Presentation title slide - 42 pt Times New Roman, White
Download
Report
Transcript Presentation title slide - 42 pt Times New Roman, White
Office of International Trade
Regulatory Audit Division
SPEECH TO LIIEA ON REGULATORY AUDIT &
QUICK RESPONSE AUDITSPETER DANIELS- REGULATORY AUDIT
CBP’s Goal:
TJ
Continue Ensuring
Compliance
1995
Focused
Assessment
2007
Quick
Response
Audit
2
Trade - Focus on High-Risk
Total Imports
Compliance
Threat
Priority Trade
Issues
Material
Discrepancies
Major
Accounts
3
Priority Trade Issues
Textiles/Wearing Apparel
Intellectual Property Rights
Agriculture
Revenue
Anti-Dumping/Countervailing Duties
Penalties
4
Types of Audits
Importer (Focused
Assessment)
Quick Response Audit
Agriculture
IPR
Textile Transshipment
Fraud & Money Laundering
Bonded Warehouse
NAFTA, GSP, CBI, IFT
Customs Broker
Foreign Trade Zone
Drawback
Referrals
5
CBP’s Approach to Compliance
Key to CBP compliance is for Trade to establish and implement
INTERNAL CONTROLS (Brokers, Importers, FTZs,
Warehouses, Etc.)
Why Internal Controls?
Mod Act requires reasonable care. Trade has the
responsibility to use “reasonable care in…classifying and
appraising merchandise…
Sarbanes-Oxley Act of 2002 (“SOX”) – Requires internal
controls over financial reporting, operations, and compliance.
6
Focused Assessment Program
Two Distinct Processes:
Pre-Assessment Survey (PAS)
Identify risks to CBP and evaluate the adequacy of
internal control over CBP activities to determine if risk
is acceptable.
Assessment Compliance Testing (ACT)
Transaction testing used to measure compliance
and/or determine loss of revenue.
7
Focused Assessment Program
Pre-Assessment Survey (PAS)
In the PAS, we determine if internal control is
implemented and effective by:
Reviewing policies and procedures.
Interviewing company personnel.
Determining if control implementation is documented.
Testing the implementation and effectiveness of control
using judgmental sampling.
8
Focused Assessment Program
Assessment Compliance Testing (ACT)
The audit team may proceed to ACT for each review area
determined to be an unacceptable risk.
The company does not maintain adequate control and
ACT testing is necessary to determine the level of
compliance.
The FA team is not able to confirm that internal control
is adequate to control risk to CBP.
Revenue issues exist that cannot be resolved without
addition testing.
9
Focused Assessment Program
Compliance Improvement Plan (CIP)
Prepared by the company to address internal control
weaknesses and compliance issues found during the
PAS or ACT.
A CIP includes:
Action(s) to be taken
Responsible organization/individual
Timetable for implementation
10
Focused Assessment Program
Follow-up Review
A follow-up review may be required for PAS and/or
ACT to:
Verify that corrective actions specified in the CIP were
implemented and effective in managing risk to CBP and
correcting the deficiencies identified during the previously
conducted FA.
Verify the accuracy of the loss of revenue calculations by
the company.
11
WHAT ARE INTERNAL CONTROLS?
Processes effected by the company board of directors,
management, and other personnel that are designed to
provide reasonable assurance that specific objectives
are met.
Internal Controls are Continuous Built-in Processes
that Provide Reasonable Assurance
and are Effected by People
12
Benefits of Effective Internal Controls
Are the first line of defense against noncompliance with CBP laws and
regulations.
Provide predictability concerning CBP-related transactions.
Demonstrate commitment to compliance.
Link management objectives and results.
May reduce duty overpayment and decrease risk.
Are the foundation for compliance in CBP programs. (C-TPAT, ISA & FA,
etc.)
13
Best Practices – Internal Controls
1. Management Commitment
2. Establish Compliance Goals
3. Develop Formal Policies & Procedures
4. Establish Training Programs
5. Conduct Internal Control Reviews
6. Create a CBP Compliance Group
7. Access to Executives for Needed Resources
8. Develop Compliance Requirements for Suppliers
9. Establish a Record Keeping Program
10. Partner with Customs & Border Protection
14
Common Internal Control
Deficiencies
No Internal Control Procedures In Place
Internal Control Procedures In Place, But, Not Documented
Written IC Policies/Procedures are General (Regulatory Requirements
Only)
Not Documenting Instructions and Communications with Broker
Not Monitoring/Verifying Broker’s Work
15
Common Internal Control
Deficiencies
Not Maintaining or Updating Classification Database
Not Requesting CBP Assistance/Input with New or Complex Issues
Other Departments Not Communicating Potential CBP Related
Information to the Import Department
Not Tracking and/or Reporting Variances to CBP (Value, Quantity,
etc.)
