CBP Audit Rules Update Would Change Sample Transaction Review Process, Revise Pre-Assessment Survey
CBP has ramped up its outreach efforts to lay out the agency's plans to update Focused Assessment (FA) rules, said customs firm Tuttle Law Offices in an emailed description of CBP's work. Among the proposed changes are a more comprehensive questionnaire and some tinkering in how the agency decides on the number of sample transactions CBP would examine, said the email. The description follows a recent presentation from Elizabeth Chiavetta, director, Audit Policy and Mel Moreland, acting executive director, Regulatory Audit at CBP, said Tuttle.
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CBP is planning to make the changes by the end of 2014 and is now working to update industry on potential process changes, it said. To start, CBP will revise procedure related to the pre-assessment survey (PAS), which is used by CBP to look at a company's internal compliance controls, said the email. While CBP previously would meet with an importer for an advanced conference following the PAS, "CBP no longer believes a formal Advance Conference is necessary," though "auditors will still explain the FA process to the importer and provide reference materials on an informal basis rather than during an onsite meeting." said Tuttle. The agency will also seek to make initial contact with the company earlier, the firm said.
CBP will also stop assessing a risk level based on its Preliminary Assessment of Risk (PAR), said Tuttle. CBP will instead "place increased emphasis on significance/materiality in determining audit areas" and assess inherent risk at a later stage, it said. CBP will also revise its survey, now to be know as the Pre-Assessment Survey Questionnaire, in order to allow for more expansive responses rather than "yes" or "no" answers, said Tuttle. A sample of the questionnaire, posted by Tuttle, is available (here). CBP did not immediately return a request for comment.
Once CBP determines the risk areas that deserve more attention, it will request sample transactions to review. "CBP is making major changes here," said Tuttle. The number of samples selected will now be determined through some new general guidelines, rather than based on the auditor's judgment. "If there is a population of 250 items or more in the universe of data, the auditor may selection between 25 and 40 samples," it said. "If the population is 250 or less, the tested quantity will be about 10%. (These ranges are meant only as general guidelines and exceptions can and will occur.)" The larger sample sizes are hoped to help the agency determine risk and assess "material noncompliance," said Tuttle.
CBP will also be adding specific limitations to its PAS reports that outline potential risks as acceptable or not, said Tuttle. "Findings will be expressly limited to the period of the audit and a caveat that, should conditions change after the audit, the risk conclusion may no longer be relevant."