Compliance Assessment

Compliance Assessment: The Ultimate FAQ Guide

If you’re in import or export business, obviously, you have come across compliance assessment term.

That’s why today I will answer all questions you have been asking about compliance assessment.

Let’s dive right in.

What is Compliance Assessment?

compliance assessment

 Compliance assessment

Compliance assessment is the analysis of the company’s trade and customs transactions. This is done to verify adherence to the laws and regulations governing international trade.

What is Trade Compliance?

Trade compliance involves understanding, respecting, and following all rules and regulations on the import/export goods.

It is also known as Customs compliance.

International trade gets complicated every other time. You need to understand the customs rules and regulations clearly. With a business that relies on international trade, you must ensure global solid trade compliance.

An ideal way of becoming knowledgeable with trade compliance is to take a course on the same. Or use the various online resources to gain more insight.

Why is Trade Compliance important?

Being compliant with international trade laws and regulations as a company or individual is very important. This will help you avoid the harsh consequences of violating customs requirements.

The consequences can be expensive as they may include very hefty fines that may shake your operating capital. Customs can also seize your shipments as a consequence of non-compliance. This can disrupt your supply chain immensely.

To stay safe while engaging in international trade, always make sure you have complied with all the laws and regulations.

Who is subject to Customs Compliance Assessment?

 Import from china

If you are doing any transactions with customs, you must be assessed. It can range from a small and medium-sized importer/exporter to a large importing company.

For small and medium-sized traders, you will be subjected to the traditional way of a comprehensive assessment.

Large businesses transacting more than $100 million in value of goods every year will self-assess. You will have to submit an accurate report of the assessment to customs. Also, customs will conduct interim assessments on your business just like they do for SMEs.

Please note that Customs’ likelihood to assess your business increases when importing high-risk products. Importing toys, clothing, food, automobile parts, and other high-risk items is likely to arouse the interest of Customs authorities.

What is the Purpose of Compliance Assessment?

Customs conducts compliance assessments for many reasons.

The main reason is to ensure business’ compliance with customs rules and regulations.

Other reasons include:

  • Protecting local businesses from unfair trade practices associated with anti-dumping duties, countervailing, and intellectual property rights.
  • Encouraging legitimate trade through partnerships and cognizant trade compliance activities.
  • Protecting government revenue as well as the general population from counterfeit or unsafe goods.

Is Compliance Assessment the same as Compliance Audit?

Not really.

Compliance assessment is a briefer check at a given area on your trading activities. The compliance audit is meant to give customs a clear picture of your business’s given area of concern. This will allow customs to assess risk without necessarily having to assign a final judgment.

You will only get a letter indicating that the compliance audit has been completed if you have been selected for the audit survey.

These findings may flag you for a more comprehensive customs audit. The primary purpose of the compliance audit is to ensure that companies follow the rules and regulations.

Why should you assess your Business’s Trade Compliance?

Among the reasons that you should assess the trade/customs compliance of your business includes:

Internal Audit being part of the Compliance Program

Compliance assessment is vital in the Compliance Program. If you have the program, then you should make good use of it.

Making pertinent policies will be preparing your employees and the company for any trade compliance subjected to you. This also helps create the confident feeling that you are doing everything right and per the law.

Preparing for an official Customs Audit

You need to know, discuss, and plan with your staff what you may have to do if you are audited. Conducting your trade compliance assessment is a clear indication that you are doing your due diligence.

While planning, you should include the following:

  • Identifying the persons to be notified once there is an audit
  • Finding out the storage location for your trade documents and records
  • Check out how the assessment plan fits into the trade management and compliance program.

Self-assessment helps Guarantee that your Staff follows the Proper Procedures and if there is a need for Training.

It is easy to know who is doing what and if they are doing it correctly if you conduct an internal trade compliance assessment.

The assessment will also reveal who is not doing the right thing and the training you may offer them. All your employees must read from the same page.

