CFS Audit Procedure 3Ts English

xx Dec. 2012 EICC and GeSI CFS Audit Procedure Page 1 of 10 2012 Electronic Industry Citizenship Coalition, Incorporated and Global e-Sustainability Initiative. All Rights Reserved.

Conflict-Free Smelter (CFS) Program

Audit Procedure for

Tin, Tantalum, and Tungsten

Revision: 21 December 2012


The third party auditing firms must conduct the audits in accordance with the requirements in

ISO/IEC 17021:2011. A reasonable approach to making determinations should be employed as identified in the OECD Guidance

1 and the US SEC final rule.

2 Auditee shall not offer or accept

bribes or other means of obtaining undue or improper advantage. Within 24 hours of such an

event, the auditors shall notifiy the CFS program manager who will determine appropriate

actions on a case-by-case basis.

Auditors should refer to the audit checklist for further details.

Auditee must provide the following for the audit period:

1) The audit process will begin with the confirmation of the information provided by the auditee on the pre-audit checklist:

Name;

Location(s);

Types of tin/tungsten/tantalum containing feed materials received;

Complete list of suppliers for each type of tin/tungsten/tantalum feed material;

Types of tin/tungsten/tantalum products produced

Types of tin/tungsten/tantalum products sold

Tin/tungsten/tantalum products transferred to other locations

Tin/tungsten/tantalum materials transferred between other company locations

Unit operations on site where tin/tungsten/tantalum materials are processed. 2) The auditee will provide a copy of its policy related to procurement of

tin/tungsten/tantalum containing materials and the auditor will assess it against the

relevant section of the audit protocol.

3) The auditee will prepare for the audit by completing the Line Item Summary (total amount on a tin/tungsten/tantalum basis) for the audit period. The Line Item Summary is

to have been completed and returned to the assigned auditor 14 calendar days prior to the

audit start date. For practical purposes, the end of the audit period is marked by this date,

the date the Line Item Summary is provided. Generally, materials delivered between the

end of the audit period through the time of the audit will be validated during the

subsequence audit period. The auditors may inquire on the status of such material while

on-site as it pertains to differences noted between the Line Item Summary and actual

circumstances. The auditee must disclose the following information on the Line Item

Summary:

i. A list of all tin/tungsten/tantalum materials delivered to the facility from beginning of audit period to end of audit. This should be an exhaustive list of all

tin/tungsten/tantalum materials delivered to the facility including materials which

1 OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk

Areas, 15 December 2010. 2 Aug. 2012 final rule of the U.S. Securities and Exchange Commission (SEC) to implement the U.S. Dodd-Frank

Wall Street Reform and Consumer Protection Act, Section 1502 (Dodd-Frank) provisions on conflict minerals.


has been delivered and are in storage but has not yet been received into the

auditees management system.The auditee will provide a list of total estimated tin/tungsten/tantalum inventory at the beginning of audit period (one year prior to

the time of the audit) and at the end of the audit period, including inline.

Alternatively, the auditee may use the ending balance from their prior compliance

audit as the beginning inventory for the current audit period.

ii. The auditee will provide a detailed total tin/tungsten/tantalum sales and toll quantity on a monthly basis covering the entire audit period. The auditor will

select one random monthly sales lots. The auditee will provide the specific sales

receipts for that month. The auditor will sum up all sales receipts for that month

and match them to the total sales quantity provided. The auditor will expand the

scope to two additional random monthly sales lots if discrepancies are

encountered while completing the original one month inquiry.

Auditor must provide the following for the audit period:

4) The auditor will use the information provided by the auditee in the Line Item Summary (Step 3 above) to conduct a total tin/tungsten/tantalum material balance (+/-10%) for the

audit period to determine if the reported receipts, inventories, losses and sales figures are

in general agreement.

5) The auditor will inspect all relevant areas of the smelter (including on-site and off-site warehouses) to determine if all lots of tin/tungsten/tantalum received/purchased inventory

is accounted for/represented and if inventory exists which is not identified on the

submitted documents. The auditor will note if any inventory that was not identified on

the submitted documents should it be discovered during the warehouse inspection.

