Welcome to Weise Wednesday! Every week we will share a brief Q&A with the former U.S. Commissioner of Customs, Mr. George Weise. If you have questions, we encourage you to send them to Esta dirección de correo electrónico está siendo protegida contra los robots de spam. Necesita tener JavaScript habilitado para poder verlo..

 

Q: What are the most common internal control deficiencies found by CBP in their audit of an importer’s compliance program?

A: While I cannot speak officially on behalf of CBP, I have had discussions with senior audit officials at CBP, and they have provided me with a list of the most common internal control efficiencies.  They are:

  • No testing of entries for accuracy
  • Not maintaining or updating the classification database
  • No internal control procedures in place
  • Not monitoring/verifying broker’s work
  • Other departments within the company not communicating potential CBP-related information to the Import Compliance team
  • Lack of documentation to substantiate various claims (Trade Preference/Agreements, Non-dutiable charges, etc.)

While there are no surprises here, these are clearly all areas that need to be addressed in any effective compliance program but frequently are not.  No compliance program can be effective without having stringent internal control procedures in place and proper documentation to substantiate all claims. Testing entries for accuracy through internal audits and keeping a close eye on broker performance are also critical. 

 

A closer look at communication barriers

The area that I have found lacking in many organizations relates to communication barriers. Oftentimes other departments within a company have relevant information pertaining to import compliance, but they fail to provide such information in a timely fashion to the Compliance team.  In an area like assists in Customs valuation, for example, designs, molds, and components are frequently provided to the manufacturer without the awareness of the company’s compliance team, resulting in an undervaluation of the imported goods. 

This is a serious problem that CBP has acknowledged. CBP stated in its Informed Compliance publication on Customs Valuation that if they find communication barriers between organizational units within the company which result in the failure to disclose relevant information affecting imports, this will be looked at as a failure to exercise reasonable care. 

The solution to this difficult challenge is to institute a vigorous internal training program across the organization to ensure that everyone is aware of CBP’s legal requirements and how to get critical information to the Compliance team in a timely fashion.