Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Canada Border Services Agency Gives Self Mixed Review in Internal Audit

On February 22, 2010, the Canada Border Services Agency (CBSA) posted an internal audit report concerning the adequacy and effectiveness of the control framework for the administration of permit, licence and other requirements for commercial goods (the "Report"). The CBSA's Report conclusion (not written by me) was:

"The audit concluded that the control framework for the administration of permit, licence and other requirements for commercial goods was partially adequate and effective. There were strengths identified in program areas with electronic controls. Improvements were needed particularly in the application of border controls for program areas that relied on reviews by border services officers and manual paper-based processes, and in performance measurement, monitoring and information sharing." (Emphasis by me)

The good news is that some of the complaints of lawyers, customs practitioners, and commercial importers have been found to be valid. The bad news is that changes are coming and importers and their advisors must be aware of the changes and take steps to comply with new rules.

The Report contains a lot of useful information. A few of the items that I would like to highlight are:

  • Out-of-date policies and procedures may lead to requirements and procedures being improperly understood by BSOs or importers, and there is a potential risk that a product would enter the country without appropriate safeguards.
  • The [Border Services Officers] review and manual paper-based processes were not delivering expected results.
  • Policies and procedures were up to date for half of the program areas and MOUs were up to date for three of the program areas reviewed. Roles and responsibilities within the CBSA were understood for the most part, however, performance measurement and monitoring were two gaps identified in the control framework, and therefore, the responsibility for these functions was not clear between the CBSA and the [Other governmental Deartment] OGD.
  • The Single Window Initiative should improve the electronic interface with OGDs and expand electronic controls to other program areas. [However,] ... the Initiative will take several years to materialize due to its complexity, need for resources and the possibility that it may require legislative changes.
  • If the importer or the broker fails to obtain and present the required OGD permit, licence, certificate, authorization or other required information, prior to, or at the time of release, then the CBSA may apply the Administrative Monetary Penalty System (AMPS), penalty number C071. The issuance of an AMPS penalty will cost the client $100 for a first instance, $500 for a second and $1,000 for each instance thereafter. Penalty levels will be increased April 1, 2010, to $500, $750 and $1,500 respectively.
  • Management Action plans includes many next steps deadlines for March 2010, April 2010, June 2010, July 2010, September 2010, October 2010, December 2010, January 2011, October 2011, November 2011 and October 2012.

The audit results suggest that HS tariff classification will be a CBSA and OGD priority area in the future. The Report states:

The audit found that the classification of goods was not always precise, as regulated goods were often grouped with non-regulated goods. In the past, the CBSA had assisted OGDs to obtain changes to the classification system for greater precision. Management indicated that obtaining changes to the classification numbering system was time-consuming and they had not invested in this activity. As well, classification numbers have been consolidated, making electronic controls less effective. Consequently, post-release monitoring efforts may be limited by imprecision of the classification numbering system, and issues of stability and precision may compromise the effectiveness of electronic controls in the future.

The audit results suggest that the CBSA and OGDs will be on the look-out for required documentation and will be issuing Administrative Monetary Penalties. The Report states:

The audit found this was a national issue. BSOs did not consistently recognize OGD regulated goods and did not enforce OGD requirements when the release request or import was not compliant. Penalties under the AMPS were not issued in a number of cases even though the BSO rejected the release request to enforce the OGD requirement. As well, original documents such as paper certificates that should have been sent to the OGD were still attached to paper release requests.

The audit suggests that the CBSA will be busy writing updated policies, which may change the way things are done.

Importers must keep up or pay up! How is it that an internal audit ends up with more risk for importers?

To review the CBSA's internal audit report, pl.ease got to the following link -

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