6) The auditor will review documentation for all (100%) receipts or purchases of tin/tungsten/tantalum ore, concentrate, intermediates, and partially processed and

byproduct materials for compliance to the 3Ts Audit Standard3. The auditor must be

able to reasonably conclude that material is conflict free, and must be able to identify the country of origin of the raw material for each material received. Exceptions will be

noted in the final audit report and will be considered in the auditors compliance

determination.

7) The auditor will review documentation for all (100%) existing inventory of tin/tungsten/tantalum ore, concentrate, intermediates, and partially processed and

byproduct materials purchased/received for compliance to the 3Ts Audit Standard. The

auditor must be able to reasonably conclude that material is conflict free, and must be able to identify the country of origin of the raw material for each material received.

Exceptions will be noted in the final audit report and will be considered in the auditors

compliance determination.

3 Conflict-Free Smelter (CFS) Program Supply Chain Transparency Smelter Audit Protocol for Tin, Tantalum and Tungsten


8) The auditor will then verify secondary tin/tungsten/tantalum-containing input materials based on the sampling methodology in the 3Ts Audit Standard to ensure it meets the

definition of secondary materials. Materials found not meeting the secondary materials

definition will be incorporated into items 6 and 7 noted above. If reasonable doubt exists

for >10% of the sampled secondary materials regarding meeting the definition of a

secondary material will result in a doubling of the sampling pool, up to 100% visible

analysis of the secondary materials.

9) The auditor will assess the OECD Guidance compliance audit of the due diligence process relied on by the auditee for material originating from a Level 3 country in

accordance with the 3Ts Audit Standard. The auditee must have available the tracking

and record keeping information validated by the OECD Guidance compliance audit that

provides reasonable assurance that the origin of the material is valid and conflict-free.

The overall result of the OECD Guidance compliance audit of the in-region sourcing

program is to be noted by the auditor in their final audit report to the ARC. This chain of

custody documentation audit report which is compliant to a credible OECD conformant

process is crucial to establishing confidence in the conflict free origin of material. The

auditor should thus review the report from the OECD compliance audit closely to ensure

it is credible and provides assurance the material is conflict free and report their

conclusions as to their assessment of such credibility. The auditor will also review the

information conveyed to downstream customers as well as publications of the smelters due diligence relative to Step 5 expectations of the OECD Guidance.

10) As possible, the auditor will summarize total tin/tungsten/tantalum receipts by country and mine of origin (see Line Item Summary) and compare to any independent data to

validate the plausibility of the stated sources of origin. The auditor may rely on multiple

sources of independent data including information provided my the auditee as related to

the smelter/refiners evidence gathered as a result of their due diligence activities.

11) The auditor will verify lot traceability by selecting at least three finished (sold) lots and follow the documentation back to the ore source (for continuous flow processes or inline

batch mixing this may include determining the total inline capacity and residence time of

the production line to predict incoming material lots as described in the 3Ts Audit

Standard). The selected three finished lots may cover materials outside of the provisions

of the audit (i.e. received materials prior to the audit period) so will only be used to

confirm lot traceability and not compliance. If irregularities are noted within the

traceability assessment that covers materials within the audit period then further

resolution as noted in the 3Ts Audit Standard is required. The traceability will follow the

three specific lots (excluding secondary materials) at each step of the process. Origin of

ore source will be reviewed and will impact compliance if within the audit period or will

be noted if outside of the audit period. Failure in matching product lots to incoming

material lots might not be possible and does not contribute to failure of the audit.


12) The auditor and auditee will conduct a closing meeting to present the audit findings and conclusions. Audit conclusion disputes should attempt to be resolved prior to auditor

creating the audit summary.

Auditee and Auditor must provide the following after the audit period:

13) As applicable, during a re-audit the material balance is recalculated including receipts and inventory change since the initial audit. The auditor will also verify that all non-

compliant procurement was discontinued from suppliers deemed CFS non-compliant on

the prior audit.

14) The auditor will prepare an audit summary report for the auditee and provide a copy to both the auditee and the CFS Audit Review Committee (ARC). In addition, the auditor

will provide to the ARC any supporting documentation necessary to enable ARCs review of the compliance conclusion including the audit report, line item summary and

audit checklist.

15) The ARC will determine compliance based on testimony, information and conclusions provided by the auditor, as well as any exception decisions made by the ARC.

Compliance or non-compliance conclusions will be communicated by the ARC to the

smelter/refiner.

