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Canadian Importers Association

Systems Linkages Under Customs Self-Assessment

by Robert Armstrong

As a result of the Customs Blueprint consultative process, importers will have a new option to streamline their customs process. Revenue Canada, Customs and Trade Administration, have referred to this new program as Customs Self-Assessment (CSA).

Members of the Canadian Importers Association Inc. and the Alliance of Manufacturers and Exporters formed a working group to provide a joint submission on the Blueprint. It was clearly stated that Canadian businesses want an efficient, simple and cost efficient import/export process that is based upon using mainstream business systems to interface with Customs and other government departments. Furthermore, qualified importers should have the benefit of immediate release of shipments without presenting paperwork prior to, or at the time of release. This would call for Customs to release goods based upon the importer’s profile in the Customs database.

The CSA system will separate requirements for paperwork and inspections from the release of goods, enabling an eligible importer or agent to obtain goods prior to the completion of administrative requirements and payment of duties, taxes, and fees. Exception will apply to goods originating from countries other than the United States, goods posing potential environment, health, and safety threats as well as goods with other government departmental requirements.

Customs and Trade Administration believe that the CSA will allow Customs to manage risk more effectively by streamlining low-risk shipments and concentrating efforts on unknown or high-risk shipments. Both importers and carriers must apply for the CSA and meet very stringent requirements that focus on compliance.

The major benefit for importers and their carriers who qualify for streamlined release under the CSA would be the elimination of customs cargo data or documents, elimination of release data or documents, line release at first point of arrival and line release for mixed shipments (CSA and other release types that require more data). CSA importers are eligible to file their trade data and revenue reports for all their importations from their own business records. This will mean one process for filing reports for all shipments with self-assessed interim and final payments, all via the use of the importer’s own business system. The in-house system will require four main categories of potential systems linkages defined through the following:

Quantity/Value Links

• To identify all international shipments, including no-charge goods, goods on warranty, goods on consignment, and samples, which may not normally be recorded in a company’s books and records, or linked to Customs;
• To identify quantity and value discrepancies, between goods as ordered, and as received;
• To identify retroactive price increases, rebates, allowance, or other price adjustments accruing to the foreign vendor.

Sourcing Links

• To discriminate, between domestic and international shipments;
• In the case of carriers, to discriminate between north and southbound shipments;
• To ensure that goods are not received from, or sent to, countries not considered applicable for Customs Self-Assessment.

Financial Links

• To ensure that specific shipments of goods can be linked to financial records. This includes cancelled cheques, posting to General Ledger, payment for freight contracts, valuation elements such as assists, commissions, royalties;
• To guarantee that relevant financial data is accurately conveyed, or sent directly, to the Customs area, and/or broker.

Communication Links

• Must be established between a company’s Customs area, and other business areas, in order to capture changes to the import process in the most accurate and timely manner;
• Must include Standard Operating Procedures, checks and balances, internal communications structure, to ensure consistent inclusion of the Customs area in the information and operations “loop.”

  As a result of having and supporting these linkages, a company should be able to provide, or demonstrate, the following:

• Third-Party attestation that these systems are auditable, and can be relied upon to consistently and accurately provide required data;
• Business trigger (e.g., receipt date) that can be used for Customs reporting;
• Methods and controls to ensure that interim accounting to Customs is “self-assessed,” based on activity in all financial areas, and is within a narrow margin of error;
• Processes and controls that generate reconciliation of orders, receipts, and payments, with month-end “sweeps” to identify discrepancies and unreconciled receipts and invoices for “self-adjustment.”

As the design of the CSA concept is underway, it is anticipated that qualified importers could begin operating under the CSA in July of 2000. Clearly, this new option for a customs process will require an importer to have the necessary systems links and a good compliance record.