On December 8, 1993, the United States Congress enacted the Customs Modernization Act. The Act provided for "shared responsibility", meaning that importers and Customs have a mutual responsibility to comply with trade and customs laws. The Act shifted the legal responsibility for declaring the value and classification of entered merchandise to the importer. The Mod Act requires that importers use "reasonable care" in their import/export activities. As part of the implementation of the Customs Modernization Act, Customs established a trade compliance process known as "informed compliance". The process of evaluating an importers system supporting customs-related operations is called "Compliance Assessment" and is undertaken by the U.S. Customs and Border Protection Regulatory Audit Division. U.S. Customs and Border Protection has targeted major importers for compliance assessments. The firm has structured a process to assist its clients in undertaking compliance assessments before being contacted by U.S. Customs and Border Protection in order to understand fully their responsibilities and to undertake corrective actions if necessary.

Our approach differs somewhat from other firms in that we believe that Focused/Compliance Assessments/Audits can and should be substantially completed by company personnel. In this manner, the necessary activity can be structured so as to be an educational and training tool for company employees while at the same time significantly moderating the expense of the effort. It provides an opportunity to increase the depth of subject-matter knowledge and cross-train employees in the entire import/export process. As your attorneys, communications between us and information uncovered during the Compliance Assessment is protected under the Attorney-Client Privilege.

The most important task in the Compliance Assessment process is to review thoroughly the current import and export operations in preparation for a potential U.S. Customsand Border Protectionaudit. Subjects include, but are not limited to, classification, valuation, financial accounting, origin marking, invoicing standards, entry, MPF/HMF, TIB, drawback, FTZs, recordkeeping, Customs communications, CF 28/29/Protests, exports, Federal Agency interface, etc. It would also be useful to audit import entries, export document packages, and physically examine sample imported merchandise to verify classification, etc. Finally, we find that the initiation of this activity also provides a good opportunity to use the information secured to prepare an Import/Export Compliance Manual for future employee use. The existence of such a Manual is now considered by the U.S. Customs and Border Protection during its Compliance Assessments and audits, and is viewed as evidence of "reasonable care" by importers. Such a document is also structured by many firms because of changes several years ago to the Federal Sentencing Guidelines that now include import/export statutory violations.

Our method of structuring such activity is to provide the company with a good deal of basic background information, and work with the company to determine the best possible means of undertaking the activity. We provide copies of selected Compliance Assessment documents. Our normal procedure is to spend an initial day in a Seminar with key company officials reviewing the documents, discussing its contents thoroughly, and establishing a timetable for the review by company employees of the information and securing same. We believe it is essential to involve representatives from finance, purchasing/sourcing, legal, warehousing, manufacturing, and traffic/logistics. There may well be other departments of your company that would be relevant to this project and should be included in the initial meeting. During the subsequent fact-finding effort, there is normally a good deal of telephone discussions on particular issues. Memoranda can be provided on any subject matter requiring further explanation. Generally, there is at least one other meeting that occurs. Our approach provides the opportunity for company employees to undertake a good deal of the Assessment on their own, thereby, providing a positive learning experience as well as significantly reducing costs. Further, the information that is secured from this review can then be utilized to prepare an Import/Export Compliance Manual.

For more information contact Marshall Miller.

Customs has updated its Focused Assessment (FA) program kit as of October 2003. The updated kit has been posted to Customs' Web site and does not reflect major changes in the FA process. According to Customs, most changes were made to help auditors with the FA process.