Responsible Sourcing Report 2021
Section 4: Auditors Update
In 2020, LBMA took the following stringent measures to ensure the ongoing credibility of the Audit Programme:
- Issued a warning to one auditor on the Approved Service Provider List due to concerns about its assessment of risk.
- Removal of one lead auditor from a firm on the Approved Service Provider List due to poor performance.
LBMA collaborates closely with the Responsible Minerals Initiative (RMI) and Responsible Jewellery Counsel (RJC) to identify opportunities for joint training of auditors.
The mandatory auditor training programme, a key pillar of our Responsible Sourcing Strategy, was rolled out in November 2020. LBMA teamed up with Synergy Global Consulting and Nirali Shah, an independent consultant to LBMA, to facilitate an eight-hour online training of more than 120 auditors worldwide. The key objectives of the audit were to:
- establish a common understanding of the contextual risks in precious metals supply chains
- help to effectively transition from ISO to ISAE 3000 assurance, and
- provide a platform for continuous professional development.
The training focused on enhancing the auditors’ understanding of the LBMA RGG requirements and other relevant reference standards (e.g. OECD Due Diligence Guidance) as well as the ISAE 3000 risk-based assurance approach and its application for LBMA RGG audits. Participants also explored the contextual risks related to mineral supply chains, and gold supply chains in particular, and how to identify and address these in the audit process. The training sought to equip LBMA auditors to not only check whether traceability and due diligence systems are in place, operational and compliant with LBMA requirements, but also whether risks are being effectively identified, assessed, managed and reported on. The training provided a platform for auditors to share common challenges and approaches to effectively address these. The training also touched upon LBMA’s disclosure guidance and the expectations that auditors should have of the quality and completeness of the Refiners’ Compliance Reports as well as the consistency in audit deliverables.
The training was very well received by our auditors, with overwhelmingly positive feedback. More than 30 auditors attended the training, which included passing a test as a requirement for completing the course. The training was mandatory for all auditors on the Approved Service Provider List.
Further online training opportunities are planned for late 2021. In 2022, we anticipate a return to in-person training built around informing auditors of material changes made in Responsible Gold Guidance (RGG) Version 9.
LBMA Review 2020
As in past years, LBMA undertakes an annual review of auditors to ensure that they remain independent and have appropriate capacity, as well as robust quality assurance policies and procedures.
Where there have been issues identified against auditors, LBMA will revisit its criteria and check to ensure that the auditor remains compliant.
An updated Approved Service Provider List for 2022 was published in late 2021. This followed LBMA’s extensive review of each auditor by the Compliance Panel, which is undertaken annually. This review includes an assessment of the quality of their audits, as well as compulsory attendance and completion of annual training seminars.
Guidance from LBMA’s Physical Committee, which collaborates closely with the LBMA Executive on Responsible Sourcing matters, contributes during the auditor review process. The Committee provides a crucial role in ensuring that the Approved Auditors List can continue to be relied upon to provide confidence to the market.
The measures provide an additional control to ensure that the most appropriate auditor is appointed to suit a GDL refiner’s business model. However, the restrictions can be changed and/or removed, if the auditing firm can demonstrate that it has implemented a development plan that addresses the restrictions.