Post-Entry Audit: What to Expect and How to Prepare -
Part 28
Audio Conversation:
Full Blog Article:
For small and midsize businesses (SMBs) involved in importing or exporting, clearing goods through U.S. Customs and Border Protection (CBP) is just the beginning. What happens after your shipment is released? One important part of the compliance journey that often catches businesses off guard is the post-entry audit.
If you’re new to global trade or still finding your footing in import/export compliance, don’t worry, we’ve got you covered. This blog breaks down what a post-entry audit is, why it happens, what to expect, and how to prepare your business so you’re not caught by surprise.
This is the twenty-eighth article in our series, Unlocking Global Markets, designed to help U.S. importers and exporters build confidence, avoid costly mistakes, and grow their businesses globally.
What Is a Post-Entry Audit?
A post-entry audit (also known as a regulatory audit or compliance assessment) is an official review by U.S. Customs and Border Protection to verify that your import declarations, documentation, and overall trade practices are accurate and compliant with customs regulations.
These audits are not random, they’re strategic. CBP selects importers based on factors like risk, transaction volume, past violations, or inconsistencies in entry filings.
Types of CBP Post-Entry Audits
- Focused Assessments (FA): These are in-depth audits that evaluate your internal controls and compliance processes, especially for larger importers or those with complex operations.
- Quick Response Audits (QRA): More targeted, these audits are designed to address specific compliance concerns such as undervaluation, misclassification, or improper use of free trade agreements.
- Audit Surveys and Reviews: Sometimes CBP starts with a simple questionnaire or review. If inconsistencies are found, they may escalate to a full audit.
If you read our earlier article on
Valuation Methods, you know that accurate valuation, classification, and country of origin declarations are critical and common triggers for post-entry audits.
Why Would CBP Audit Your Imports?
Customs wants to ensure that the U.S. government is receiving the proper revenue (duties, tariffs, taxes) and that importers are complying with U.S. trade laws. Audits are CBP’s way of verifying that importers:
- Classify products correctly (refer to Article 3: HS Codes)
- Accurately declare the value of imported goods
- Apply free trade agreements or duty relief programs correctly (refer to Article 16: Import Tariff Exemptions)
- Have proper documentation (refer to Article 5: Export Documentation)
Even honest mistakes, like using an outdated classification code or misunderstanding an Incoterm, can trigger an audit and lead to penalties if not properly addressed.
What Happens During a Post-Entry Audit?
Here’s a simplified breakdown of the process:
1.
Audit Notification - CBP will send a formal notice via mail (usually on CBP Form 29, Notice of Action) or contact you requesting records under 19 CFR Part 163 (Recordkeeping requirements).
2.
Document Request -
You’ll be asked to provide entry documentation for selected shipments, this can include:
- Commercial invoices
- Packing lists
- Bills of lading
- Importer Security Filing (ISF) records
- Proof of origin (for FTA claims)
- Classification and valuation support
- Communications with suppliers or brokers
3.
Review and Assessment - CBP auditors will evaluate the data against your filed entries. They’re looking for discrepancies in value, classification, country of origin, duty calculations, and use of special programs.
4.
Interviews and On-Site Visits (Optional) - CBP may visit your facility or interview staff responsible for trade compliance.
5.
Audit Results and Follow-Up - After their review, CBP may:
- Issue a clean report (no violations)
- Require corrective action or voluntary disclosures
- Recommend penalties or monetary assessments
- Refer cases for enforcement if fraud is suspected
How to Prepare for a Post-Entry Audit
Preparation isn’t just for when the audit notice arrives. A solid compliance foundation will protect your business long before that day comes.
1.
Know Your Data - Keep accurate records of every shipment, including the HS code used, value declared, country of origin, and basis for any trade program benefits claimed. Documentation should be organized and easy to retrieve.
2.
Implement Internal Controls - Designate a compliance lead or team, even if it’s outsourced, to:
- Review entries regularly
- Conduct internal audits
- Reconcile invoices with entry data
- Verify broker performance
If you haven’t already, consider using Trade Compliance Software to manage and automate these processes.
3.
Understand Recordkeeping Rules
- Under CBP regulations, importers must keep import-related records for five years from the date of entry. This includes commercial invoices, entry summaries, ruling letters, FTA certificates, and broker communications.
4.
Train Your Staff - Educate your team about classification, Incoterms, country of origin marking, and documentation. Refer back to our earlier blogs like Incoterms and Country of Origin Marking.
5.
Be Proactive with Discrepancies
- Found a mistake? Don’t wait for CBP to uncover it. File a Post Summary Correction (PSC) or prior disclosure to limit potential penalties and show good faith.
How a U.S. Customs Broker Can Help
A licensed U.S. customs broker can be your greatest asset for small businesses without an in-house compliance team. Brokers don’t just help clear your shipments, they are compliance experts who:
- Ensure correct classification and valuation
- Track updates to tariffs and regulations
- File corrections and responses during audits
- Maintain audit-ready documentation
- Guide you through prior disclosures, if needed
If you’re worried about navigating an audit or preventing one, a good broker can help you sleep at night.
Summary: Key Takeaways
- A post-entry audit is a review by CBP to ensure import compliance after goods have cleared customs.
- Common audit triggers include classification errors, valuation issues, and misuse of trade programs.
- Preparation includes strong recordkeeping, internal controls, compliance training, and regular audits.
- Trade compliance software and professional brokers can reduce your audit risk and simplify preparation.
- A proactive approach, including prior disclosures and correction filings, can reduce penalties and show good faith.
Frequently Asked Questions (FAQs)
Q1:
How likely is my small business to be audited by CBP?
A1: While most audits target higher-volume importers, small businesses can still be audited, especially if errors, inconsistencies, or red flags appear in your entries. Staying compliant reduces your risk.
Q2: What if I realize I made a mistake after I’ve filed an entry?
A2: Don’t panic. You can file a Post Summary Correction (PSC) to fix errors or submit a prior disclosure if the mistake may be material. Doing this before an audit starts can reduce or eliminate penalties.
Q3: Can I handle a post-entry audit without a customs broker?
A3: It’s possible, but not recommended, especially for businesses new to global trade. Brokers understand CBP’s expectations and can manage document requests, communications, and corrective actions on your behalf.
Coming Up Next…
U.S.-UK Trade Post-Brexit: Understanding the New Rules and Opportunities
Trade between the U.S. and the United Kingdom has entered a new chapter. In our next blog, we’ll break down the post-Brexit trade landscape, explore emerging opportunities for U.S. businesses, and share practical tips to make the most of this historic shift.
🎧🎙️
Want to hear more?
Stay informed and inspired through two powerful channels:
- Borders & Bourbon: A Global Trade Podcast – Pour yourself a glass and join us for real talk on international trade. This show delivers solution-driven insights tailored for small businesses navigating the complexities of global markets. Available on all major streaming platforms.
- Global Trade Navigator – Prefer to read or listen to quick, practical tips? Explore our blog series or tune into the companion podcast on Spotify, where we break down each article to help you chart a smarter course through import/export compliance.
No matter your style, sip and listen, or scroll and learn, we’ve got your global trade journey covered.
References
- U.S. Customs and Border Protection, Focused Assessment Program - Link
- 19 CFR Part 163 – Recordkeeping Electronic Code of Federal Regulations (eCFR) - Link
- CBP’s Regulatory Audit Division Overview, CBP Audit Info - Link
If you're curious to see how we can help, please visit our website http://magneticprecision.com/. For inquiries and questions, contact us at inquiries@magneticprecision.com.
Stay tuned for more insights as we continue our journey to mastering global trade compliance!
