Every business that engages in international trade is subject to a customs audit – a review of the company’s compliance with applicable laws and regulations governing imports and exports. Being prepared for a customs audit will not only help prevent potential penalties and fines, but also will help expedite the audit process. Here are some steps businesses can take to prepare for a customs audit.
1. Maintain Accurate Records – This is the first and foremost thing businesses should do to prepare for a customs audit. Proper record keeping is essential to demonstrate compliance with customs regulations. The record must include all relevant documentation, such as invoices, packing slips, bills of lading, and any other relevant document required by customs.
2. Review Import and Export Procedures – Import and export procedures are often set up in-house to ensure compliance with domestic and foreign customs regulations. Reviewing the procedures will help identify if it needs any improvement to reduce compliance risk.
3. Verify HTSUS and other classification codes – In the world of trade compliance, proper classification of products is crucial to ensure customs duties and taxes are paid accurately. Correct identification is essential to determine the precise tariff rate and tax, which should be paid to customs and avoid any penalties.
4. Train Employees – Transit trade can be made by many in a company, and training employees can help ensure that the handling of goods meets customs regulations and is up to date on changes in the law to eliminate compliance risk. All records of employee training should be kept available to show during the audit.
5. Conduct Internal Audits – Conducting internal audits is essential to prepare for a customs audit and demonstrate compliance with customs regulations. Identify areas where the company should focus to improve internal controls and compliance.
Being prepared for a customs audit is essential for all businesses engaged in international trade. It is essential for the company to ensure that they can maintain consistent compliance with customs regulations while remaining competitive. By following the tips mentioned above, companies can prepare for customs audits and minimize the risk of penalties and fines during the audit process.
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