We have a client, an outdoor lighting importer out of Irvine, California. In March 2024 he got a CBP letter with a one-line subject: Focused Assessment Audit Notification. His first reaction wasn't fear — it was outrage. He called his customs broker: "I pay you a fortune every year, isn't this your job?" The broker's answer: "All filings were made based on information provided by your company, and classifications were confirmed by you." He called me right after: "Susan, who exactly are they auditing here?"
You. Not the broker — you, the importer. Burn this into your brain, because it's the starting point for understanding this audit: under 19 USC 1484, the legal duty of "reasonable care" in import declarations sits with the importer of record. The broker is your agent. When something goes wrong, the notice lands on your desk, not theirs. That fee buys labor, not a transfer of liability.
What a CBP Focused Assessment Audit Actually Is: PAS, ACT, and Follow-Up
A Focused Assessment is a risk-based, full-scope audit run by CBP's Regulatory Audit division — a different animal from a container exam at the port. Three phases: PAS (Pre-Assessment Survey), ACT (Assessment Compliance Testing), and a Follow-Up audit.
In PAS, auditors send you a tailored questionnaire built around your company's import controls: who decides classification, who approves valuation, who manages origin documents, who supervises the broker. Then comes the entrance conference — and note this, the entrance conference IS the start of the audit, not a casual chat. Inside baseball from the vendor side: plenty of importers blow it right on the questionnaire, writing "determined by our broker" in the classification-basis field. The moment an auditor reads that, the ACT sample size goes up a notch. They're auditing your internal controls, not your excuse-making form.
In ACT, auditors pull samples from your actual entries over the past few years and test classification, valuation, origin, and preference claims one entry at a time. Usual focus areas: classification, valuation, country of origin, FTA claims, antidumping/countervailing duties, intellectual property, recordkeeping — plus your oversight of the broker. Follow-Up circles back to check whether you actually fixed what they found.
What Puts You on a CBP Focused Assessment Radar: 7 Signals
Clients ask me this more than anything else. Short answer: CBP selects audit targets on a risk basis, rarely over a single event — usually a stack of signals. Seven of them, drawn from CBP's own guidance and cases we've watched play out:
- Your import values or duty payments spike suddenly — a steep curve gets flagged by data analytics first.
- Your tariff numbers look "cheap" next to your peers — CBP holds industry-wide data, and a systematically lower duty rate is an anomaly.
- You touch sensitive products: AD/CVD merchandise, textiles and apparel, chronic FTA preference claims, branded goods (IPR).
- You have a record: prior CF-28s (requests for information), penalties, recurring classification or valuation problems.
- Your own filings contradict each other: invoice, packing list, and entry summary don't line up.
- A tip or a referral from another CBP office — anonymous tips are a real channel.
- You get caught in an industry-wide enforcement push. CBP runs priority trade initiatives every year, and hot product categories get swept.
We have another client, a home-textiles importer in Texas, who tripped on signal number three in 2023. He imported cotton goods from Southeast Asia and claimed FTA preference year after year, saving several hundred thousand dollars in duties annually. The first question on his PAS questionnaire asked for origin documentation. His supplier stalled for two months, then produced a declaration with a factory address that didn't even match. The auditor's message was blunt: the preference claim was yours, and without documents, the preference doesn't exist. Textiles were already a CBP priority enforcement category — walking straight into the crosshairs. Several years of preference claims were clawed back, duties plus interest, and the owner was in pain for the better part of a year.
What Auditors Actually Look At on Day One
On the first day on site, auditors usually want the person in charge, not the operators. They're answering one question: is import compliance at this company "managed" or "nobody's job"? Killer questions straight from real PAS questionnaires: who makes your classification decisions, and based on what documentation? How are related-party prices set for valuation, and are royalties included in dutiable value? When was your broker power of attorney last signed, and how often reviewed? If you can't answer — or your answer is "the broker's always handled it" — you've told the auditor this one deserves a deep dive.
Then there's the recordkeeping trap. Under 19 CFR 163.4, import records generally must be kept for five years from the date of entry, entry by entry. Auditors go through all five years. Plenty of companies have records scattered across the broker, the forwarder, and finance — and can't pull a complete set on demand. In an auditor's eyes, "we couldn't find it" isn't an explanation. It's a control deficiency.
The Counter-Intuitive Part: This Audit Has Winners
Two counter-intuitive takes. First, "the broker handles everything" is the most expensive misconception in an audit like this. Reasonable care legally belongs to the importer — the notice comes to you, the duty bill comes to you, the penalty goes on your record. Outsourcing compliance entirely and never supervising it is handing someone else the steering wheel while keeping the tickets for yourself.
Second, the audit list isn't all bad news. CBP policy explicitly allows importers who pass a Focused Assessment to transition into the ISA (Importer Self-Assessment) program with no second review. More practically, written controls that survive an audit are the best leverage you'll ever have with brokers and suppliers. One client took his corrective-action requirements into a broker renegotiation: same fee, plus a new line item for quarterly classification reviews. Sometimes an audit notice is a knife handed to you by your own vendor.
And the trade-off: spend a little now on a self-review and voluntarily disclose what you find, or wait for the auditors to show up? Prior disclosure gets treated completely differently in penalty mitigation — the first conversation is about "duties plus interest," the second about "how much is the penalty."
The Six-Item Prep Checklist
| Prep item | What auditors actually want to see | How importers usually fail it |
|---|---|---|
| Classification basis | A written classification memo or binding ruling for each key SKU | "Our broker said it was fine" doesn't count |
| Valuation file | Related-party pricing policy; whether royalties are in dutiable value | Transfer price and declared value tell two stories |
| Origin and FTA documents | Origin proof behind every single preference claim | Supplier can't produce it; preferences get clawed back |
| Broker oversight | Power of attorney, periodic review records, CF-28 response log | Same POA for a decade, never reviewed |
| Record retention | Five complete years, retrievable on demand (19 CFR 163.4) | Records scattered across three vendors, incomplete |
| Written control procedures | Who classifies, who signs off, how often it's reviewed — in writing | Everything lives in a veteran employee's head |
Do the Math: What a Five-Year Lookback Means
Take the lighting client's numbers for scale: roughly $6 million in annual imports, finished lamps declared as "lamp parts" for two years, a duty-rate gap of two to three percentage points. That's $120,000 to $180,000 a year in underpaid duties. The retention period is five years, and auditors work through all five — two years are documented fact, and they'll follow the thread through the rest. Duties plus interest: a seven-figure lesson in RMB terms. With classification, one wrong year is a mistake. Five wrong years is a business model.
Next Time You're Negotiating a Contract, Ask These Three Questions
Audit prep always comes down to contracts and day-to-day management. Next renewal, or next team meeting, ask these three:
First, ask your broker: when was the classification on my key SKUs last reviewed, and where's the written basis? If they can't answer, write "quarterly classification review" into the service terms at renewal.
Second, ask yourself: have I ever looked at my own data in ACE? Plenty of importers have never even applied for an ACE account — their whole picture of their filings comes secondhand from the broker. Auditors read the system directly.
Third, ask your suppliers: can you produce origin certificates and composition breakdowns within 48 hours? If not, hold off on FTA preference claims — the duties you "saved" will come back with interest.
An audit isn't scary. What's scary is assuming someone else is worrying about it for you. The day auditors walk into your conference room, the only thing that saves you is your own filing cabinet.
By Susan, 3PL Sales Director
