CBP Audit Preparation

Jennifer Diaz was recently published in Bloomberg Law!

Editor’s Note: CBP’s modern enforcement strategy extends well beyond reviewing individual entries at the port of entry. The agency has broad authority to review an importer’s compliance at any point after entry, and can do so months or even years after the goods were imported. Through audits, assessments, and importer site visits, the agency evaluates whether importers have established effective internal controls and are exercising the “reasonable care“ required under U.S. customs law. These reviews may be triggered by a variety of factors including identified compliance risks, anomalies in import data, or as part of routine enforcement initiatives.

Receiving notice of a CBP review can understandably create concern within an organization. However, many of these reviews are not initiated because CBP has concluded that violations have occurred; rather, they are designed to evaluate an importer’s compliance systems, identify areas of risk, and determine whether additional review or corrective action is warranted.

Companies that understand the purpose of these reviews and prepare before receiving notice are generally in a far stronger position than those attempting to organize years of customs records after CBP has already initiated contact.

CBP’s Audit and Assessment Tools

Not every CBP review follows the same process. The scope, objectives, and level of scrutiny vary depending on the type of review being conducted. While each review mechanism serves a distinct purpose, findings from an initial inquiry or assessment may prompt CBP to expand its review to a more comprehensive audit.

Informed Compliance Notification Letters

In lieu of initiating an audit, CBP may also issue informed compliance notification letters to importers. The receipt of an informed compliance notification letter means that CBP has identified issues with the importer’s transactions and is “strongly considering” the

company for a comprehensive audit. If an importer receives this letter, they should immediately conduct an internal risk assessment, review internal controls, and consider filing a prior disclosure (PD).

Import Specialist Visit

Importer site visits have become an increasingly valuable tool for CBP. Although often less formal than a Focused Assessment, these visits provide CBP with an opportunity to observe how an importer’s compliance program functions in practice. A variety of factors may prompt CBP to conduct an import specialist visit, including unusual import patterns, significant increases in import volume or value, discrepancies identified during entry review, prior compliance issues, or products subject to heightened enforcement initiatives.

A site visit may include discussions with compliance personnel, management, purchasing teams, logistics staff, finance departments, and customs brokers. CBP may review internal procedures, examine supporting documentation, observe recordkeeping practices, and seek to understand how customs decisions are made throughout the organization.

These visits frequently provide context that cannot be obtained from reviewing entry documents alone. Importers are typically contacted before an import specialist visit and may be given advance notice of the date, scope, and information CBP intends to review.

Risk Analysis and Survey Assessment (RASA)

A Risk Analysis and Survey Assessment (RASA) is generally a targeted review designed to help CBP better understand a company’s import activities and evaluate potential compliance risks. Rather than conducting a comprehensive examination of every aspect of an importer’s operations, CBP may focus on a particular issue, commodity, import program, or area of concern identified through its risk analysis.

During a RASA, CBP may request documents, interview company personnel, review selected entries, and assess internal procedures related to the specific issue under review. Although narrower in scope than a full audit, findings made during a RASA may influence whether CBP determines that additional examination is appropriate.

Focused Assessment

A Focused Assessment is a more comprehensive audit of an importer’s customs compliance program. Unlike RASAs, Focused Assessments target multiple customs compliance areas. CBP seeks to evaluate the effectiveness of an importer’s internal controls and whether those controls are sufficient to ensure compliance with customs laws and regulations.

CBP examines the systems companies use to make customs decisions, including procedures governing tariff classification, customs valuation, country of origin determinations, free trade agreement claims, antidumping and countervailing duty compliance, recordkeeping, and broker oversight.

Rather than focusing on a single issue, CBP seeks to determine whether it can reasonably rely on the company’s internal compliance processes going forward. To do so, it may request documents, interview company personnel, review selected entries, and assess internal procedures.

Potential Audit Outcomes

The initiation of a CBP review does not necessarily mean the agency has concluded that a violation has occurred. Whether through an import specialist visit, Regulatory Audit, Risk Analysis and Survey Assessment (RASA), Focused Assessment, or another compliance review, CBP’s objective is often to evaluate an importer’s compliance systems, understand its operations, and assess whether it is exercising reasonable care. If the review identifies classification errors, valuation issues, country of origin concerns, recordkeeping deficiencies, or other compliance issues, CBP may expand the scope of its review, request additional information, assess additional duties, pursue penalties where authorized by law, or refer the matter for further enforcement action. The outcome ultimately depends on the nature, scope, and significance of the issues identified.

Preparing Before CBP Makes Contact

The most effective audit preparation begins long before a company receives notice from CBP. Importers should periodically evaluate whether their compliance program accurately reflects their current business operations and whether documented procedures are consistently followed throughout the organization.

The following areas deserve particular attention.

