On October 18, the SEC held roundtable discussions with various representatives to address benefits and challenges related to its proposed rule implementing Section 1502 (on conflict minerals) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Section 1502). Under the proposal, registrants would be required to disclose, in their annual report, whether the origin of their conflict minerals (when these materials are necessary to the functionality or production of a product) was the Democratic Republic of the Congo or any adjoining country. In such cases, the registrant "would be required to furnish a separate report as an exhibit to its annual report that includes, among other matters, a description of the measures taken by the [registrant] to exercise due diligence on the source and chain of custody of its conflict minerals." Such report would have to be audited in accordance with the standards of the comptroller general of the United States.

The primary purpose of the roundtable was for the SEC to solicit additional input on the proposal to help improve the practicability of the implementation rule for Section 1502. Contributors to the discussion were individuals representing advocacy groups, issuers, investors, and independent public sector auditors. Participants in the first of two panels discussed the scope of the rule and the tracking of the supply chain. Participants in the second panel focused on the tracking of the supply chain and the form, timing, and audit requirements of the report. Although various views were expressed, no conclusions were reached; each constituent group’s issues and concerns were consistent with those expressed previously in their comment letters to the SEC on the conflict minerals proposal or in other venues.

Watch for Deloitte's upcoming Heads Up for more information about the proposed rule and the roundtable discussions.