In business, a lot of things change every time. From regulations, products, trade terms, customers to employees. With an internal trade compliance assessment, you can gauge the reality of the business. From this, you can make the necessary alterations to help your business adapt to best practices.

Assessing your Business’s Trade Compliance helps in Making People Accountable

Compliance assessment will give you a chance to evaluate the external processes and partners to hold them accountable. This will include:

  • The freight forwarders and vendor partners. The assessment will help in ensuring that your partners are doing everything efficiently and in a cost-effective manner. They should also do it in compliance with the laws.
  • Foreign Partners. The assessment of foreign partners will help you and your business stay in line with the foreign corruption laws. This makes sure that you do not have any violations in that area.
  • Foreign Distributors and salespeople. You should audit both the distributors and the salespeople to ensure the company is not violating embargoes. They should observe all the export license requirements.

What are the benefits of Compliance Assessment when Importing from China?

Compliance assessment will serve many purposes, including:

Identification of Gaps

One objective of a compliance assessment is checking whether the laid down policies and processes are effective. In case there are any con-compliances, the assessing officer will note them. They can then report them to the management or the government agency responsible.

Helps in Making Improvements

After the compliance assessment, some gaps may be uncovered. You can then take the necessary measures to address the gaps.

Reduction of Risk

Compliance assessment will help pave the way for compliance and reduce risks.

Avoiding Fines and Penalties

Compliance assessment when importing from China is important because goods you’re importing may be subject to certain restrictions and prohibitions.

The products may also be required to meet specific requirements before and during importation.

If you don’t adhere to the product regulations, the consequences for your supply chain can be expensive and detrimental.

How do you prepare for a Compliance Assessment?

To prepare a compliance assessment, your company and the auditing company should come up with a schedule for a formal audit.

You need to prepare to pass adequately.

The following are some helpful tips on how you can prepare for it:

Prepare the requisite documents: These are the documents that define how your organization has complied with the necessary rules and regulations. They should show the actual practices that your employees follow.

Conduct an internal review first: Conducting a self-assessment will help point out the gaps. With this, you will be able to correct it before the official compliance assessment is conducted.

For example, you may have to review your quality management systems to observe all the regulatory standards.

Ensure your records are clear: If you do not manage your documents (previous assessment reports and proof of compliance) well, there is the likelihood that you will have issues with customs. Security policies and proper data management will play a crucial role in managing your records well.

Conduct staff training: You should train your employees or staff to know the policies and procedures they need to follow.

Staying up to date: You should utilize the information you get about your competitors to improve your systems.  It would help if you did not repeat the mistakes they get fined for. It is necessary to track any new standards and regulations that may affect your business.

What happens in a Compliance Assessment?

Authority officials will contact you about the selection of your business for a Compliance assessment.

You can include a representative such as your customer broker or import agent in the process if you want.

On the D-day, the assessing officers will review all the processes, documents, and any other indicators of your compliance. A final report will be generated and handed to your company. This report will include non-conformances as well as recommendations.

The level of non-compliance will determine whether your company will face penalties or get a chance to fix the gaps that were identified.

You shouldn’t, however, rush for a compliance assessment. Take time and prepare for it.

Also, note that the assessment takes a short time to avoid imposing on your business and plans.

How do you conduct a Compliance Assessment step by step?

Compliance assessment

Compliance assessment

Compliance Assessment may look like a daunting task. The process below outlines some of the steps taken to achieve a proper compliance assessment:

Initial Discovery and Plan

This will involve finding out what should be focused on and what is essential to your company. Initial discovery can happen via phone call. The consultant will let you know what is required as they try to understand your business more.

Gathering of Information

The next stage is to gather all the relevant information. This helps understand the current state of the company concerning customs compliance.

The quality of information you give to the consultant will help achieve a successful assessment.

It will be pretty hard to measure compliance if there is a lack of information. This will hinder the consultants from discovering any crucial gaps.

The relevant information can be found by interviewing the compliance officer.

Any other function that contributes to customs compliance must also be questioned.

