US Customs to start new Focused Assessments

June 2001

For those companies who are not currently undergoing a CAT (Compliance Assessment Team) audit and have not yet been notified by US Customs that a CAT audit will take place, the rules for audits will be changing. CAT audits will be replaced by FA (Focused Assessments) audits starting October 1, 2001. The emphasis of FAs is for importers to demonstrate to US Customs that their internal controls are adequate to meet the requirements of reasonable care. If US Customs is satisfied that this is the case, then it will not be necessary to conduct transnational testing of the importers' actual imports to determine the number and nature of actual errors which have occurred. Importers found to have adequate compliance systems will be subject to fewer US Customs inspections of its shipments.

The significance of this change is that there is now even more of an incentive for importers to develop and implement procedures for how they (and their brokers) import goods. The areas tested under FAs will continue to be largely the same as under CATs: value, classification, GSP, NAFTA, antidumping/countervailing, quota, etc. The difference is how they are tested. Now, Customs will review internal controls before-and possibly instead of-transnational testing. Even more under FAs than under CATs, an importer's first and best line of defense against liability to US Customs is to have robust procedures for how it imports its products into the U.S. If, however, US Customs finds that the importer's internal controls are not adequate to assure the importer's compliance with US Customs laws and regulations, the importer may be designated high-risk. US Customs will then sample actual import entries to determine the importer's level of noncompliance and what are the appropriate consequences, such as penalties and increased inspections.