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Summertime is the Perfect Time for an Export Compliance Checkup
8/21/2006 - by Catherine J. Petersen

In summer, I love to create checklists of things to do. Since we only have 9.23 weeks of summer in Minnesota, all the items that I’ve put off because of cold weather are on the summertime to-do list.

The following list does not include mowing the lawn, painting the house, cleaning out the garage, or washing the windows (which are all on my personal list). This list is my compliance checklist, which companies should regularly review to ensure they aren’t “out of compliance.”

Answer the following questions to see if more compliance work needs to be done at your company.

• Are customer service and sales checking your international customers, banks, and forwarders’ names and addresses against the restricted party lists at the Bureau of Industry and Security (BIS) website or through a specific service?

  • NO indicates out of compliance.

  • I DON’T KNOW indicates out of compliance.

  • YES without printed proof of transaction screening indicates out of compliance.

• Does customer service or shipping use a Schedule B cheat sheet of three or four Schedule B code numbers?

  • YES indicates out of compliance.

• Is the NAFTA Certificate of Origin being completed and signed by someone such as personnel at the loading dock or receiving rather than the Export Manager or a Finance Team Lead (Controller or CFO)?

  • YES indicates out of compliance.

• Is training for current export personnel done by the person leaving the job?

  • YES indicates out of compliance.

• Has formal export training by an external or internal expert been provided in the past two years?

  • NO indicates out of compliance.

• Does your firm’s ERP system generate documentation that identifies your products by the: (1) Country of origin, (2) Schedule B or Harmonized Tariff Schedule Code, (3) Value and currency, and (4) A description that goes beyond model or item number and can be understood by a non-employee?

  • NO indicates out of compliance.

• Does your firm regularly have shipments held up by customs at destination or at the Canadian or Mexican border?

  • YES indicates out of compliance.

• Does your foreign customer regularly advise you of the “correct” Harmonized Tariff Schedule number of Schedule B code number, and ask that you provide updated documentation with his numbers?

  • YES indicates out of compliance.

   

• Frequently, your firm ships samples or replacement parts with an invoice that states the value is $1, $5 or $10 when the true value is much more; you’re just helping out the customer so they don’t have to pay any duty.

  • YES indicates out of compliance.

This checklist is designed to help you potential compliance issues; it is not a definitive source that your firm has a problem. However, if your answers to one or more of the questions on this list indicates that you may be out of compliance, you should review your export program, evaluate compliance, and determine what steps will help you avoid unexpected costs. If your firm is publicly traded and subject to Sarbanes-Oxley, these areas become even more important to your firm.