CBP New Audit Survey Program
Uploaded by
ged1821CBP New Audit Survey Program
Uploaded by
ged1821PAEI Brown Bag Event
Whats in a Name?
CBPs New Audit Survey Program
GeorgeTuttle,III
Attorney
LawOfficeofGeorgeR.Tuttle
[email protected]
CindydeLen
SeniorTradeAuditor
DeleonTradeLLC
(FormerU.S.CustomsAuditorandAuditSupervisor)
[email protected]
Who is PAEI?
TheProfessionalAssociationofExportersandImportersorPAEIisaBayArea
organizationdevotedtotheeducationandtrainingofthetradecompliance
professional.
Founded1986inresponsetochangingU.S.exportcontrols,PAEIwasincorporated
asanonprofitorganizationin1987.
ObjectivesoftheAssociationincludepromotingandfosteringtheroleofthe
import/exportprofessional,providingongoingeducationonregulatoryissuesand
exchanginginformationoncurrentimport/exportissues.
PAEIhostsquarterlymeetingswithguestspeakers,networkingandjobplacement
opportunities.AffiliationsofferPAEImemberdiscountstoseminars,services,and
products.
Individualmembershipsstartat$50.
FormoreinformationonPAEIgoto:http://www.paei.org/join.htm
Deleon Trade LLC
Tuttle Law P.C.
Types of CBP Audits and Reviews
Focused Assessments
Quick Response Audits (risk or referral based)
Value, Classification (single issue)
NAFTA, GSP, SFTA, AFTA, Chapter 98, other
Commercial Fraud
Agriculture
IPR
Textile Transshipment
Foreign Trade Zone, Bonded Warehouse, Drawback
Audit Surveys
Broker Compliance Audits
Drawback, etc.
Deleon Trade LLC
Tuttle Law P.C.
Whats New in the World
of CBP Regulatory Audit?
FY2015
Implementation of new Pre-assessment program &
Questionnaire
Limited number of new FAs for consistency with new program
Heavy HQ oversight of FAs for risk and preparation of reports
Need to clean-up and close follow-ups
San Francisco Reg Audit no new FAs -- close follow-ups
Seattle Office -- limited FAs under enhanced Pre-assessment
program
Reg Audit Focus -- QRAs and Audit Surveys
Deleon Trade LLC
Tuttle Law P.C.
Whats New in the World
of CBP Regulatory Audit?
Audit Surveys
Deleon Trade LLC
Tuttle Law P.C.
What is an Audit Survey?
An audit survey is intended to be a quick
assessment of what is going on and allows
the CBP auditor to focus his/her
attention on the areas of greatest risk.
Deleon Trade LLC
Tuttle Law P.C.
What is an Audit Survey is NOT!
Not an official audit per 19CFR 163.11
Not a Focused Assessment
Not a Quick Response Audit
Not an assessment of internal controls
No samples (only walk-through
entries)
No formal report.
Deleon Trade LLC
Tuttle Law P.C.
Audit Surveys
Previously,AuditSurveyshavefocusedonintellectual
propertyrights &enforcement,butisnowbeingusedfor
otherreviewareas.
Providesimporterswithopportunitytoavoidmoreintensive
FAorQRAreviews,anddemonstratehowyouimplementand
maintainaneffectiveimportcomplianceprogram
Lackofpreparationcanresultinafullblownauditorother
enforcementactions.
Deleon Trade LLC
Tuttle Law P.C.
The Audit Survey program
Identifiescompaniesthroughrisksegmentation.
RArequestsinformationaboutspecificimportactivityand
processesinadvanceviaaquestionnaire.
RAgivesinformedcompliancepresentationstoinform
importersoftheirresponsibilities.
RAconductsinterviewsandwalkthroughsofselectedentries
tounderstandhowimporteraddressesspecificareaofrisk.
Deleon Trade LLC
Tuttle Law P.C.
The Audit Survey Program
AllowsCBPtoquicklyandefficientlyobtainonsite
informationaboutimportactivitiesrelativetoaspecifictrade
area orissuewithoutcommittingsubstantialtimeand
resourcesrequiredbyafullaudit.
Thoughsimilartoauditriskassessmentprocedures,surveys
donotconstituteanauditinaccordancewithGovernment
AuditingStandards.
AllowsRAtoassignresourcestoonlyrisksegmented
companiesforaudit,increasingefficienciesforbothCBPand
thetradecommunityinfacilitatinglegitimatetrade.