16
Common Internal Control
Deficiencies
Not Obtaining and Maintaining Proof of Eligibility for Special Trade
Program Claims
Lack of Knowledge or Specialized Training
No CBP Reference Materials Available to Employees or Not
Accessed/Used
No Testing of Entries for Accuracy
No Periodic Review and Adjustment of Internal Control Procedures
17
Common Compliance Errors
Not Reporting Full and Proper Value
Additions to Price Actually Paid or Payable
Manufacturing Assists
Estimated Non-dutiable Charges
Unreconciled or Incorrectly Reconciled
Improper Basis
Misclassifying Merchandise
18
Common Compliance Errors
Not Declaring/Paying Proper ADD/CVD
Wrong Orders
Wrong Classification
Claiming Special Trade Programs or Duty Provisions when Not Eligible
or Not Supported
9801, 9802
GSP, CBI, etc.
NAFTA
19
What TRADE Can Do
Check CBP Web Site: www.cbp.gov
Guidance on Internal Controls (TIPS)
Best Practices
Red Flags
Internal Control Checklist
Model Internal Controls Guide
Audit Program
Guidance - Compliance Improvement Plans
Regulatory Audit Contact
20
What TRADE Can Do
Assess Risks of Noncompliance
Ensure Control Procedures are Written & Detailed
Periodically Assess Internal Control, Look for Strengths &
Weaknesses, Make Adjustments
Test Transactions for Accuracy & Make Corrections When Needed
Make Sure All Control Procedures Performed are Documented
Provide Sufficient Training/Resources to Staff
Contact CBP for Further Guidance When Needed
Self-Review & Prior Disclosure Before Audit Commencement
21
Evaluate Your Controls…
Are CBP control procedures formally documented to ensure
accuracy of CBP information?
Are written policies and procedures that relate to CBP
issues approved by Management?
Are CBP related policies and procedures reviewed and
updated periodically by responsible company officials?
Within the written control procedures, are duties assigned
to a position rather than a person?
Are internal controls periodically tested, results documented
and appropriate corrective action taken?
22
Evaluate Your Controls…
Does company identify, analyze, and manage risk rated to
CBP issues?
Has the company identified any risks related to CBP issues
and implemented control mechanisms?
Do company employees responsible for ensuring that
accuracy of CBP related information have adequate
knowledge and training?
Does the company have adequate interdepartmental
communication about CBP?
23
QUICK RESPONSE AUDITS
INTRODUCED TO TRADE JANUARY 6, 2006
SINGLE ISSUE AUDIT or LIMITED OBJECTIVE REVIEWS
INTELLECTUAL PROPERTY RIGHTS
AGRICULTURE
TEXTILE COUNTRY OF ORIGIN
SIGNIFICANT FACTORS ADDRESSED
BACKGROUND INFORMATION
OBJECTIVE OF AUDIT
CRITERIA
METHODOLOGY
24
EXAMPLES OF QRA SUBJECTS
Improper Valuation-Undervaluation
Possible Anti Dumping Duty Violations
FTZ- Inventory Discrepancies
Bonded Warehouse- Missing Merchandise
IPR Violations
ICE Fraud Support-Evidence & Quantifications
Agriculture Import Problems-Food Products (Prohibitive List)
Prior Disclosure Review
25
QUICK RESPONSE AUDIT
QUESTIONS
How are QRA Candidates chosen?
Difference between FA & QRA
Subjects Addressed in QRA
WHY ISA Approved Importers still subject to QRA
Typical Document or Information Required Time
26
QUICK RESPONSE QUESTIONS
Can Failure To Respond Invoke Customs Record Rules?
Does QRA Notice Preclude Prior Disclosure?
Results Of QRA Can lead to Penalty Actions
CAN Prior Disclosure Result In A QRA?
Can A QRA Be Suggested From A Competitor?
27