# Transshipment

**Pre-Assessment Survey**

**Internal Control Technical Guide**

####### Objective

Provide guidance in performing a Pre-Assessment Survey (PAS) of the
company's internal control to prevent unlawful transshipment and
evaluating the results.

# Background

Generally Accepted Government Auditing Standards require the PAS team to
obtain a sufficient understanding of internal control to plan the audit
and determine the nature, timing, and extent of tests to be performed.

The guidelines and terms in this technical guide are based on *Assessing
Internal* *Controls in Performance Audits,* GAO/OP-4.1.4, published by
the United States General Accounting Office, Office of Policy, September
1990; and American Institute of Certified Public Accountant's *Statement
on Auditing Standards No. 78.*

Transshipment is the movement of goods through a second country en-route
to the United States. Transshipment is legal and commonly used in the
ordinary course of business. However, transshipment of merchandise for
the purpose of circumventing trade laws and other trade restrictions
applicable to the shipment is unlawful. For Customs purposes, unlawful
transshipment involves claiming a false country of origin to circumvent
quota, avoid paying higher duties (such as antidumping or countervailing
duties), or to receive benefits from Special Trade Programs (e.g.,
NAFTA, Generalized System of Preferences (GSP)).

Unlawful transshipment can have the following effects:

-   Decrease the competitiveness of the receiving country\'s domestic
    market;

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-   Create an unfair competitive edge for the violator;

-   Establish an erroneous restraint level on a host country that was
    based on the level of unlawful transshipped goods; thereby,
    restricting the trade from legitimate manufacturers;

-   Undermine bilateral textile agreements and other trade initiatives;
    and

-   Confer fraudulent country of origin to the consumer.

Section 141.86(a)(10) of 19 CFR requires commercial invoices to include
the country of origin for the merchandise. Section 12.130 of 19 CFR
covers country of origin requirements for textile and textile products.
Sections 10.173 and 10.176 of 19 CFR cover evidence of country of origin
for merchandise claimed under GSP and merchandise produced in
beneficiary developing countries respectively. See other trade area tech
guides for additional country of origin criteria pertaining to those
specific areas/programs.

The Federal Register, on a biannual basis (around March and September),
issues a list of individuals and foreign entities located outside the
Customs territory of the United States that have been issued a penalty
claim under U.S.C. 1592 of the Tariff Act for certain violations of the
Customs regulations. This list is referred to as the "List of Foreign
Entities Violating Textile Transshipment and Country of Origin Rules"
(19 U.S.C. 1592a list). The Federal Register is also available on the
web at http://www.access.gpo.gov/su_docs/fedreg/frcont01.html.

A comparison of the manufacturers selected for the PAS sample to the
Federal Register and the Bulletin Board should be performed to provide
assurance that the company's internal control procedures are working.

####### Examples of Red Flags

The following examples are conditions that may indicate a potential
problem with transshipment.

-   The company has insufficiently documented, poorly defined, or no
    internal control for prevention of transshipment of imported
    merchandise. Examples:

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-   The company does not monitor or interact with the broker on
    transshipment issues.

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-   The company relies on one employee to handle transshipment issues,
    and there are poor or no management checks or balances over this
    employee.

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-   The company or qualified agent representative does not visit the
    factory.

-   The company does not exercise adequate control over their agents
    (buying/selling) regarding transshipment.

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-   The company's import staff lacks knowledge of transshipment issues
    such as U.S. Rules of Origin.

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-   Imported merchandise is subject to quota, antidumping duties, or
    other restrictions.

-   Quota class merchandise is imported or admitted to a Foreign Trade
    Zone from an unlikely country of origin.

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-   The company makes quota/visa payments to a country other than the
    country declared to Customs and/or payments have been endorsed to
    other parties instead of factories.

-   The purchase order does not identify the same manufacturer as the
    one identified in the commercial invoice.

-   Freight bills do not identify the same countries of origin or export
    as the purchase order.

-   Payments for the goods to the stated exporting or manufacturing
    factory could not be verified.

-   ACS data showed the same Harmonized Tariff Schedule (HTS) number and
    manufacturer for entry type code "01" (consumption entry) and "03"
    (antidumping/countervailing duty (ADD/CVD)).

-   ACS data showed a different country of origin and country of export
    for many of the company's imports and one or both of the countries
    may have trade restrictions.

