Sustainability and Responsible Sourcing Report 2022
Section 5: Auditor Review
Audit Training
LBMA Approved Auditors continue to be required to participate in annual training sessions. These training sessions are instrumental in keeping auditors aware of LBMA’s expectations for third-party audits, as well as sensitising them to emerging sourcing challenges. All participants are evaluated at the end of the training and are required to pass with a mark higher than 70%. Those that underperform are required to take additional training at their expense and be re-evaluated.
With the implementation of RGG 9 in January 2022, LBMA expects there to be an adjustment period as both auditors and Refiners become more familiar with new requirements.
In anticipation of this, LBMA will hold a mandatory two-day training session for all Approved Auditors in November. In addition to familiarising auditors with the new reporting requirements expected under the latest iteration of the RGG, the training will also afford an opportunity to sensitise auditors to recent examples of sourcing challenges encountered by other Refiners, or which have come to LBMA’s attention through media or NGO reports.
This year, the training will also outline key changes introduced to the amended Disclosure Guidance that will be published later in 2022.
The training also affords an opportunity for LBMA to hear feedback from auditors on emerging issues or best practices they may come across whilst undertaking audit assurances for GDL Refiners. This dialogue helps to inform LBMA as it considers improvements to future iterations of the RGG.
Those on LBMA’s Approved Auditors List play a critical role in ensuring a robust, independent assessment of GDL Refiners’ performance. For this reason, LBMA invests significant time communicating with auditors, particularly during the audit assessment period, and providing annual training to keep them apprised of changes to reporting requirements or emerging issues they should be aware of.
For example, the Responsible Sourcing Team engaged with auditors over public concerns around mining and sourcing practices from environmentally and culturally protected areas in the Amazon. Similarly, the enactment of the Uighur Forced Labour Prevention Act in the United States in June 2022 led to direct conversations with auditors (and Refiners) to ensure there was no forced labour in the supply chains of Chinese Refiners.
As covered in Section 5, annual training focused on sensitising auditors to changes in reporting and disclosure requirements outlined in RGG 9 and the updated Disclosure Guidance.
A key change in RGG 9 requires Refiners to change audit companies after a 10-year period. No auditors or firms were removed from the Approved Auditors List in 2022 due to poor performance; however, PWC Russia did advise LBMA that it underwent a legal name change and reorganisation brought about by sanctions regimes imposed following Russia’s invasion of Ukraine. As a franchise of the global PWC network, the Russian office proactively made the decision to decouple itself for purely business reasons, even though it faced no legal jeopardy from any of the sanctions.
LBMA admitted two new audit firms to the Approved Auditors List, thereby widening the international reach and choices offered to Refiners.