Standards Board Conflict Minerals Task Force to provide practitioners with guidance relating to the IPSA. Further details on these issues, as well as guidance relating to independence, CPE for Yellow Book engagements and appropriate procedures for IPSAs, are available in the Q&A section on the AICPA’s Conflict Minerals webpage. In addition, the AICPA has created a flier to assist firms in helping clients and prospective clients understand the benefits of having CPAs perform IPSAs.

The task force expects to issue illustrative auditor’s reports in the near future. The Conflict Minerals Task Force is interested in seeing examples of Conflict Minerals Reports; please send any you may have, with issuer-identifying information redacted.

Ahava Goldman, CPA, Senior Technical Manager, American Institute of CPAs. Ahava is the staff liaison for the Conflict Minerals Task Force and the Auditing Standards Board.

Gold image via Shutterstock


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