Post-Clearance Audits at the CBSA
Outline
Trade Overview Trade Compliance
Trade Compliance Verifications Priority Approval Committee Verification Priorities
Trade Overview • Canada Border Services Agency (CBSA) carries out its mission of managing access of people and goods to and from Canada by delivering various trade-related programs administered by regional and Headquarters’ (HQ) offices. • Programs we administer and work we perform support Canadian businesses and help protect our economy. • We complete verifications, audits and reassessments and provide advice and guidance to importers, exporters and stakeholders.
Trade Compliance • CBSA administers a robust trade compliance program that verifies tariff classification, origin and valuation of goods. • Agency focuses on areas or businesses where compliance issues need attention. • CBSA maintains integrity of origin and valuation programs to support competitiveness of industries. • Agency ensures that government’s economic objectives for Canadian businesses are met through proper classification of goods.
Trade Compliance Verifications • Trade compliance verifications are conducted through desk audits or on-site visits. • Specific importers, exporters, goods or industries may be selected for random or targeted verifications. • When non-compliance is found for verified samples, importers must file corrections for importations of same or similar goods within a period of up to four years. • Escalating penalties may be applied as a corrective measure in cases revealing non-compliance.
Randomly-Selected Verifications • Random verifications based on non-risked selection of importers where samples are selected from a statistically-sound perspective. • Main goals are to measure compliance rate for trade programs and revenue loss for Government of Canada. • Random verifications can be used for risk assessment, revenue assessment and promoting voluntary compliance. • Multiple selection of same importer over the years should not be interpreted as a lack of confidence in that particular importer.
Targeted Verification Priorities • Targeted verification priorities are based on a selection of importers or exporters and on the impact of non-compliance for revenue, national security and/or health and safety. • Main goals of verification priorities are to: identify and address inherent weaknesses within trade programs; engage stakeholders in the management of risks related to trade programs; keep stakeholders informed of our activities and their ensuing results; and report on and monitor verification priorities’ results.
Verification Priority Process
Risk Identification
• Referrals from internal or external sources
Priority Submissions
• Prepared by the Regions or Headquarters
Priority Approval Committee (PAC)
• Submissions presented to PAC; • Once approved, issue becomes a verification priority.
Priority Approval Committee • The Priority Approval Committee (PAC) reviews regional and HQ priority submissions for purposes of establishing verification priorities to be actioned in each regional compliance verification office.
• All members are representatives of CBSA’s management cadre with decision-making authority. • Committee meetings are being held once a month.
PAC Key Responsibilities • Review priority submissions and accept or refuse submissions based on the impact of non-compliance. • Once a priority submission has been approved as a verification priority, generate high-quality trade compliance verification cases that best utilize regional resources and will affect trade compliance in the desired fashion.
Priority Submission • The priority submission document describes the goods at issue, classification number(s), target period and trade program under review. • The trade compliance issue is explained and information on related previous verifications is provided. • The impact of non-compliance is determined (e.g. revenue loss, health and safety, national security). • The duty at risk is calculated for a period of up to four years after the goods have been accounted for.
Priority Submission (cont.) • A risk matrix is utilized to identify the risk ranking category (e.g. acceptable, undesirable, unacceptable). • The risk matrix combines the impact of noncompliance (duty at risk) and the likelihood of the risk to occur (rate of non-compliance based on previous related verifications).
• Finally, a list of targeted importers/exporters is provided.
Identifying Targets • For PAC-approved verification priorities, companies are targeted based on: importers’ or exporters’ volumes of trade in goods bearing significant inherent risk; prior compliance history, such as previous verification activity; importers’ or exporters’ activities, lines of products, etc. • Once cases are completed, verification results are analyzed to determine efficiency of targeting and following steps. • If warranted, a second round of verifications could be released with new companies targeted for verification.
Conclusion • Trade compliance verifications are an important tool that the CBSA utilizes to ensure compliance with trade laws. • Verifications ensure that importers are correctly paying their customs duty and tax obligations. • Verification Priorities approved by the PAC allows the Agency to identify and mitigate risks, and estimate degree to which importers are complying with their trade obligations. • Targeted verification priorities have been the Agency’s most resultant workload (in terms of assessment) and will continue to expand as we provide greater emphasis on developing priorities.