Deleon Trade LLC
Tuttle Law P.C.
10
The Audit Survey Program
Sinceanauditisnotbeingperformed,thesurveysdonot
provideadeterminationofacceptable/unacceptableriskora
levelofcompliance.
Aformalreportisnotissued;rather,importerswillreceivea
closeoutletter.
Resultshelpimportersbyidentifyingweaknessesintarget
arearequiringimprovement.
Deleon Trade LLC
Tuttle Law P.C.
11
DocumentRequests
Deleon Trade LLC
Tuttle Law P.C.
12
Deleon Trade LLC
Tuttle Law P.C.
13
DocumentRequest
Deleon Trade LLC
Tuttle Law P.C.
14
Deleon Trade LLC
Tuttle Law P.C.
15
Who is Subject to CBP Audits and Surveys?
Deleon Trade LLC
Tuttle Law P.C.
Example
Feb 2015
Official CBP Letter sent
to select ISA Members
CBP requested that ISA
members conduct an
ADD/CVD selfassessment to identify
imports of wooden chests
from China under HTS
9403.50 and 9403.60 in
order to collect
ADD/CVD revenue.
16
CBP Audit Survey Targeting
AuditSurveyReferralChannels:
CBPPriorityTradeIssues(PTI)(seenextslide)
AuditSurveystargetaspecificindustryorissue(i.e.,AD/CVDor
IPR)andarenotcompanyspecific.
AuditSurveysinvolveareviewofmultipleimporterswithcommon
issuesatthesametime!
Conversely,QuickResponseAuditstendtobeimporterspecificand
relatedtoareferralonaspecificimporter.Intendedtoconfirman
assertion.
CBPCentersofExcellence&Expertise(CEEs)arealsogenerating
referralforauditsurveys
Eallegationreferrals
Deleon Trade LLC
Tuttle Law P.C.
17
Audit Survey (Primary Focus Areas)
Deleon Trade LLC
Tuttle Law P.C.
18
CBP Audit Planning Process
Deleon Trade LLC
Tuttle Law P.C.
19
Who is Subject to CBP Audits and Surveys?
Small, Medium, & Large Importers
Many large importers have already been audited!
Small and medium sized importers should expect audits.
Many large importers are in ISA and exempt from FAs.
Large importers go back into the audit pool after a few years.
Audit Surveys focus on industries and/or specific issues such as:
Retailers and Consumer Electronics and Products
IPR compliance
Antidumping and CVD compliance
Furniture Importers
Aluminum Extrusions
Tires
Other emerging compliance issues
Valuation First sale
International Freight Deductions
Computed Value importers not on Reconciliation
FTAs and U.S. Goods
Importers with history of Classification errors
Deleon Trade LLC
Tuttle Law P.C.
20
General CBP Audit Plan Process
A risk based approach is used in selecting audit candidates
15-20 Risk factors, including:
Company size & import activity (value & volume)
Company complexity in import activity (HTS variety)
Priority Trade Issues (PTI) risk
Referrals from CBP and other government agencies
Potential audit candidates are usually contacted by mid-summer
Audit Plan is developed each CBP fiscal year beginning Oct 1st
Approximately 400 Auditors nationwide
Houston Field Office has new Field Director, Danielle Hightower
Potential changes caused by reorganization
Deleon Trade LLC
Tuttle Law P.C.
21
CBP Audits
How to Prepare
Deleon Trade LLC
Tuttle Law P.C.
22
How to Prepare for a CBP Audit Survey / FA / QRA
Getting Started
1. ReviewofyourCustomsACEentrydata.
2. Conductaninternalreviewandriskassessmentofyourimportactivities.
Identifyriskareas,
Conductlimitedselftesting,
Assessinternalcontrolsforeachriskarea,
ConsideraPriorDisclosureifyoudiscoverissuesinordertoreduce
oreliminatepotentialpenaltyexposure.
3. CompletetheFAInternalControlQuestionnaire,
(http://www.cbp.gov/trade/audits/focusedassessment).Thiswillgive
youasenseofhowpreparedyoureallyare.
Aninternalreviewcanhelpyou:
becomeorremainCustomsCompliant,and
discovernewdutysavingsprogramsforyourbusiness.
Deleon Trade LLC
Tuttle Law P.C.
23
TheNewFAQuestionnaire
Deleon Trade LLC
Tuttle Law P.C.
24
TheNewFAQuestionnaire
Deleon Trade LLC
Tuttle Law P.C.