Analyzing of Data and Information

After gathering information, it is grouped into various categories and analyzed.

Grouping the information ensures that your compliance assessment captures all the relevant areas and can be helpful in the future.

From the collected information, the assessing officer will then check on all areas for both compliance and non-compliance.

Report Writing

An assessment report is crucial in a compliance assessment. It details all the findings of the assessment and also recommends measures to follow.

It is in this stage that the compliance assessment officer writes an assessment report. This stage is simple, considering that the information has been grouped and sorted correctly. The rest is putting the information in a format that is simple to read and interpret.

Reviewing Assessment Results and Creating an Action Plan

Here, you will draft an action plan based on the findings and recommendations of the trade compliance assessment report. Finalizing the report will take place once you’re done reviewing the report and adopted the recommendations given therein.

The action plan will detail the findings of the assessment as well as the recommendation

The plan will provide you with what was found and the recommendations categorized into every specific functional area. You can decide on the date the action plan should be delivered and to whom.

How do you manage Compliance when Importing from China?

Managing compliance when importing from China can be challenging given the number of regulatory agencies involved.

China customs, China Food & Drug Administration (CFDA), Administration of Taxation (SAT), etc., can put a strain on your trade compliance.

To avoid problems and disruptions to your supply chain, it would be best if you hire a third party to help you with compliance.

As you do this, you can also self-assess for customs compliance by being conscious of the following about your business:

  • Office locations
  • Operational procedures
  • All customs declarations concerning the total number of imports
  • The total value of imports and when declarations were made
  • Import duties and taxes paid and if the duties were correctly calculated and paid on time
  • Price declaration history by item. This will prevent large fluctuations that may cause problems

Apart from all the above, it is also essential to develop a management policy for your supply chain. Such a policy will help ensure that you use the correct classifications hence avoiding customs penalties and fines.

Besides, you should also ensure that your compliance documents are valid and in order. You need to have copies of all declaration documents at all times. Monitor any missing documents have them resolved immediately.

Issues on classification and valuation should also be monitored and resolved accordingly.

Importantly, verify the legitimacy of all third-party service providers, including your freight forwarders and customs brokers. Always maintain a record of all transactions with third-party vendors.

To develop good compliance practices, you may want to maintain a manual of trade compliance policies. This proves to assessment officials that you have enforcement policies in place.

Which Documents do Customs Auditors look at during a Trade Compliance Assessment?

 Import documents

Import documents

The audit team will gather all the necessary information and analyze it. The commercial documents that you need to provide are:

  • Accounting Ledgers
  • Airway bills
  • Bills of lading
  • Contracts
  • Correspondence
  • Evidence of any payments received or made.
  • Invoices
  • Orders
  • Packing lists
  • Permits

What is a Compliance Assessment Report?

A compliance assessment report is a record of everything that was discovered in the assessment.

It includes details of every compliance and non-compliance found during the assessment.

The report also gives recommendations on what you should do to ensure compliance. It also provides the penalties/fines for any violations found.

What happens if a Compliance Assessment discovers errors and risks?

The primary concern of customs is how to avoid errors in the future. Where possible, customs will recommend ways to improve procedures to prevent mistakes in the future.

If errors and risks are discovered during compliance assessment, the audit team will discuss them with you. Depending on the existing rules and regulations, the team may recommend adjustments to some errors.

Others may be too far gone that you will have to face penalties or pay fines for violations.

In case you disagree with the outcome of the assessment, you are allowed, by law, to contest the results.

The charges you will pay are only for professional assistance. You will be legally responsible for the statutory obligations.

Are there Penalties for Violating International Trade Compliance?


As mentioned, errors in your declarations may lead to penalties and fines according to legislative guidelines.

However, customs will always give you a chance to explain the circumstances of the errors before the execution of punishment.

What is an International Trade Compliance Program?

It is a program that seeks to explain the complicated customs process at every level of the organization. The anatomy of this program may vary from one company to another, but the concept is, however, the same.

