CBP is Conducting FY 2012 Drawback Compliance Measurement Test

U.S. Customs and Border Protection has issued a CSMS message to provide information on a Drawback Compliance Measurement (DCM) program, which it is currently testing in fiscal year 2012. After this one-year test period, CBP will evaluate the DCM procedures and results, in order to determine next steps. CBP notes that the test may result in an increase in requests to the drawback filer for constructed paperless entries.

DHS Audits Consistently Find Material Weakness in CBP's Drawback Controls

According to the message, the Department of Homeland Security (DHS) Office of Inspector General (OIG) has consistently reported drawback as a material weakness for CBP internal controls over financial reporting. This in turn results in a significant deficiency for DHS. The audit findings highlight the manual nature of drawback processing and the associated risk of erroneous drawback payments. Without a formal drawback measurement program, CBP is unable to defend the accuracy of current drawback processes. DCM will enable CBP to establish drawback compliance information based on a sound statistical methodology, as well as determine potential revenue loss, for a more comprehensive risk picture. (See ITT's Online Archives 11041522 for summary of DHS OIG 2010 report.)

CBP Will Run Test For Full FY 2012

CBP is running a full-year DCM test in fiscal year 2012 (i.e., October 1, 2011 through September 30, 2012). After the one-year period, CBP will evaluate the DCM procedures and results, in order to determine next steps. The sample pool for claims reviewed under DCM consists of drawback claims which liquidated in the previous month. Evaluation of liquidated claims enables CBP to fully assess compliance with drawback requirements, since all the underlying import entries are finalized. Although review is performed on liquidated claims, DCM is not an audit. The DCM review will be conducted by a drawback specialist.

Test May Result in Increase in Rejects for Constructed Paperless Entries

This test may result in an increase in requests to the drawback filer for constructed paperless entries. However, a DCM review should not be an additional burden for the claimant in terms of substantiating documentation. CBP notes that as part of the test, certain drawback claims may be reviewed by an office other than the one at which the drawback claim was filed. If claimants receive requests for information, they should respond to the requesting office.

(CSMS #11-000290, dated 11/29/11)

http://apps.cbp.gov/csms/viewmssg.asp?Recid=18536&page=&srch_argv=11-000290&srchtype=all&btype=&sortby=&sby

(CSMS #11-000290)