-   The company offers unreasonable explanations to Customs.

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-   The company fails to cooperate with or respond to Customs.

-   The company has high turnover of people in key positions.

-   A significant variance exists between the importer's data and
    Customs data.

-   Customs shows a history of problems with transshipment issues
    (import specialist, account manager, compliance measurement, prior
    audit, other profile information).

-   Company imports a high volume of merchandise under special duty
    provisions.

-   The company uses factories that have been issued penalties for
    transshipment or that use many subcontractors.

-   The company's import staff does not research the Customs Bulletin
    Board or the Federal Register for foreign entities violating textile
    transshipment and country of origin rules.

-   Textile declaration is not signed or is missing original signature.

# Examples of Best Practices

-   Internal controls for the prevention of transshipment:

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-   Are in writing;

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-   Include procedures for monitoring and feedback; and

-   Are monitored by management.

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-   One manager is responsible for control of the import department,
    including prevention of transshipment and accurate reporting of
    country of origin. That manager has knowledge of Customs matters and
    the authority to ensure that internal control procedures for imports
    are established and followed by all company departments.

-   Written internal control procedures assign duties and tasks to a
    position rather than a person.

-   The company has good interdepartmental communication about Customs
    matters.

-   The company conducts and documents periodic reviews of entry
    summaries and makes corrections to entries and changes to their
    import operations as appropriate.

-   The company requires periodic training for staff responsible for
    Customs matters.

-   The company provides transshipment training to its agents and
    brokers.

-   The company requests binding rulings from Customs on country of
    origin.

-   The company agency agreements (buying and selling), purchase orders,
    employment contracts, or letters of credit contain clauses
    specifying transshipment certification requirements and penalty
    provisions.

-   The company's inspection team makes regular unannounced visits to
    the plant to assure that a factory exists and that merchandise was
    produced at that factory.

-   The company records and tracks visit to the factories along with the
    evaluation form.

-   The company obtains profiles prepared by the factories, which state
    capacity levels, in order to determine whether proper ratio exists
    between the number of workers and the quantity produced.

-   The company discontinues doing business with or puts factories on
    probation for failing the inspection and/or denying admission for an
    inspection by the company or its representative.

-   The company provides a Quality Manual to its vendors stating its
    expectations of the vendor.

-   The company's Quality Manual states that its vendors must obtain
    written approval from the company before making any changes
    regarding manufacturing facilities.

-   The company has a plan of action or system to deal with factories
    that have been identified on the 19 U.S.C.1592a list.

####### Examples of Documents and Information To Review

-   Internal control policies and procedures.

-   The company\'s response to the questionnaire.

-   Interviews with company staff concerning actual procedures and
    controls specific to transshipment.

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-   Documentation that supports monitoring and verification of
    established and/or written internal control for prevention of
    transshipment.

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-   Process Map flowchart and narrative.

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-   Other documentation supporting country of origin and prevention of
    transshipment:

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-   Receiving and inventory records.

-   Correspondence.

-   Factory inspection reports.

-   Factory profiles.

-   Quality control inspection sheets.

-   Sales confirmations, purchase contracts, or purchase orders.

-   Invoices and payment records (Letter of Credits, wire transfers).

-   Bills of lading/airway bills.

-   Freight payment or accounting records.

-   Buying/Selling agency agreements.

-   Quota/Visa transfer forms.

-   Quota/Visa payment records.

-   Textile declarations.

-   Quota/Visa charge statements.

-   Binding rulings on country of origin.

-   Antidumping Orders.

-   Exporter's Certificate of Origin (ECO).

####### Suggested Testing

PAS team judgement should be used to determine the type and amount of
testing needed to evaluate how effective internal control is and whether
there is risk to warrant proceeding to the Assessment Compliance Testing
(ACT) phase.

Using the chart and the guidelines below, determine through limited
judgmental testing whether the company's internal control is effective.

To determine the extensiveness of internal control testing, it is
necessary to evaluate:

1.  The **risk exposure**; and

2.  The **internal control** system by determining whether the controls
    are in operation, how the controls were applied, how consistently
    they are applied, and who applies them.

**Risk Exposure**

Risk exposure is the probability of significant Customs noncompliance.
In each step of determining risk exposure, consideration should be given
to:

1.  Significance (to Customs) and sensitivity (e.g., issues of interest
    to Congress or the media, or impacting admissibility).

