How to prepare for a Customs audit? Customs compliance audit can be stressful. Customs officers will be in your building inspecting your documents and goods. Let see how to prepare for such an event.
From controls at the border to on-site audits
Customs controls increasingly move away from the border and into business premises. As a result, Customs audits have become the mechanism to ensure traders comply with Customs regulations. Businesses should therefore plan ahead of time to ensure the audit runs smoothly.
Sound compliance processes ensure that customs obligations are met and international transactions are compliant with customs law. Furthermore, using Best Practices will make the process easier and more fluid.
The Audit-Trail
Customs officers might ask to see paperworks for transactions that are two or three years old. These documents might be filed away in a box, somewhere in the archive, in an old format data file. In case of an audit, gathering these documents can be time consuming and cumbersome. Meeting record-keeping obligations is part of any customs laws but filing paperwork, documentary evidences, electronic data in a methodical audit-trail is a global trade best practice that will save time during an audit. Logging transactions, verifying the information, filing documents and data is at the core of the definition of Customs compliance. To prepare for a Customs audit you must start with accurate information and record-keeping.
Customs on-site inspection/audit
During an audit, Customs officer can carry out any or all of the following:
- Inspect goods and take samples to help classify and identify the goods;
- Detain or seize goods found for transaction that are in violation of customs law;
- Mark goods, documents or items to show we’ve inspected them
- Inspect the documents relating to customs and international trade;
- Check the customs approvals, authorisations, registration, licence. Review how the business comply with the terms of the authorisations;
- Ask for information about goods or services in the international supply chain that sell or buy;
- Examine the business records such as accounts, bank records, import and export paperwork, contracts, good specifications, other business documents;
- Check the details of sales and purchases in your records. Ensure that your have correctly applied the customs treatment. For instance, to check the origin of the goods
- Inspect the premises and any areas of the business specific to certain approval, authorisation, licence or registration such as a customs warehouse area.
- Ask for your help when carrying out a physical inspection
So how to prepare for a Customs audit? here is some tips from our team of experts.
Prepare your team, involve all business departments
- Customs audits can be extremely disruptive to the business because they absorb time and resources. Prepare for the disruption. For instance, re-allocate work so staff can focus on working on the audit.
- Ensure you allocate staff to the audit to support Customs. The meeting with Customs itself might last a full day or more. Following the meeting your team might have a list of information to provide that might take time to collect such as old invoices from the archive or old customs declarations.
- Involve all departments. All business functions must be ready to support the audit. For instance, there might be a restricted access to your warehouse delaying deliveries, the sales team might have to report on specific transactions, finance might be asked about payments. IT might have to access an old system to extract data. Duty reliefs and duty saving mechanisms affect most department. Therefore, every department must have someone ready to answer questions and take actions.
- You will have a time limit to provide this information. This might happen when your team is already busy responding to a tender or dealing with a crisis so in some cases you might need to hire temporary staff.
Prepare your records
- Build your record keeping for compliance: ensure you have a full audit trail linking the entire import or export transaction from initial enquiry to payment.
- For imports, an audit-trail can show: procurement enquiries, purchase orders/contract, delivery notes, transport document, customs import declaration and if applicable authorisations, stock records, supplier’s invoices, bank payment to the supplier.
- For exports, an audit trail can show: sales enquiries, purchase orders/contract, delivery notes, transport document, customs export declaration and if applicable authorisations, stock records, customer’s invoices, customer’s payment.
- Ensure you can identify in your records any transaction from a customs entry number (customs declaration number). That way, when provided with a list of entry numbers you be able to quickly identify the transaction and locate the documents.
- Run internal audits to stress-test your system or get in touch and we’ll run the review for you for a fixed fee: info@alegrant.com.
- For help with Customs audits, at home and abroad, login to your alegrant account (or create an account to join us) and talk to one of our Customs experts, on the ground, in 25 countries.
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