Conducting Effective, Internal Trade Compliance Audits

Auditing is one of Customs and Border Protection’s greatest revenue generators and can be quite a nightmare for an importer without the proper trade compliance procedures in place. With the new era of CBP’s Centers of Excellence and Expertise, we are seeing a heightened emphasis being placed on trade compliance auditing – mainly in the issuing of CBP Forms 28s and 29s. CBP also has a plethora of other tools for auditing importers. These tools include: Commercial Enforcement Analysis & Response Team referrals, regulatory audit generated referrals, Centers of Excellence and Expertise referrals, and Quick Response Audits & Audit Surveys. Quick Response Audits & Audit Surveys are ranking amongst the most popular tools for auditors. These auditing techniques require less time than a focused assessment and have a higher cost benefit ratio for CBP Teams. So how can an importer prepare for all of this? By self-auditing of course!

Most importers have heard of CBP audits, but do not know what to expect until auditors knock at their door. Preparing for audits is as simple as getting to know ones weaknesses. Evaluating which imports represent the highest risk will allow for proper import risk management. Customs will focus on seven main points when looking at trade compliance: anti-dumping and countervailing duties, conformance with free trade agreements, tariff classifications and chapter 98, valuation, textiles, intellectual property rights and import safety. Every importer should consider the compliance of these points as crucial to their wellbeing in the eyes of CBP.

Once an importer has identified what it is that represents high risk for noncompliance, it is time to begin auditing. There is no magic number or percentage of audits which should be conducted. The frequency of the audits depends on the importer, but should be conducted at least quarterly. When auditing, it is also recommended that aside from the targeted audits, a good share of audits are conducted at random, as you never know what you may find.

The best way to get an immediate sense of the state of your CBP entries, and thus your trade, is to run and analyze ACE reports online. If you’re an Importer of Record, you have complete access to all of your trade via the CBP ACE Portal. Included in the portal are these ACE Reports. The reports are great tools to use as they are the very same reports that CBP auditors have themselves. We recommend running general ACE reports, as well specific ones, such as the antidumping and countervailing duties reports, on a monthly, quarterly, and yearly basis. An easy initial comparison to do would be to look at your current year’s and previous year’s imports, identify your top ten HTS classifications by entered value, and then audit those for highest risk of noncompliance. Review reports closely for inconsistencies in data and sudden increase in the imports of certain HTS classifications. You can also run reports on you Exports should exportation make up part of your trade as well. For more guidance on the reports and how to run them, visit the ACE Reports Training and User Guides section of the CBP website.

Besides auditing your ACE reports, it’s important to also review your internal records, SOPs, databases, and the entry documents themselves for any discrepancies. Additionally, documenting your audit process is crucial evidence that will demonstrate to CBP that the importer is conducting due diligence in its efforts to stay compliant.

Once all of your results are back from the audits, be sure to put them to good use. Auditing and then just filing the findings represents a higher risk, as Customs may find documented errors when searching through the importer’s files. Analyze your internal audit results and correct your errors in the best possible manner. Implementing and documenting these corrective measures should be part of your internal controls as well. This will better prepare you for the time when you do receive and official CBP audit.


If you have any questions regarding best practices for trade compliance, be sure to email us at compliance@cphgroupusa.com.

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