Issue Alert: Conflict Minerals May, 2011

SEC READIES FINAL RULE AFFECTING PUBLIC REPORTING FOR THOUSANDS OF COMPANIES, BRINGING SIGNIFICANT TRANSPARENCY TO THEIR SUPPLY CHAINS.

Background

Widely viewed as an instrument of financial reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) also spells out significant changes for the Supply Chains of many foreign and domestic companies that are SEC issuers. Within Dodd-Frank, the Conflict Minerals Provision (“Rule 1502”) will require significantly increased transparency for thousands of companies that manufacture (or contract to manufacture) goods that contain materials dubbed “conflict minerals”. To ensure compliance, affected companies will be required to undertake significant action. We are monitoring this issue and actively developing an approach to support client compliance with this aspect of Dodd-Frank. Affected clients will be required to do significant work during 2012 to comply. Conflict Minerals: What they are and why action is being taken now. The term “conflict mineral” refers to cassiterite, columbite-tantalite, gold, wolframite, or their derivatives. In their finished form, they are more commonly known as gold and “the three T’s” (Tantalum, Tin, Tungsten). When sourced from the Democratic Republic of the Congo (the “DRC”) and neighboring countries, the resulting profits are used to support brutal violence and repression. The conflict has resulted in 5.5 million deaths and is considered to be the deadliest conflict since World War II. While these minerals are not all household names, they are ubiquitous in this global and electronic age and can be found in common consumer products such as jewelry, mobile telephones, computers, videogame consoles, digital cameras and other items that use electronic circuits and components. With their wide application in industrial processes, they are pervasive as well in these areas: tin alloys and plating, solder, industrial tooling, jet engine components, communications equipment, aerospace equipment, metal wires, electrodes. The intent of this rule is to require transparency that will drive markets toward both the substitution of materials and/or the development of a verifiable supply chain for “conflict-free” minerals. There is no prohibition for continued use of conflict minerals nor is there any “penalty” per se imposed on those companies that continue to use conflict minerals in their products.

What’s Next? Dodd-Frank provides high-level direction and the SEC is now developing the details of the final rule. Public comment on the proposed Rule has ended. The final rule, initially targeted for issue on April 15, 2011, will now be issued in the August to December, 2011 time frame. The effort required to fully comply could require many months of work. Those companies that are most impacted would have to not only publicly disclose their use of conflict minerals, but would also have to furnish an audited Conflict Minerals Report as an exhibit to their Annual Report. It is expected that companies will need to perform this work during calendar 2012 for disclosure in early 2013.

Thousands of companies will be required to review this law and assess the level of required compliance.

They will fall into four categories:

1. Companies that manufacture or contract to manufacture products with conflict minerals and are

unsure of their origin or verify that some of their conflict minerals come from the DRC countries:

Required to perform extensive Supply Chain due diligence and file an independently audited

Conflict Minerals Report as an addendum to their 10-K.

2. Companies that manufacture or contract to manufacture products with conflict minerals and can

verify that their conflict minerals do not come from the DRC countries: Required to perform

significant Supply Chain due diligence to verify the country of origin for their conflict minerals and

then disclose this information publicly.

3. Companies that manufacture or contract to manufacture products that do not rely on conflict

minerals: No significant action required beyond internal verification.

4. Companies that are not SEC issuers and/or do not manufacture or contract to manufacture

products: No action or disclosure required.

While the final form of the rule could change its applicability or burden to some companies, it is also clear that there is a wide swath of companies that will be heavily impacted regardless of its final form. Our Role We anticipate that companies impacted by this regulation will require outside assistance to comply. Our consultants’ experience in global sourcing as well as audit and technology issues will provide a significant advantage in supporting client compliance and implementation. We will continue to monitor this issue, engage with clients and thought leaders on its specifics, and work with our client base to assure successful compliance.

ABOUT RESOURCES GLOBAL PROFESSIONALS

Resources Global Professionals is a multinational professional services firm that helps business leaders execute internal initiatives. Working as members of client teams, we solve problems, execute and transfer knowledge. Partnering with business leaders, we drive internal change across all parts of a global enterprise - finance and accounting, information management, internal audit, human capital, legal services and supply chain management.

Resources Global was founded in 1996 within a Big Four accounting firm. Today, we are a publicly traded company with over 2,700 professionals, from more than 80 practice offices, serving 2,200 clients around the world. Headquartered in Irvine, California, Resources Global has served 81 of the Fortune 100 companies.

For additional information, please contact your Resources Global Professionals Client Service Director. www.resourcesglobal.com

If you no longer wish to receive these emails, please reply to this email with “unsubscribe” in the subject line.