Case Studies
Case Studies
Reference Material
The Following Case studies are to be used as examples only. Please refer to Due
Diligence and Guidance documents for in-depth information.
The Following Case studies are to be used as
examples only. Please refer to Due Diligence and
Guidance documents for in-depth information.
Invisible
Case study 01
Due Diligence on
Chairs from Malaysia
The ABC company have decided to import some chairs from Malaysia to add to the range of products that they offer in the Australian market. They are aware of the Illegal logging prohibition regulation and have set up a documented Due Diligence System. The Compliance Manager, Brian, is responsible for managing the system and is asked to complete Due Diligence on supply of the chairs from Mr Big Chair in Malaysia.
He firstly assesses if the chair is a regulated Timber product by looking up the customs tariff code for the product in Schedule 1 of the regulation. He concludes that the appropriate code is 9401.61.00 with the description- SEATS (OTHER THAN THOSE OF 9402), WHETHER OR NOT CONVERTIBLE INTO BEDS, AND PARTS THEREOF: – Other seats, with wooden frames-Upholstered. As the chairs are a regulated timber product he must now perform due diligence on the product prior to their importation.
To complete the first step in the Due Diligence process he sends off a letter to Mr Big Chair in Malaysia informing them of the need to comply with the Australian Regulation along with a Supplier Questionnaire.
Three weeks later he receives a response with the completed Questionnaire. He assesses the response from Mr Big Chair.
Firstly, he checks that all the information is complete, and he finds that it is. Next, he must decide which risk assessment pathway he will use. He decides because the product is not certified under a Timber Legality Framework (FSC or PEFC) but there is a Country Specific Guideline (CSG) for Malaysia he will use the CSG. He notes that Mr Big has affirmed that they have legality documents for the timber they purchase. He downloads the CSG from the Department’s web-site and commences the risk assessment. Based on the CSG he identifies that the key document that demonstrates the legality of the chairs is Registration with the Malaysian Timber Industry Board (MTIB) and appropriate customs declaration as well as export clearance from the customs department. He contacts Mr Big and they are happy to send him a copy of the documents.
To complete his risk assessment, he reviews all the other information including that the product is made from Rubber Wood which is not considered a species of concern. However, he is concerned that the Corruption Perception Index for Malaysia is 47 (2017). This could lead to possible issues with the validity of the legality documents. To mitigate this risk and to ensure that the registration is valid he contacts MTIB and they confirm the Mr Big Chair is registered for the product that is intended for import into Australia. After considering all the other information he consults the company risk matrix and reaches a conclusion that the risk of the chairs containing illegally logged timber is low on origin and supply chain and the overall risk is low. He completes the risk assessment by documenting the process and the evidence he has relied on to reach the conclusion of low risk.
Finally, he contacts their Customs Agent and informs them in writing to answer “yes” to the complete the Community Protection Question for this product.
Case study 02
Risk Assessment –
Timber Legality Framework
Sally has been asked to perform a risk assessment on a chair which will be imported by her company. After ascertaining that the product is a regulated timber product she initiates the company Due Diligence process and obtains the results of the supplier questionnaire. Sally then sits down to conduct the risk assessment.
Sally notes in the questionnaire that the supplier claims they are certified under the PEFC timber legality framework and that the product is included within the scope of their certification. As a result, she decides to use the Timber Legality Framework pathway to perform the risk assessment.
To ensure that the suppliers’ claim of certification is valid she decides to consult the PEFC
Sally then looks at all the other information that has been gathered and cannot find any concerns regarding the supplier. She also does a search on the internet and speaks to colleagues about the supplier.
Again, no concerning information is found about the supplier or supplies from this area. After consulting the company risk matrix she reaches the conclusion that the risk of the chair containing illegally logged timber is low on origin and supply chain and overall the risk is low and the import can take place. Finally, she documents her findings and informs the purchasing department.
She also informs them that they should request that the certification claims for the product be included on the invoice they will receive from the supplier on each occasion that a purchase is made.
Case study 03
Risk Assessment of
a complex product
Freda has been asked to conduct a risk assessment of a new table that her company is intending to import. After gathering the required information from the supplier, she prepares to conduct the risk assessment.
She finds that in fact the product is made from two different species of timber, one for the carcass and one for the decorative veneer used on the exterior. As a result, Freda decides she must undertake two separate risk assessments, one for each timber species. The product is not covered by a timber legality framework or a country-specific guideline, so she must use a regulated risk factors pathway to assess the risk.
She reviews the available information on both species including the prevalence of illegal logging in the area and of the species present as well as armed conflict in the area. She also considers that the product is complex, but she has been able to find all the required information. She also consults some contacts she has in the industry and cannot find any issues that would suggest that the table contains illegally logged timber.
As a result, after consulting the company risk matrix she considers that the risk on supply chain and origin is low and as a result the overall risk is low.
Freda documents her finding and informs that purchasing department that the import of the table can go ahead.
Case study 04
High Risk
Harry is undertaking a risk assessment on a new cabinet that is being considered for importation. He receives the completed supplier questionnaire from the supplier and commences his risk assessment.
He finds that the supplier has not completed the information about the wood species used in the cabinet as well as not supplying the details of
He considers the other information he has and finds that there is also evidence of illegal logging in the region around the place where the cabinet is being manufactured.
There are no other mitigation steps that Harry feels he can take and consults his company risk assessment matrix. He concludes that there is high risk
Harry documents his finding and informs the purchasing department not to go ahead with the import.
