The following post is co-authored with Matthew C. Dixon and Christopher R. Schneider from KPMG LLP.

As you sit at your desk waiting for any guidance regarding what your Conflict Minerals Report should look like, you may allow yourself to think about June 3, 2014, the day after companies are required to file their Form SD with the U.S. Securities and Exchange Commission ("SEC"). As you are wondering what life will be like when all the fruits of your labor have finally come to bear, the reality hits you. Unless all of the world's smelters are certified as conflict-free, you will have to perform some form of this process all over again. While this is a scary proposition, below are some practical steps that may ease your pain as you move forward.

  1. Develop a detailed Standard Operating Procedure ("SOP"). Create the roadmap of what worked well and adjust the things that did not, so you have a clear path for executing next year's strategy.
  2. Review the filings of your peers and industry group. You may find steps in their processes that you may not have considered. Incorporating these into your SOP could add tremendous value to your efforts in subsequent years.
  3. Review findings of Non-Governmental Organizations ("NGOs") as they come available. The NGOs, for example the Enough Project and Global Witness, will most likely publish findings from their reviews of the first round of Conflict Minerals Reports ("CMRs"). Since you want to stay off of any watch lists, look to see what NGOs' findings may be and adjust what you do for 2014 accordingly.
  4. Determine a level of appropriate reliance on prior year responses. One of the biggest questions on most companies' minds is whether they have to re-survey the entire supply base. The answer may depend on how much your product line changes and to what extent your supply base's vendor structure changes. You may even need to consult with SEC disclosure counsel to ensure you are moving forward in an appropriate manner.
  5. Question new suppliers about Conflict Minerals during "on-boarding." By addressing this issue on the front-end of supplier interaction, you can reduce the difficulty in generating responses later in the year. Having an effective process that asks questions before a supplier is selected also shows that your company has strong controls in place for Conflict Minerals and other supply-chain initiatives.
  6. Follow Conflict Minerals reporting initiatives in your industry. For example, you may want to consider the IPC 1755 Data Exchange Standard, as IPC-1755 is a multi-industry standard for the exchange of information related to conflict minerals. Check out the details on the proposed standard. By standardizing your approach with others in your industry, there is less chance of you being seen as a negative outlier that is not approaching this issue seriously. Another example is the EICC-GeSI, which has already released an updated template from the version most companies utilized in 2013. You may also want to consider the reporting mechanism you used in 2013 and whether you will use this same approach for 2014.
  7. Track related regulations in Europe and other jurisdictions where you may do business. While Conflict Minerals compliance may have been painful, it was hopefully an initiative that allowed you to grow in your understanding of the supply base. Your company needs to be aware of what other initiatives may be gaining traction and how you can apply synergies from Conflict Minerals to these new initiatives to reduce the pain they cause.
  8. Review any further clarification or guidance provided by the SEC or American Institute of Certified Public Accountants ("AICPA").
  9. Set up a review meeting with your Stakeholder Team. To be most effective, this should be an in-person meeting in late summer or early fall. At the meeting, the following should be addressed:

    1. Review the findings of peers and NGOs;
    2. Discuss potential changes in scope for the current year;
    3. Execute on any "Next Step" disclosures in the prior year's CMR; and,
    4. Consider new suppliers or those that could not provide answers in 2013.
  10. Engage with the firm conducting the Independent Private Sector Audit ("IPSA") and Law Firm. Even if you did not require an audit or use a lawyer in 2013, you may in the future. You would probably like to know if your IPSA firm or counsel has any concerns with your format. Ideally, you would have discussed with them before filing for 2013 but, as the saying goes, better late than never.

While most of the above are just common sense, that fact should comfort you as you look toward future years. Remember, the goal is to have a well-structured story about how your company is moving toward a greater understanding of its supply base in line with this social initiative.

About the Guest Co-Authors:

Matt Dixon is a Director in KPMG LLP's Forensic Advisory Services practice. He has over eight years of experience in investigations, litigation support, and other advisory engagements and has taken leadership roles on many projects. He has provided support in accounting dispute matters and has significant experience performing forensic data analyses. Mr. Dixon has significant experience in the automotive industry and has assisted in projects to identify automotive industry fraud risk factors, potential mitigating controls, and possible testing procedures.

Chris Schneider is a Director in the Chicago office of KPMG LLP's U.S. Forensic Advisory Services. With more than ten years of forensic accounting and litigation experience, Mr. Schneider has provided clients with dispute advisory services related to complex business disputes, multi-million dollar insurance claims, lost profits litigation, criminal litigation, post-acquisition arbitration and financial statement restatements. In addition, he has provided fraud investigation and forensic accounting services related to whistleblower and audit committee investigations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.