2.  Susceptibility (of making incorrect declarations).

3.  The existence of any "red flags."

4.  Management support (of strong internal control).

5.  Competent personnel (to adequately administer the controls).

*Steps to Determine Risk Exposure:*

1.  Evaluate problems identified in the profile, compliance measurement
    rates, questionnaires, and concerns raised by the import specialist
    and account manager.

2.  Perform the macro risk analysis tests.

3.  Analyze all results to determine the risk exposure level.

4.  Evaluation of risk exposure is not simply a one-time process that
    occurs at the start of the PAS process. Continually reassess risk
    exposure as more information is gathered from evaluating internal
    control and performing other work in the PAS.

**Macro Risk Analysis Examples**

*Example A: Low Risk Exposure*

A query of ACS data found no import activities from known transshippers
or merchandise subject to quota or antidumping. The company also has
adequate internal control procedures for preventing illegal
transshipment. Since there were no PAS team concerns, the risk exposure
level was considered low.

*Example B: High Risk Exposure*

A query of ACS data by vendors shows import activities from known
transshippers. In addition, the profile showed a decrease in imports
from Country A with quota restrictions and a corresponding increase from
Country B with no quota restrictions. Due to the above concerns, the
risk exposure level was considered high.

**System of Internal Control**

To evaluate the internal control system:

1.  Consider the five components of internal control:

-   Control Environment.

-   Risk Assessment.

-   Control Activities.

-   Information and Communication.

-   Monitoring.

2.  Review relevant Customs and company documents to identify and
    understand internal control for prevention of unlawful
    transshipment. (Examples of documents and information to review are
    listed on prior page.)

3.  Determine whether the company has established and follows
    procedures. Review:

-   Documentary evidence of the results of periodic internal control
    reviews/testing and corrective action implemented.

-   Documentary evidence of communication with the broker and company
    departments on transshipment issues, including company testing of
    broker operations and verification that the broker followed company
    instructions.

-   Company-specific rulings requested. Determine if they are followed.

-   Documentary evidence of intra-company communications to ensure
    correct information is provided to Customs.

-   Training records and materials used to educate staff on Customs
    matters including transshipment issues.

4.  Review written policies and procedures and interview applicable
    company personnel to complete appropriate sections of the "Worksheet
    for Evaluating Internal Control for the Prevention of Unlawful
    Transshipment."

> Note: The internal control assessment should include steps to:

-   Identify and understand internal control.

-   Determine what is already known about control effectiveness.

-   Assess the adequacy of internal control design.

-   Determine whether controls are implemented and effective.

-   Determine whether transaction processes are documented.

**Extensiveness of Audit Tests (Testing Limit)**

The purpose of limited PAS testing is to take a survey in order to
determine the necessity for and extent of substantive tests. In some
circumstances, the PAS team may decide that it probably will not be able
to form an opinion based on limited PAS testing. In that case, it may be
necessary to proceed immediately to the ACT process. If the PAS team
believes that it can form an opinion based on limited PAS testing, test
the appropriate number of controls and associated transactions using the
table below.

**Determine Extensiveness of Audit Tests**

+----------+---+------------------+---+-------------------+-------------+
| **Risk   | * | > **Preliminary  | * | **Extensiveness   | **Testing** |
| Ex       | * | > Review         | * | of Audit Test**   |             |
| posure** | + | > Internal       | = |                   | **Limit**   |
|          | * | > Control**      | * |                   |             |
|          | * |                  | * |                   |             |
+==========+===+==================+===+===================+=============+
|          |   |                  |   |                   |             |
+----------+---+------------------+---+-------------------+-------------+
| **High** |   | Weak             |   | High              | 10-20       |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Adequate         |   | Moderate to High  |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Strong           |   | Low to Moderate   |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   |                  |   |                   |             |
+----------+---+------------------+---+-------------------+-------------+
| **Mo     |   | Weak             |   | Moderate to High  | 5-15        |
| derate** |   |                  |   |                   |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Adequate         |   | Moderate          |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Strong           |   | Low               |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   |                  |   |                   |             |
+----------+---+------------------+---+-------------------+-------------+
| **Low**  |   | Weak             |   | Low to Moderate   | 1-10        |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Adequate         |   | Low               |             |
+----------+---+------------------+---+-------------------+-------------+
|          |   | Strong           |   | Very Low          |             |
+----------+---+------------------+---+-------------------+-------------+

*Source*: Adapted from *Assessing Internal Controls in Performance
Audits.*

Column titled "Testing Limit" reflects Customs test sizes.