01
Due Diligence on
Chairs from Malaysia
The ABC company have decided to import some chairs from Malaysia to add to the range of products that they offer in the Australian market. They are aware of the Illegal logging prohibition regulation and have set up a documented Due Diligence System. The Compliance Manager, Brian, is responsible for managing the system and is asked to complete Due Diligence on supply of the chairs from Mr Big Chair in Malaysia.
He firstly assesses if the chair is a regulated Timber product by looking up the customs tariff code for the product in Schedule 1 of the regulation. He concludes that the appropriate code is 9401.61.00 with the description- SEATS (OTHER THAN THOSE OF 9402), WHETHER OR NOT CONVERTIBLE INTO BEDS, AND PARTS THEREOF: – Other seats, with wooden frames-Upholstered. As the chairs are a regulated timber product he must now perform due diligence on the product prior to their importation.
To complete the first step in the Due Diligence process he sends off a letter to Mr Big Chair in Malaysia informing them of the need to comply with the Australian Regulation along with a Supplier Questionnaire.
Three weeks later he receives a response with the completed Questionnaire. He assesses the response from Mr Big Chair.
Firstly, he checks that all the information is complete, and he finds that it is. Next, he must decide which risk assessment pathway he will use. He decides because the product is not certified under a Timber Legality Framework (FSC or PEFC) but there is a Country Specific Guideline (CSG) for Malaysia he will use the CSG. He notes that Mr Big has affirmed that they have legality documents for the timber they purchase. He downloads the CSG from the Department’s web-site and commences the risk assessment.
Based on the CSG he identifies that the key document that demonstrates the legality of the chairs is Registration with the Malaysian Timber Industry Board (MTIB) and appropriate customs declaration as well as export clearance from the customs department. He contacts Mr Big and they are happy to send him a copy of the documents.
To complete his risk assessment, he reviews all the other information including that the product is made from Rubber Wood which is not considered a species of concern. However, he is concerned that the Corruption Perception Index for Malaysia is 47 (2017). This could lead to possible issues with the validity of the legality documents. To mitigate this risk and to ensure that the registration is valid he contacts MTIB and they confirm the Mr Big Chair is registered for the product that is intended for import into Australia. After considering all the other information he consults the company risk matrix and reaches a conclusion that the risk of the chairs containing illegally logged timber is low on origin and supply chain and the overall risk is low. He completes the risk assessment by documenting the process and the evidence he has relied on to reach the conclusion of low risk.
Finally, he contacts their Customs Agent and informs them in writing to answer “yes” to the complete the Community Protection Question for
this product.
02
Risk Assessment – Timber
Legality Framework
Sally has been asked to perform a risk assessment on a chair which will be imported by her company. After ascertaining that the product is a regulated timber product she initiates the company Due Diligence process and obtains the results of the supplier questionnaire. Sally then sits down to conduct the risk assessment.
Sally notes in the questionnaire that the supplier claims they are certified under the PEFC timber legality framework and that the product is included within the scope of their certification. As a result, she decides to use the Timber Legality Framework pathway to perform the risk assessment.
To ensure that the suppliers’ claim of certification is valid she decides to consult the PEFC web-site. She uses the certification number provided by the supplier and searches for their certification to verify the claim and ensure that the certification is not falsified.
Subsequently she finds the certification details on the PEFC web-site and confirms that the product to be purchased is included in the scope of certification and the certification is valid for the period of the purchase.
Again, no concerning information is found about the supplier or supplies from this area. After consulting the company risk matrix she reaches the conclusion that the risk of the chair containing illegally logged timber is low on origin and supply chain and overall the risk is low and the import can take place. Finally, she documents her findings and informs the purchasing department.
She also informs them that they should request that the certification claims for the product be included on the invoice they will receive from the supplier on each occasion that a purchase is made.
03
Risk Assessment of
a complex product
Freda has been asked to conduct a risk assessment of a new table that her company is intending to import. After gathering the required information from the supplier, she prepares to conduct the risk assessment.
She finds that in fact the product is made from two different species of timber, one for the carcass and one for the decorative veneer used on the exterior. As a result, Freda decides she must undertake two separate risk assessments, one for each timber species. The product is not covered by a timber legality framework or a country specific guideline, so she must use a regulated risk factors pathway to assess the risk.
She reviews the available information on both species including the prevalence of illegal logging in the area and of the species present as well as armed conflict in the area. She also considers that the product is complex, but she has been able to find all the required information. She also consults some contacts she has in the industry and cannot find any issues that would suggest that the table contains illegally logged timber.
As a result, after consulting the company risk matrix she considers that the risk on supply chain and origin is low and as a result the overall risk is low.
Freda documents her finding and informs that purchasing department that the import of the table can go ahead.
04
High Risk
Harry is undertaking a risk assessment on a new cabinet that is being considered for importation. He receives the completed supplier questionnaire from the supplier and commences his risk assessment.
He finds that the supplier has not completed the information about the wood species used in the cabinet as well as not supplying the details of origin of the timber. He contacts the supplier to ask for the missing information and is told that they don’t know where the wood originates from as there are many steps in the supply chain. They are also unsure of the species of timber which comes as a mixed lot of random species. The supplier tells him they cannot help him with any other information.
He considers the other information he has and finds that there is also evidence of illegal logging in the region around the place where the cabinet is being manufactured.
There are no other mitigation steps that Harry feels he can take and consults his company risk assessment matrix. He concludes that there is high risk on origin as well as supply chain. As a result, he concludes that there is a potential risk that the cabinet may contain illegally logged timber and that he cannot put the company at risk of the serious penalties that will apply for beaches of importing product which is illegal.
Harry documents his finding and informs the purchasing department not to go ahead with the import.
