Our Analysis Raises Concerns About Impact of Compliance Assessments on Importer Compliance

In the absence of a Customs evaluation of the impact that compliance assessments have on importers’ compliance with U.S. laws and regulations, we analyzed compliance rates for all 59 importers that had compliance assessments completed by September 30, 1997, and had received compliance measurement exams in both fiscal year 1996 and fiscal year 1998. According to the NASC Director, the delay was due to lack of staff resources and to staff turnover. We analyzed two of six Customs actions designed to address noncompliance within the informed and enforced compliance framework—the Multi-port Approach to Raise Compliance by the year 2000 (MARC 2000) and the Company Enforced Compliance Process (CECP)—and found that Customs’ efforts to raise overall compliance rates for importers in selected industries had mixed results. Fiscal year 1998 compliance rates for these industries were all below the prior year’s (fiscal year 1997) compliance rates (see table 5). Although Customs has monitored and evaluated certain aspects of the initiatives and actions, it has not evaluated, nor does it have a plan to evaluate, the impact on compliance of the overall informed compliance strategy. This seems especially important since Customs may not be able to reach its goals in terms of coverage for the compliance assessment and account management initiatives. We stated that “While Customs has monitored and evaluated certain aspects of the initiatives and actions, it has not evaluated nor does it have a plan to evaluate the impact on compliance of the overall informed compliance strategy.” We agree with and support Customs’ ongoing monitoring, evaluation, and enhancement efforts of its many programs, including those related to informed compliance activities. If, after such an evaluation, Customs determines that one or more of the initiatives are not making substantial contributions to the overall goal of raising importers’ compliance rates, then either part or all of the informed compliance strategy should be reexamined at that time. Scope and Methodology

To review the status of Customs’ implementation of the informed compliance strategy developed in response to the Mod Act and to determine the extent to which trade compliance under the new program had improved, we concentrated on five key initiatives. The Customs Service’s Director of the Office of Planning provided written comments that are discussed at the end of the letter and are reprinted in appendix IV.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the Custom Service's Modernization efforts, focusing on: (1) the status of Customs' implementation of the informed compliance strategy; and (2) whether trade compliance under the new program had improved.

What GAO Found

GAO noted that: (1) compliance data suggest the key initiatives and actions that make up Customs' informed compliance strategy have not yet produced the benefits that were expected; (2) among the reasons for these results may be that Customs has not implemented three of the key initiatives and actions to the extent or at the pace that it had expected; (3) two of the five are fully operational; (4) three have been implemented but have not yet reached many of the intended importers; (5) in responding to noncompliant importers, Customs has had limited success in increasing compliance; (6) its efforts to raise compliance rates in selected industries led to an initial increase in the rates, followed by a decrease, and ended with the fiscal year 1998 compliance rates falling below Customs' goal; (7) Customs cited the lack of sufficient staff resources as a major reason for shortfalls in implementing the compliance assessment and account management programs to the extent or at the pace intended; (8) Customs also noted that as it implemented the compliance measurement system and introduced new analytical tools, staff have become more astute at finding noncompliance; (9) although Customs has monitored and evaluated certain aspects of the key initiatives and actions, it has not evaluated, nor does it have a plan to evaluate, the impact on compliance of the overall informed compliance strategy; (10) however, such an evaluation seems appropriate to address the concerns raised by GAO's analysis of the impact of the compliance assessment initiative on the compliance rates for 59 importers; (11) the overall improvement in these importers' compliance rates after compliance assessment was less than Customs expected; and (12) the limited extent or pace of implementation of some aspects of the strategy and GAO's findings concerning compliance rates for the 59 importers raise fundamental questions about informed compliance strategy.