Elements that make up a good compliance program include policies and procedures, risk assessment, record keeping, and training.

Companies with a good mastery of international trade will have a strong compliance program. This allows the leadership on every level to understand the rules and understand the risks.

What are the considerations of building a Trade Compliance Program?

When building a trade compliance program, you should consider the following:

  • Familiarizing yourself with the relevant regulatory agencies
  • Partake in trade compliance seminars and education programs. It is important to get educated on the customs laws for import/export.
  • Formalize the import and export compliance policy, training, procedures, and records of your business.

You can also hire a supply chain expert to help you build a strong compliance program for your business. Many professionals can handle the complexities of international trade laws and regulations.

What are some Trade Compliance Program Mistakes to avoid?

One big mistake that importers make is taking trade compliance as an afterthought. It is not!

Trade compliance is quintessential to any business operating in the international trade arena, and it won’t happen on its own. You need to be hands-on about this, and if you can’t, get expert help.

An expert can help you develop an effective compliance program for your business. He/she will educate you on obligations as a trader and even show you ways to comply.

Understanding the risks your business faces concerning trade compliance enables you to put the right policies in place.

Unfortunately, many importers fail to see the importance of seeking expert help regarding their trade compliance program. They may never consider asking for assistance on their compliance program. By doing this, they mistakenly have reasons they believe they don’t need one. Some of this includes:

It is expensive- Hiring may seem costly, but the penalties may outweigh the cost of having a compliance program in place. The penalties arising from gross negligence can be issued in millions of dollars. They can easily get to a 7 figure or more.

It is time-consuming– It will take time to come up with a compliance program. But once you have it, your processes will move even quicker, thus saving your precious time. After you have a compliance program, all you need is to maintain it.

Customs don’t bother you-You can’t avoid customs forever. They have a Quick Response Audits program that targets any importer for any issue.

Our broker handles everything- As the importer of record, you will be held legally responsible for any done entry. The broker will only help you have your customs done. However, you cannot outsource the responsibility.

How often should you conduct a Compliance Assessment on your business?

You should carry out your compliance assessment annually. The auditors can decide to review your processes at a go or divide them into portions.

They should then make a plan which will detail the schedule in several months.

What is the difference between a Compliance Assessment and Factory Audit?

 Factory audit

 Factory audit

Unlike Compliance assessment which involves audit regarding customs, factory audit focuses on production capability.

It assesses the company’s ability to timely produce goods that meet both the clients’ and industry requirements on quality, performance, and safety.

What is a Trade Compliance Checklist?

A trade compliance checklist is an assessment tool that is used to identify red flags quickly.

The checklist effectively implements the recommended corrective actions and ensures compliance with the trade regulations.

Who is responsible for Conducting a Compliance Assessment?

For self-assessment, you can seek the services of a customs broker or third-party compliance assessment services.

You will oversee this process and make sure that everything is done following customs requirements.

Delegated customs compliance auditors do comprehensive compliance assessments.

These are chosen by relevant authorities and will always notify you in advance about any scheduled assessments.

Do you need a Customs Broker for Compliance Assessment?


Many importers undergo compliance assessments yearly. This is done as a routine part of countries’ efforts to ensure the importation of safe and credible goods.

As long you follow the law and the advice of your customs broker, you be fine.

It is unwise to navigate a compliance assessment alone, whether internal or external.  Find a qualified customs broker to help make the process as smooth, fast, and open as possible.

How much does a Compliance Assessment Cost?

There is no specific figure that a compliance assessment may cost you.

The cost will always differ depending on the organization doing the work and the amount of work involved.

For small companies, it will cost less as opposed to large companies.

You should, however, know that statutory charges are not part of the assessment fees.

On average, the compliance assessment cost should cost you around $500 on an average of tasks undertaken.

At BanSar, we help you import from China to any destination effortlessly by handling all the freight forwarding procedures.

Contact us now for all your freight forwarding needs from China.

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