How to Survive a Canadian Customs Audit

What to expect from a CBSA customs audit

It lands on your desk with a thud and your heart sinks. You just received a Trade Compliance Verification notification letter from the CBSA. You are now under a customs audit. Even the most compliance–minded importers dread this day, but it need not be the stuff of nightmares.

6 tips to survive a customs audit

  1. Assign a project manager to oversee the process.
    This person should be knowledgeable about your business, be a good communicator, and be capable of strictly managing deadlines.
  2. Assemble and review requested documentation and submit them by the deadline.
    Importers are required to maintain a complete set of records including customs accounting documents and copies of all purchase orders; invoices; letters of credit; records of payment; certificates of origin; buying agency agreements; trademark agreements; freight invoices; customs rulings; end–use certificates; and accounting documents relating to the purchase, value for duty, origin, marking, end-use, and disposal of the goods.

    The type of documents requested will depend on the type of audit the CBSA is conducting. Carefully review the requested documentation with your customs broker prior to submitting them to the CBSA to identify any potential issues in advance. Have strategy discussions with your customs service provider early on in the process.

    Do not procrastinate—give yourself plenty of time to hunt down any documentation you may be missing. Do not forget to complete the form authorizing the CBSA to share correspondence with your customs broker/service provider, otherwise they will not receive a copy of the audit report, penalties, etc.
  3. Respond to any questions from CBSA honestly and completely, but keep it succinct and on-point.
    Avoid oversharing, which can just lead to additional questions and confuse the matter. Answer the question and just stop talking. This can be harder than it sounds. You may wish to have your customs broker respond to any inquiries on your behalf.
  4. Review the findings in the Interim report with your broker.
    You have an opportunity to submit comments on this interim decision. This is your best opportunity to clear up any misunderstandings or provide further documentation or arguments if you disagree with the auditor’s findings.
  5. Review the final report and identify any corrections that may be required.
    The final audit report will identify any errors and indicate the correction period, a maximum of four years, though this may be shorter in certain circumstances. Corrections are required not only for the sampled entries, but also for all transactions affected by the same issue. You may want to engage your customs broker to help identify which entries require correction.
  6. File your corrections within 90 days of the date of the final report.
    Any required corrections not filed within the 90-day window are subject to Administrative Monetary Penalty System (AMPS) penalties. In the event you continue to disagree with the auditor’s findings, speak with your broker or customs service provider about grounds for an appeal.

Next steps: Start a discussion about your compliance risks

Of course, your best defense is being compliant in the first place. It’s a good idea to discuss your compliance risks and best practices with your trusted customs advisor before that audit notification letter arrives. Connect with one of our trade policy experts to learn more.