Documents supplied to the auditor and used to complete the assessment

a) Audit Checklist (provided by the CFS program)

Checklist for implementing the audit

Audit Summary Results Template

b) Audit Line Item Summary (provided by the auditee)

Line item for summarizing documentation for each tin/tungsten/tantalum receipt

Explanation of Documentation items

OECD Guidance On the Ground Assessment Summary Report and other supporting reports and documents

c) Example Information (provided by the auditee)

Certificate of Origin (Acceptable/Unacceptable)

Export License

Certified Analysis/Sample (from variety of sources)

Mining License/Concession

Secondary Materials Example Lists (see the 3Ts Audit Standard)


Summary results of the audit

The audit will have five different potential outcomes at the conclusion of the audit review by the

auditor and Audit Review Committee (ARC):

1) Adequate documentation is available and reasonably demonstrates the source of all tin/tungsten/tantalum-containing purchases/receipts within the audit period as being

conflict-free minerals.

The audit result will be compliant.

2) The auditee refuses to participate in the audit process or does not provide adequate information or access to facilities to complete the audit. Auditor should take reasonable

means to resolve inadequate access while on-site by informing the auditee the

reprecussions of continued lack of auditor support. The auditor shall notify the Audit

Review Committee in the event an audit cannot be completed due to the auditees refusal

to participate or provide adequate facility access.

The audit result will be non-compliant.

3) There is insufficient documentation such that the auditor cannot reasonably substantiate the source of all tin/tungsten/tantalum-containing materials. The auditee cannot or does

not agree to provide further information.

The audit result is non-compliant.

4) Material from a level 3 source, exported without an OECD guidance compliant scheme being utilized, was found in the auditee records. A risk exists they may constitute not-

conflict free minerals (tin/tungsten/tantalum containing source from level 3 area which

was reasonably believed to have been received or exported [as noted on export

document] within the audit period).

The audit result will be non-compliant.

5) There is insufficient documentation to reasonably substantiate the source of all tin/tungsten/tantalum-containing materials. The auditee agrees to provide additional

information to address documentation deficiencies identified by the audit (see Continuous

Improvement Plans). The additional information will be supplied to the auditors within 2

months. A follow-up assessment (as required by the auditor) will be completed within

one additional month. The auditor will then determine if adequate information has been

provided to reasonably substantiate the source of the tin/tungsten/tantalum containing

materials.

The result is compliant if adequate documentation is provided (see 1 above). The result will be non-compliant if insufficient documentation remains after completing

the Continuous Improvement Plan.


Continuous Improvement Plans

Should an auditee be found to be non-compliant by outcome #5 above, then a continuous

improvement plan needs to be implemented and verified prior to becoming compliant. The

details of the improvement plan will be agreed to between the auditee and the CFS Audit Review

Committee (ARC).

If any lot of incoming tin/tungsten/tantalum ore or tin/tungsten/tantalum-containing material is

identified to be non-compliant (insufficient documentation and reasonably identified to be not-

conflict free) then the auditee should quarantine this material immediately until reviewed by the

ARC to discuss disposition. Material with inadequate documentation but reasonably identified

to be conflict free does not need to be quarantined.

The auditees continuous improvement plan must contain the following elements:

1) Providing sufficient documentation to the auditor to reasonably substantiate the source of all tin/tungsten/tantalum-containing materials. The auditee may work with the supplier

of the non-compliant material to obtain follow-up documentation as a means to further

document/justify it to be conflict free.

2) Disposition of any non-compliant tin/tungsten/tantalum material (inadequate documentation and reasonably identified to be not-conflict free mineral as per the 3Ts

Audit Standards) must be reviewed and approved by the ARC prior to taking any action.

This material must remain in the as-received tin/tungsten/tantalum-containing material

state as it was originally purchased by or provided in a tolling agreement to the auditee

(or in semi- or final processed state, if applicable), as it is described in the Line-Item

Summary until the ARC and the auditee agree to a disposition plan. This will only apply

to tin/tungsten/tantalum-containing material still residing at the auditee during the audit

which is reasonably believed to be not-conflict free.

