Decoding the ISF Audit Process
Ensuring compliance with Importer Security Filings (ISFs) is a requirement for importers. How does the verification process by U.S. Customs actually work? Lets take a look at what happens during a CBP ISF audit;
Selection and Notification
CBP adopts a risk based approach to select importers for auditing taking into account factors such as incomplete data, inconsistencies and past compliance issues. If chosen, the importer will receive a letter from CBP requesting various documents.
The importer will be given 30 days to gather and submit the requested ISF records and supporting documents to demonstrate compliance. This may involve invoices, bills of lading, manifests and other evidence that aligns with the information provided in the ISF filings.
Review of Sufficiency
CBP will examine the submitted documents to ensure they are complete and adequate in supporting the ISF transactions. If deemed insufficient, additional documentation may be requested.
A comprehensive evaluation is conducted by comparing declared ISF data, against the source records provided. Any discrepancies, omissions, or inconsistencies will be identified during this process which can take around 2 to 3 months.
If no significant issues are discovered CBP will issue an audit report to formally close out the audit.
If significant errors or violations are identified fines may be. Further investigation may be initiated.
Importers have the option to appeal audit findings and penalties through CBPs process. They can present evidence to dispute any alleged violations but it is important to initiate the appeals within 60 days.
Maintaining records of ISF and source documents is crucial for successfully navigating the audit process.
Collaborating with a customs professional can also demonstrate diligence in case any discrepancies arise during the audit.
With preparation, an ISF audit doesn’t have to be overwhelming.
Here are some frequently asked questions about the ISF audit process;
CBP adopts a risk based approach to select importers for audits. Factors such as inconsistent ISF data, previous violations and intelligence analysis contribute to identifying potential targets for audits. Random selection is also a possibility.
Importers should provide source documents such, as invoices, packing lists and material certifications that align with the information submitted in their ISF filings. Maintaining records is crucial.
Neglecting to respond could lead to financial penalties.
Customs officers may also decide to conduct a thorough inspection of your shipments at ports, which can result in significant delays.
The importer is responsible for bearing all expenses related to the audit. This includes gathering records making copies, shipping and seeking assistance. No reimbursement is provided.
Importers have a period of 60 days starting from the date of the audit report to file an appeal contesting any penalties or violations identified during the audit. Additional evidence can be presented during the appeals process.
While maintaining ISF records helps reduce the likelihood of audits violations can still occur. Engaging legal counsel assists importers in navigating through the process of appealing audits if necessary.