Changes in Audits Garner High Marks

August 9, 1999

9 August 1999

Changes in audits garner high marks

The following article is excerpted from "The Journal of Commerce" edition of 9 August 1999. It follows up on the article entitled "Customs Audits" distributed to members on 5 August.

American importers are applauding new US Customs Service guidelines aimed at reducing audit-completion time.

The US Customs Service's goal is to limit its audits of individual importers to nine months or less. Until now, audits often lasted more than a year, angering importers who say the audits involve far too much time and expense.

The guidelines, released July 1, contain several changes from earlier rules.

One change importers will notice immediately is that Customs will notify them of a pending audit six months or more before the audit team arrives at the importer's office.

By giving importers twice as much time to prepare for the audit, Customs expects the companies to have all of their supporting records in hand so the process can be expedited.

One major change is that Customs is reducing from 220 to 100 the number of sample shipments it will study to determine if a company is complying with commercial regulations.

Customs does not have the resources to audit the thousands of shipments importers receive each year. By studying a representative sample, the agency believes it can determine if the company is compliant in key areas such as classification and valuation of merchandise.

"This is a very good, reasonable and rational change in the process," said Leslie Cazas, corporate manager of customs administration at Nissan North America. Nissan was audited under the previous criterion of 220 samples, and the process was grueling, she said.

In another change, Customs is applying a dollar value to the impact of errors companies make when describing the value and quantity of their imports. If the errors equate to less than 0.5% of the entered value of merchandise, importers will be placed in a low-risk category, even though the number of errors would normally place the companies in a higher-risk category.

Over the past three years, 173 companies were audited. Of those, 84 were placed in the low-risk category, 30 in the moderate-risk category and 59 in the high-risk category. The risk category is significant because low-risk importers only experience 10 cargo exams per year. These exams, which are costly and can delay a shipment for a day or two, increase to 40 per year for moderate-risk importers and 160 per year for high-risk importers.


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
Document Type: 
Email Article