Awareness of Risk Factors

CBP uses a risk-based approach when determining which importers to review, meaning there is rarely a single event that triggers an audit. Instead, the agency considers a variety of factors, including high import volumes or duty exposure, significant changes in import patterns, products subject to heightened trade enforcement, prior compliance issues, recurring classification or valuation discrepancies, inconsistencies in customs filings, referrals from other CBP offices, and information identified through data analytics. While the presence of one or more of these factors does not necessarily mean an audit will occur, importers with effective internal controls, well-documented compliance procedures, and a demonstrated commitment to exercising reasonable care are generally better positioned to respond if CBP initiates a review.

Review of Internal Controls

CBP places significant emphasis on internal controls because they demonstrate whether an importer has established processes designed to ensure compliance and is using “reasonable care” in its customs operations. Companies should clearly identify the processes for tariff classification, valuation decisions, country of origin determinations, free trade agreement claims, broker oversight, record retention, and responses to government inquiries. Responsibilities should be documented and consistently applied across business units. A strong internal controls program includes written procedures, clearly defined employee roles, periodic compliance reviews including periodic post-entry self-audits, employee training, management oversight, and processes for correcting errors.

If procedures exist only through institutional knowledge rather than written policies, they should be formalized before an audit occurs.

Validate Tariff Classification

Classification errors remain one of the most common sources of customs exposure. Importers should periodically review classifications for their highest-volume and highest-value products, particularly when products evolve, new models are introduced, or tariff schedules are amended. Importers should designate an internal owner for tariff classifications, make a written record explaining why each classification was selected, review classifications whenever a product changes, and periodically reconcile broker filings against internal records. Supporting documentation, including engineering specifications, product descriptions, binding rulings, and classification analyses, should be readily available.

Companies should also confirm that customs brokers are using current classifications and receiving updated instructions when changes occur.

Evaluate Customs Valuation

Customs valuation often presents complex compliance issues that extend beyond the commercial invoice.

Companies should periodically review whether assists, royalties, license fees, commissions, related party considerations, rebates, and post-importation payments may affect declared customs value. Transactions involving related parties should also be carefully evaluated to ensure an arms’ length value is reported to CBP and that appropriate documentation supports the declared value.

Confirm Country of Origin Determinations

Country of origin analyses have become increasingly significant as importers navigate free trade agreements, Section 301 and 232 tariffs, forced labor enforcement, and country-specific import restrictions.

Importers should ensure they maintain documentation supporting origin determinations, including substantial transformation analyses, supplier certifications, manufacturing information, and supporting production records where appropriate.

Review Trade Remedy Compliance

Today’s enforcement environment requires importers to evaluate more than basic customs requirements.

Companies should periodically assess compliance procedures relating to antidumping and countervailing duties, Section 232 and Section 301 tariffs, quota requirements, partner government agency regulations, and forced labor restrictions under the Uyghur Forced Labor Prevention Act.

These areas often involve evolving regulatory requirements and increased enforcement attention.

Test Recordkeeping Practices

An effective compliance program depends on complete and accessible records.

Importers should verify they can promptly retrieve commercial invoices, purchase orders, packing lists, bills of lading, customs entry documentation, broker communications, payment records, origin documentation, valuation support, and correspondence relating to import decisions.

Difficulty locating records during an audit may itself become an area of concern, as all importers are subject to five-year recordkeeping requirements.

Conduct Internal Entry Reviews

Periodic internal audits can identify compliance issues before CBP does.

Companies should select representative samples of import entries and compare commercial documentation with CBP entry data to verify tariff classifications, declared values, origin claims, duty calculations, and partner government agency filings.

Where discrepancies are identified, importers should investigate the underlying cause and determine whether corrective action is appropriate.

Evaluate Customs Broker Oversight

Although customs brokers play a critical role in the import process, responsibility for compliance ultimately remains with the importer.

Companies should periodically review broker instructions, standard operating procedures, communication protocols, and quality control processes to ensure brokers receive complete and accurate information necessary to prepare customs entries correctly.

Train Personnel

Compliance programs are only as effective as the employees implementing them.

Personnel involved in purchasing, sourcing, logistics, finance, customs compliance, and legal functions should understand their responsibilities, recognize potential customs issues, and know how concerns should be escalated within the organization.

Cross-functional communication is essential for customs compliance in general, and often becomes particularly important during a CBP review.

Responding to a CBP Audit or Assessment

Once CBP initiates an audit, assessment, or site visit, organizations should establish a coordinated response process.

Many companies benefit from designating a central point of contact responsible for coordinating communications with CBP, organizing document productions, tracking deadlines, and ensuring responses are consistent across departments.

Legal counsel can also help evaluate document requests, preserve rights and privileges where appropriate (particularly with respect to whether any prior disclosures should be filed), and assist in developing an organized response strategy that accurately addresses CBP’s inquiries while avoiding unnecessary confusion or inconsistent statements.

Preparation frequently determines whether an audit proceeds efficiently or becomes significantly more burdensome.