US Customs Officials Explain Audits

September 13, 1999

13 September 1999

The following article is excerpted from "The Journal of Commerce" on 10 September 1999.

US Customs Officials Explain Audits

Late last week US Customs officials indicated in detail how they have revised the guidelines governing routine audits of large importers.

But importers said the audits are too burdensome and they will continue to push for changes....

In the new guidelines, implemented on 1 July 1999, Customs tweaked the six-year-old audit program to shorten the list of items checked in an audit.

That was in response to importers' complaints that the audits — which Customs uses to decide on possible penalties, increased cargo inspections and future audits for an importer — are too long, harsh and intrusive.

But along with cutting the number of audited items, Customs tightened the standards for getting a passing grade. That elicited complaints from importers that the changes could make audits even worse. Customs officials sought to dispel that notion....

Customs halved the number of samples, or information items, in a basic audit from 220 to 110. But importers will be allowed only one mistake before they fail ... Previously they were allowed six or seven.

However, failing doesn't automatically lead to penalties or other negative consequences .... Customs also will examine the materiality, or seriousness, of the error.

The following are examples of material errors ...:

- when an importer's listing of a product's value is off by more than 0.5 per cent
- when its payment of a dumping duty is off by more than 0.5 per cent
- when more than five per cent of its products are misclassified

An audit will also be expanded if a company has imported more than $10 million per year under special trade programs, such as the Generalized System of Preferences .... In such cases, Customs will conduct a separate audit of the importer's use of each special program....

Importers have complained that Customs' audit standards are unrealistic and make them too likely to fail, and that audits often take longer than 15 months....


Topic(s): 
Canadian Economy & Politics
Information Source: 
Canadian News Channel
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