*Example -- Determine Testing Level*

Based on a review of the profile, questionnaire, written procedures,
process map narrative and flowchart, and other documents, the team
concluded that the risk exposure was low.

The company's internal control manual required factory visits prior to
contracting with the factories. During factory visits, the company
verified the data in the factory profile. The import manager provided
documentation to support the fact that the Customs Bulletin Board and
Federal Register are routinely reviewed for known overseas
transshippers. Purchase orders and contracts were required to contain
specific information to prevent and identify possible transshippers.
After completing the Worksheet for Evaluating Internal Control, the team
concluded the preliminary review indicated an adequate internal control
system.

Using the table above (based on a low-risk exposure and adequate
internal control system) the team concluded they would test 10 internal
control transactions for the prevention of unlawful transshipment.

####### 

####### Evaluation of Pre-Assessment Survey Testing Results

The following steps are guidance for determining the effectiveness of
company\'s internal control for the prevention of transshipment.

1.  Complete the "Worksheet for Evaluating Internal Control Over
    Transshipment" to determine whether risk determination is acceptable
    or unacceptable and document why. Put results of testing in
    perspective and evaluate confirmed weakness as a whole. The
    evaluation should consider the results of the internal control
    testing, problems identified in the profile, and/or concerns raised
    by the import specialist or account manager. The team must evaluate
    the PAS results based on the specific situations.

> Customs considers risk to be unacceptable when testing reveals that
> internal control is not sufficient or effective in providing
> reasonable assurance that accurate, timely, and complete declarations
> are reported to Customs.

2.  The following will assist the PAS team in determining whether
    conditions warrant proceeding to ACT.

##### Do not proceed to ACT (Revenue) if:

-   Cost-benefit analysis warrants no further effort (do not spend a
    significant amount of resources to identify a potential loss of
    revenue considered insignificant).

-   The PAS indicated that the error was due to an isolated incident.

-   The company agrees with PAS finding(s) and agrees to quantify the
    errors within an acceptable timeframe.

##### Do not proceed to ACT (Compliance) if:

-   The error was isolated, and the importer can show identical entry
    lines with value correctly reported.

-   The transshipment errors were systemic, and the importer agrees to
    develop and implement a compliance improvement plan within an
    acceptable time frame.

##### Proceed to ACT (Revenue) if:

-   The company does not have adequate internal control, and PAS
    indicated a material loss of revenue that cannot be quantified
    without statistical sampling or further review.

-   Importer will not quantify loss of revenue.

##### Proceed to ACT (Compliance) if:

-   The company refuses to take corrective action on systemic errors,
    and it is necessary to calculate a compliance rate.

Note: If substantive tests necessary to determine a compliance rate or
revenue loss can be quickly performed without extensive effort, the team
should immediately perform the substantive tests without proceeding to
ACT.

3.  Determine whether referrals should be made for enforcement action.

### **Examples**

The following examples of situations might be encountered during the PAS
*are for clarification purposes only:*

*Example A:* *Situation in which the team* would not *proceed to ACT
(Revenue)*

The auditor found that the importer has import activities from a company
on the 19 U.S.C. 1592a list of known transshippers.

The PAS team reviewed the company's internal control procedures and
found that the company has detailed written procedures to monitor
factories and to prevent unlawful transshipment. The company also kept
records of its visit to the factories and reviews its policy on
transshipment with its buying agents. In addition, the import manager
also documented the review of the 1592a list and Customs Bulletin Board
for known transshippers. The company explained that there were only two
purchases from the particular vendor and that the company stopped using
the factory after it was found to be on the 1592a list. The PAS team
verified that these were isolated incidents and that the importer was
committed to following its written internal control procedures.

*Example B: Situation in which the team* would not *proceed to ACT
(Compliance)*

Same as example A, except that the company did check the 1592a list on a
regular basis and could show that they had stopped the two purchases
mentioned above before they were shipped. During the PAS, the company
established written procedures and implemented them.

