The document emphasizes the importance of audit preparation for businesses involved in international trade, highlighting the potential risks and costs associated with customs audits. It outlines the benefits of being audit-ready, including compliance and the ability to absorb additional costs if an audit occurs. The document suggests conducting regular self-audits, checking with suppliers for compliance, and ensuring thorough documentation and processes are in place to mitigate potential risks.

1. TRADE COMPLIANCE HEALTH CHECK
ACHIEVING
EXECELLENCE IN
AUDIT
PREPARATION

2. Trade Compliance Health Check
Audit preparation
For businesses involved in international
trade, the supply chain and its
associated compliance processes can
be one of the most complex parts of
their business. It’s easy to overlook a
detail or two – and those might just
be the details that lead to a costly and
time-consuming Customs audit.
Why audit preparation matters
As an importer, you’re ultimately responsible for any gaps
or errors in your customs compliance process. Ensuring
accurate documentation, being diligent in your record
keeping and having all the proper processes in place will go
a long way in helping you be audit-ready.
A customs audit is serious business
In addition to the added overhead and general disruption of
an audit, the results of a Customs audit can include penalties
and costly recommendations to address gaps. Perhaps
more importantly, Customs has the right to audit and assess
fines on any infraction in your company’s imports over the
previous five years (four years in Canada). If that happens,
you could be looking at paying years’ worth of Customs fines
and the cost of rebuilding all those transaction records, from
the original purchase order to final payment. At that point,
you’re also facing the unpleasant prospect of telling your
shareholders why you’re in the red at year-end. Can your
company really afford it?
Save time and money by
preparing in advance for a
potentially costly customs audit.
How you’ll benefit
The benefits of audit preparation are obvious: The more
you do to prepare for an audit, the more compliant you’ll
be. Should an audit happen – and customs authorities have
said in recent years that they plan to audit every importer on
record – your business will be in good position to meet the
auditors’ needs, to absorb the additional costs and resource
demands, and to implement any changes, should they be
required.
Next steps
Get audit-ready
Review your compliance process to confirm that you have
appropriate systems and controls in place. Stay current
with regulations, and make sure you keep your training and
procedures current as well. Ensure that there are process
and system linkages through each department, check your
financial links, and ensure that all financial statements and
agreements are accessible.

3. www.livingstonintl.com
Check in with your vendors, carriers and suppliers
Your partners are key parts of your supply chain. Make
sure your vendors, carriers and suppliers are compliant
with all government regulations and requirements as well.
If Customs hits your suppliers with a violation, chances are
they’ll be looking your way next.
Conduct a self-audit
One of the best ways to get ready for a Customs audit is
to conduct a self-audit of your trading activities. Use an
internal audit team or an external service provider to take a
look at your processes from top to bottom. Your self-audit
should be performed at least once a year; depending on
changes in rules and regulations by Customs authorities,
you may even consider doing a mid-year audit. Changes in
your organization and the introduction of new products or
partners might also warrant the initiation of an audit.
Just as technology provides you with greater efficiencies, it
also gives regulatory agencies such as Customs the power
to audit and monitor what is moving across borders more
effectively. Rather than take the chance that you’ll never be
audited, always assume that you will. While it might require a
little extra investment of time on the part of your compliance
team, it’s worth the effort and money you’ll save in the long
run.
Contact Livingston
Contact your account executive,
write to us at simplify@livingstonintl.com
or give us a call at 1-800-837-1063