TRADE COMPLIANCE HEALTH CHECK

ACHIEVING EXECELLENCE IN AUDIT PREPARATION

Trade Compliance Health Check

Audit preparationFor businesses involved in international trade, the supply chain and its associated compliance processes can be one of the most complex parts of their business. It’s easy to overlook a detail or two – and those might just be the details that lead to a costly and time-consuming Customs audit.

Why audit preparation mattersAs an importer, you’re ultimately responsible for any gaps

or errors in your customs compliance process. Ensuring

accurate documentation, being diligent in your record

keeping and having all the proper processes in place will go

a long way in helping you be audit-ready.

A customs audit is serious businessIn addition to the added overhead and general disruption of

an audit, the results of a Customs audit can include penalties

and costly recommendations to address gaps. Perhaps

more importantly, Customs has the right to audit and assess

fines on any infraction in your company’s imports over the

previous five years (four years in Canada). If that happens,

you could be looking at paying years’ worth of Customs fines

and the cost of rebuilding all those transaction records, from

the original purchase order to final payment. At that point,

you’re also facing the unpleasant prospect of telling your

shareholders why you’re in the red at year-end. Can your

company really afford it?

Save time and money by preparing in advance for a potentially costly customs audit.

How you’ll benefitThe benefits of audit preparation are obvious: The more

you do to prepare for an audit, the more compliant you’ll

be. Should an audit happen – and customs authorities have

said in recent years that they plan to audit every importer on

record – your business will be in good position to meet the

auditors’ needs, to absorb the additional costs and resource

demands, and to implement any changes, should they be

required.

Next stepsGet audit-ready

Review your compliance process to confirm that you have

appropriate systems and controls in place. Stay current

with regulations, and make sure you keep your training and

procedures current as well. Ensure that there are process

and system linkages through each department, check your

financial links, and ensure that all financial statements and

agreements are accessible.

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Check in with your vendors, carriers and suppliers

Your partners are key parts of your supply chain. Make

sure your vendors, carriers and suppliers are compliant

with all government regulations and requirements as well.

If Customs hits your suppliers with a violation, chances are

they’ll be looking your way next.

Conduct a self-audit

One of the best ways to get ready for a Customs audit is

to conduct a self-audit of your trading activities. Use an

internal audit team or an external service provider to take a

look at your processes from top to bottom. Your self-audit

should be performed at least once a year; depending on

changes in rules and regulations by Customs authorities,

you may even consider doing a mid-year audit. Changes in

your organization and the introduction of new products or

partners might also warrant the initiation of an audit.

Just as technology provides you with greater efficiencies, it

also gives regulatory agencies such as Customs the power

to audit and monitor what is moving across borders more

effectively. Rather than take the chance that you’ll never be

audited, always assume that you will. While it might require a

little extra investment of time on the part of your compliance

team, it’s worth the effort and money you’ll save in the long

run.

Contact Livingston

Contact your account executive,

write to us at simplify@livingstonintl.com

or give us a call at 1-800-837-1063