25
Deleon Trade LLC
Tuttle Law P.C.
26
How to Prepare for a CBP Audit Survey / FA / QRA
Continued
5. ConsiderapplyingfortheISAprogram
YoumaybeabletoavoidanFAbyapplyingforISAifyouhaveaninternal
controlsysteminplace
YoumustbeaCTPATmembertoapplyforISA
6. Determinethestatusofyouroverallsystemofinternalcontrols
7. VisitCBPswebsiteandreadEVERYTHINGregardingFAsandinternalcontrol
programs(http://www.cbp.gov/trade/audits/focusedassessment)
8. Ifyouarenotcompletelycomfortableconductinganyoftherecommended
tasksabove,considergettingexternalassistance
9. IfyourenotifiedofanFA,QRAorauditSurveykeepthenewsofyour
selectioninternallytoaneedtoknowbasis
10.Timeisoftheessence!!!
Deleon Trade LLC
Tuttle Law P.C.
27
Internal Controls
Are they really needed?
Deleon Trade LLC
Tuttle Law P.C.
28
Customs Modernization Act (December 8, 1993)
SharedResponsibility:ImportersandCustomshaveamutual
responsibilitytoensurecompliance
InformedCompliance: Customs'responsibilityistoclearlyand
completelyinformimportersoftheirlegalobligationswithregardto
importing
ReasonableCare: Requiresimporterstousereasonablecarewhenthey
provideCustomswithentryinformation,includingthetariff
classification,value,andrateofdutyapplicabletotheirmerchandise
EnforcedCompliance: Customswilltransitionfrominformedcompliance
toenforcementmeasures
Deleon Trade LLC
Tuttle Law P.C.
29
29
Why are Internal Controls Needed?
Deleon Trade LLC
Tuttle Law P.C.
30
How to Prepare for a CBP Audit Survey / FA / QRA
Are you ready?
DoyouhaveasystemofinternalcontrolsthatwouldpassmusterwithCustoms?
Doyouhaveanypotentialissueswhichcouldexposeyourcompanytoduty
liabilityorsevereCustomspenalties?
Haveyouconductedariskassessmentandinternalreviewrecentlyorhaveyou
hadanoutsidefirmassessyourcompliancewithCustomslawsandregulations?
Doyouknowwhichfreetradeagreementsandspecialtariffprovisionsareused
byyourcompany?Aretheclaimscompliant?
HaveyoudeclaredaccuratevaluestoCustomsincludingalltheCRAPP
(Commissions,Royalties,Assists,Packing,andProceeds)
HaveyoureviewedyourGeneralLedgerrecentlyfor
accountsofinterest?
Deleon Trade LLC
Tuttle Law P.C.
31
AbouttheSpeakers
CindyDeleon
GeorgeTuttle
BeforeformingDeleonTrade,Cindyservedfor12
yearsasaSeniorAuditorandAssistantField
DirectorofU.S.CustomsandBorderProtections
RegulatoryAuditDivisioninChicago.
WhileworkingatU.S.Customssheconducted
andsupervisedmultiplefocusedassessment
audits,quickresponseaudits,fraud
investigations,freetradeagreementreviews,
drawbackaudits,NAFTAaudits,andprior
disclosurereviewsofFortune500andmidsize
companies.
Inaddition,shedesignedandledthementoring
andrecruitingprogramsfortheChicagofield
officeandconductedadvancedtrainingsessions
ontechnicalauditissuesandspecialtrade
programaudits.
AdditionalinformationaboutMs.Deleonand
DeleonTradeislocatedathttp://www.deleon
trade.com/
GeorgeTuttleisanattorneywiththeSan
FranciscolawfirmofGeorgeRTuttleLawOffices.
Hehasbeeninpracticeforover30years.His
practiceemphasisisonCustoms,international
traderegulation,andexportcompliancerelated
matters.
Deleon Trade LLC
Heassistscompanieswithcomplianceauditsand
todevelopeffectivecomplianceprograms;
determinecorrectcustomsduties,values,
productclassifications,anddutypreference
eligibility;obtainrulings,fileprotests;andresolve
penalty,seizureandenforcementcases.Healso
litigatetradecasesbeforetheUnitedStatesCourt
ofInternationalTradeandtheCAFC.
AdditionalinformationaboutMr.Tuttleandthe
firmcanbefoundatwww.tuttlelaw.com .
Tuttle Law P.C.
32
