Customs Service Compliance Assessments of Selected Importers

Pursuant to a congressional request, GAO provided information on how the Customs Service's Office of Regulatory Audit is conducting compliance assessment audits in the context of the Customs Service Modernization Act, focusing on: (1) procedures established by the act; and (2) Customs' policies and procedures for conducting the audits to identify any problems that might warrant GAO's further review.

GAO noted that: (1) on the basis of the data GAO reviewed, Customs' Office of Regulatory Audit appeared to have generally complied with: (a) the section of the Modernization Act that addresses compliance audits; and (b) most of its internal policies and procedures; (2) not all of the audits that GAO reviewed were completed within the timeframes defined by Customs' guidance; (3) however, for the audits that GAO reviewed, the importers often contributed to some of the additional time required to complete the audits; (4) because GAO noted no serious problems concerning Customs' compliance with the act or its policies and procedures, GAO does not believe that any further work is warranted in that area at this time; (5) GAO's review of 25 cases closed in New York and Chicago indicated that these field offices were following procedures established by the act; (6) as required by the act, in all 25 cases, the Office of Regulatory Audit: (a) informed importers of upcoming audits; (b) provided importers an opportunity for an entrance conference; (c) provided importers the opportunity for a formal exit conference; and (d) provided importers a formal written report of the results of the audit; (7) the act also requires Customs to inform importers of the estimated time it would take to complete an audit; (8) during the case file review, GAO found evidence that Customs provided time estimates to importers in 12 of the 25 cases; (9) however, neither the act nor Customs specifically requires that the provision of this information be documented, so more importers may have been informed than the 12 cases for which GAO found documentation; (10) when the new compliance assessment program was initiated in October 1995, Customs established a target of 6 months and 1,000 staff hours to complete each audit; (11) after completing 63 compliance assessment audits, the Office of Regulatory Audit concluded that the process was taking considerably longer than it had initially estimated; (12) subsequently, in November 1997, Customs targeted 9 months for the cycle time and 1,500 staff hours for conducting each audit; (13) for GAO's analysis, it used the standard of 9 months and 1,500 hours for the cases GAO reviewed in the two field offices; (14) the median number of months elapsed and the median staff hours used to complete the compliance assessment audits exceeded Customs' target by 9 months and 209 hours respectively; and (15) GAO's review of the case files suggested that importers often contributed to the delays in completing the compliance audits.