Sunday, July 17, 2011

Customs and Border Protection Updates ISA

Customs and Border Protection has posted an updated Importer Self Assessment Memorandum of Understanding. You can read that document here.

I don;t want to sound like a curmudgeon; I am at least two years away from that status. But, I have long had questions about the value of ISA participation. Looking at this MOU, the ISA member agrees to a number of things including:
  • Agreeing to comply with applicable CBP laws and regulations
  • Perform annual risk assessments
  • Make appropriate disclosures
  • Maintain results of testing for three years and make test information available to CBP upon request
  • Maintain an audit trail from financial records to CBP declarations, or an alternate system that ensures accurate values are reported to CBP
So, the ISA member has to perform annual testing and maintain the records for review by CBP. 

An importer that is not in ISA but behaves as if it were would undertake annual (or more often) risk assessments. Those reports, however, if done at the direction of counsel, would be privileged against disclosure to Customs. Further, the company could decide what to disclose to Customs. A company that is careful and interested in compliance would make disclosures to protect itself from penalties and to ensure that it has paid the appropriate amount of duties to the U.S. Further, a careful and compliant company is going to maintain records in accordance with the law.

It seems to me that ISA members have agreed to give up the flexibility that goes with internal controls. The main benefit for this undertaking is to be removed from the random audit pool. That is true and a valuable benefit. But, importers should keep in mind that ISA membership does not remove them the responsibility of responding to a so-called Quick Response Audit. Nor does it mean that Customs and Border could not launch a full-blown audit if it sees a reason to do so. And, the MOU specifically states that ISA members are not immune from penalty liability (although membership may be taken into consideration in setting penalty amounts).

So, I have a question for ISA members out there: Is it worth it? If so, how?

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