Spring Cleaning: Tips on How to Prepare for an Audit

Spring Cleaning: Tips on How to Prepare for an Audit

With tax season still fresh on everyone’s mind, now is the perfect time to test your importer health. When it comes to taxes, most businesses scrutinize their internal processes every year to help keep things running smoothly and avoid the worst effects of a potential audit - often going so far as to hire an outside consultant to serve as a kind of test auditor. The same should be true when it comes to your dealings with Customs. After all, like its sister agency, the Internal Revenue Service, Customs and Border Protection are also revenue collecting agencies, and assessments are part of their toolkit.

Your company’s processes, personnel, and documentation are vital parts of your international trade, and a routine inspection of those elements can not only reveal lapses and mistakes but can also show you missed opportunities. Making the decision to check your importer health every year can even help keep you safe from fraudulent activity. We’ve recently written about a company that was affected by corporate identity theft in Canada and, in part due to their lack of routine care, had to pay significant funds to battle it out in court. The same level of consideration you put into your tax preparedness can go a long way to spotting that kind of illicit activity early on. 

There are many benefits to doing both your tax preparations and your import health check at the same time in a top-to-bottom spring cleaning. Today, we will cover some things to know, along with industry tips that can help you as you get out the mop and bucket.

Make an Assessment of Your Importing Records and Documents

In the hypothetical worst-case scenario where you have found yourself the subject of a Focused Assessment (FA) from CBP, the first step should be to reach out to an expert who will guide you towards the relevant information and documentation that will be vital to your FA.

  • A vital first step of your spring cleaning should be knowing where your key documents are, who is responsible for them, and the nature of their contents. Even with guidance, having an idea of what will be relevant to CBP and knowing where to find it is a great way to start and will save you a lot of time and effort down the road. 
  • As a reminder, depending on the circumstances surrounding it, CBP can request documentation relevant to their interest as far back as five years, so maintaining rigorous records for at least that long is an excellent way to keep yourself flexible in the face of a Focused Assessment.

Even well before you are flagged for an assessment, there are a few ways to know what is relevant to CBP. The first is the questionnaire they send as part of their assessment. It is a publicly accessible document, and with it, you could even run through your own internal audit as a form of preparation. In fact, if you are working with PCB, we can run the sample assessment for you, utilizing the records we already have as your broker and flagging potential issues on the horizon. Again, vitally, this sample assessment has to be a proactive measure as once you’ve been flagged for an FA all we can do is help you through it. The benefit of this preemptive approach is that not only can we spot issues right away, but we will also have the knowledge and resources required to resolve them.

Policies, Processes, and People 

Importing is a fast-moving industry, and new policies and regulations are constantly being introduced. It can be worthwhile to use this yearly clean-up to keep yourself informed of any new regulations or requirements for your industry and ensure that your team is equally refreshed. 

  • A team-wide refresher on your import regulations and policies can help you highlight any lapses in compliance that may be lagging behind. It can also help direct your efforts when working to prepare for a potential audit. 
  • This refresher can also serve as a golden opportunity to keep everyone on your team in the same place in terms of importer knowledge - making sure that no part of this exists on just one person’s desk.

Of course, any new and applicable regulations would be included in a PCB sample assessment, but there is another service we provide that may also make this step simpler: Personalized Instruction. We can build and customize a live or recorded presentation bespoke to your business that includes all the rules, regulations, and best practices your team needs to operate effectively and within CBP compliance. For those not looking to reinvent the wheel with a bespoke presentation, we also offer standardized, free webinars that are so comprehensive in their guidance they grant NEI points to participating Certified Customs Specialist designates. 

Leave it to the Professionals

While it is always an option to put on some gloves and scrub your business down yourself, there’s nothing quite like a ‘professional cleaner’ when it comes to audit preparation and planning.

  • One of the surest ways to prepare for an FA is with a professional sample assessment from our team at PCB. As industry experts with decades of experience, we examine every aspect of your import processes, from the importing assessment records to regulatory compliance and everything in between. 
  • Our team knows what to look for, typical pitfalls, and perhaps most importantly, how to fix issues we find quickly and effectively.

Just like you might bring in a professional accountant to ensure your books are ready for tax season, a sample assessment is a great way to move into the warm months with confidence. 

The expression ‘an ounce of prevention is worth a pound of cure’ is profoundly apt when it comes to audit preparation. The more consistently you examine your processes, protocols, and people, the more likely you are to be prepared should CBP decide to audit your imports in an official capacity. 

It is also worth mentioning that one of the best ways to avoid audits entirely is to stay compliant year after year. One of the largest determining factors in choosing businesses to audit is their history of infractions. 

To get started with a sample assessment, personalized instruction, or just to ask some questions about what you might expect in the face of an FA, please get in touch with our team today. We’re here to help get your business cleaned up and looking its best in record time!

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About Author
Breanna Leininger

Breanna has been in the industry since 2004 and has dealt with clearances and compliance concerns for a multitude of commodities for all ports of entry and all modes of transportation. She has a Bachelors in Communications, Bachelors in Political Science & Government, is a Licensed Customs Broker as well as Certified Customs Specialist. Breanna has been asked to be the speaker in a variety of events including the BC Agriculture Show, Doing Business in the US seminar and has been a contributor to Small Business BC publications. She was recently nominated for the NCBFAA Government Affairs Conference Emerging Leaders and Mentors by the NBCBA. She participates in the Northern Border Customs Brokers Association and the NCBFAA annual conferences in Washington, DC. Breanna has a deep passion for politics, global affairs, and how communication shapes policy and international business relationships. She feels very fortunate to work in an industry that allows her to take part in how policy impacts the global economy and domestic businesses of all shapes and sizes.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.
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