3) Disposition of any non-compliant tin/tungsten/tantalum (inadequate documentation but reasonably identified to be conflict free) may need to be verified by the auditor when

complete. Utilization of this material (or inadequate disposition action) by the auditee

without the approval of ARC will result in immediate non-compliance. The auditee may

work with the supplier of the non-compliant material to obtain follow-up documentation

as a means to further document/justify it to be conflict free. The auditee must provide all

additional documentation to the auditor and ARC for validation and approval prior to

consuming the non-compliant material as specified in the Continuous Improvement Plan.

4) Documented changes in the auditees purchasing policies and recognition of prior issues. These changes must be implemented within a three-month period following the audit.

5) A verification audit (re-audit) conducted by the initial auditor may be required to ensure the auditee has implemented the corrective actions identified in the Continuous


Improvement Plan including the disposition of the non-compliant tin/tungsten/tantalum

material and changes to purchasing policies. The re-audit will primarily focus on

validation of all non-compliant items identified in the Continuous Improvement Plan, as

well as new materials delivered since the initial audit.

6) After reviewing information from the second audit (or subsequent re-audits) then the ARC will determine whether that auditee can be identified as compliant or whether

additional actions are required. For example a more frequent audit schedule may be

required for the future.

7) Any auditee that has a repeat non-compliance issue identified, or was unable to complete closure on open items within the three-month post audit continuous improvement plan period will be deemed as non-compliant (subject to the final review by the CFS Audit Review Committee mentioned in step 4) and will be exempted from participating in the CFS program for a period of six months.

Disclosure and non-disclosure agreements

Compliant smelters/refiners will be posted on the EICC and GeSI websites and made available

publicly. Additionally the CFS policy of the auditee will also be posted. Country of Origin

Information (COI) will be provided to supporters of the CFS Program for their due diligence

needs. COI may provided directly or posted for supporters to access. The detailed data collected

during the audit will be made available only to the CFS Audit Review Committee (ARC) to

ensure consistency, compile anonymous aggregate information and identify common issues.

ARC members who have access to the detailed information are bound by NDAs with EICC and

GeSI, to not share the audit details outside the committee. The ARC will be primarily comprised

of final OEMs (e.g. Apple, HP, Intel, RIM, etc.) as well as an academic representative. The audit

details will not be distributed outside of the Committee. Only in the case of an appeal by the

auditee to the CFS Audit Program Manager might any relevant portions of the audit details be

provided beyond the ARC. NDAs will be implemented separately between the auditing firm, the

ARC and the individual auditee.

Public disclosure regarding CFS programs

Names and addresses (of facilities) of compliant smelters/refiners

Each smelters/refiners CFS policy

Country of Origin Information from all current audits


About EICC (Electronic Industry Citizenship Coalition)

The EICC was established in 2004 to improve social, economic, and environmental conditions in the

global electronic supply chain through use of a standardized code of conduct. The EICC was incorporated

in 2007 as an association to ensure greater awareness of the Code, and to expand its adoption across the

industry. The EICC includes over 75 global electronics companies. For more information or to view the

EICC Code of Conduct, see www.eicc.info or the latest annual report.

About GeSI (Global e-Sustainability Initiative) The Global e-Sustainability Initiative (GeSI) is an international strategic partnership of the Information

Communications Technology (ICT) sector and organisations committed to creating and promoting

technologies and practices that foster economic, environmental and social sustainability. Formed in 2001,

GeSIs vision is a sustainable world through responsible, ICT-enabled transformation. GeSI fosters global and open cooperation, informs the public of its members voluntary actions to improve their sustainability performance, and promotes technologies that foster sustainable development. GeSI has 32 members

representing leading companies and associations from the ICT sector. GeSI also partners with two UN

organizations - the United Nations Environment Program (UNEP) and the International

Telecommunications Union (ITU) - as well as a range of international stakeholders committed to ICT

sustainability objectives. These partnerships help shape GeSIs global vision regarding the evolution of the ICT sector, and how it can best meet the challenges of sustainable development. For more

information, see www.gesi.org.

For more information, contact:

Mike Loch Bob Leet GeSI EICC

Extractives Work Group Co-Lead Extractives Work Group Co-Lead

Board Representative

[email protected] [email protected]


Revision History

Rev 21 December 2012 Changes: Consolidation of Audit Procedure into one document in support of 3Ts Audit Standard

release.

Rev 15 September 2011 (Sn), 09 August 2011 (W), 15 January 2011 (Ta) Changes: Initial release as part of the tin protocol.

CFS Audit Procedure 3Ts English

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