*Example C: Situation in which the team* would *proceed to ACT
(Revenue)*

The company does not have written internal control procedures to prevent
unlawful transshipment. In reviewing documentation for transshipment,
the PAS team found that the country listed on the manifest and bill of
lading were from Vietnam and the country of origin declared on the
Customs entry was China. The company spoke to the manufacturer and the
Chinese manufacturer explained that it had contracted part of the
production to its sister plant in Vietnam. Vietnam was subject to a
higher duty rate (column 2) at the time.

The PAS team proceeds to ACT to quantify the loss of duty and to
determine whether there were other incidents of transshipment. The PAS
team also referred the case to the EET for review.

*Example D: Situation in which the team* would *proceed to ACT
(compliance)*

Same situation as in C, except company refuses to take corrective action
to prevent unlawful transshipment.

**Worksheet for Evaluating Internal Control**

**for the Prevention of Unlawful Transshipment**

Objective: Determine whether the company has procedures designed to
effectively control Customs risks related to unlawful transshipment.

Risk Determination:

  ------------------------------------- ---------------------------------
                                        

  **Acceptable**                        

  **Unacceptable**                      
  ------------------------------------- ---------------------------------

  ----------------------------------------------------------------------------------------------------
  **Internal Control**     **Yes**   **No**   **Not          **Internal   **Work Paper  **Comments**
                                              Applicable**   Control      Reference**   
                                                             Manual Page                
                                                             Number**                   
  ------------------------ --------- -------- -------------- ------------ ------------- --------------
  Are internal controls                                                                 
  for the prevention of                                                                 
  unlawful transshipment                                                                
  formally documented?                                                                  

                                                                                        

  Does management approve                                                               
  written policies and                                                                  
  procedures?                                                                           

                                                                                        

  Are written policies and                                                              
  procedures reviewed and                                                               
  updated periodically?                                                                 

                                                                                        

  Is one manager                                                                        
  responsible for control                                                               
  of the Import                                                                         
  Department, including                                                                 
  transshipment issues?                                                                 

                                                                                        

  Does that manager have                                                                
  knowledge of Customs                                                                  
  matters and the                                                                       
  authority to ensure that                                                              
  internal control                                                                      
  procedures for imports                                                                
  are established and                                                                   
  followed by all company                                                               
  departments?                                                                          

                                                                                        

  Do written internal                                                                   
  control procedures                                                                    
  assign transshipment                                                                  
  duties and tasks to a                                                                 
  position rather than a                                                                
  person?                                                                               

                                                                                        

  Does company have good                                                                
  interdepartmental                                                                     
  communication about                                                                   
  transshipment matters?                                                                

                                                                                        

  Does company conduct and                                                              
  document periodic                                                                     
  reviews of                                                                            
  transshipment?                                                                        

                                                                                        

  Do procedures require                                                                 
  the company to                                                                        
  constantly review the                                                                 
  Federal Register web                                                                  
  site to identify                                                                      
  factories found to be                                                                 
  transshipping or unable                                                               
  to produce production                                                                 
  records?                                                                              

                                                                                        

  Do procedures require                                                                 
  the company to review                                                                 
  the Federal Registers                                                                 
  for violators of 1592a?                                                               

                                                                                        

  Do procedures require                                                                 
  the Purchase Orders (PO)                                                              
  to identify the factory                                                               
  producing the garment,                                                                
  quantity, unit prices,                                                                
  and the specific garment                                                              
  style numbers so the                                                                  
  commercial invoice with                                                               
  the Customs entry can be                                                              
  verified by any U.S.                                                                  
  Customs Officer? POs                                                                  
  should indicate if a                                                                  
  factory is                                                                            
  subcontracting out to                                                                 
  another factory and the                                                               
  company must have the                                                                 
  authority to approve the                                                              
  changes prior to                                                                      
  production.                                                                           

                                                                                        

  Do procedures require                                                                 
  Letters of Credit to                                                                  
  state the beneficiary                                                                 
  manufacturer, state that                                                              
  textile transshipment is                                                              
  prohibited and include                                                                
  penalty provisions in                                                                 
  the event transshipment                                                               
  occurs?                                                                               

                                                                                        

  Do procedures require                                                                 
  suppliers to undergo a                                                                
  thorough approval                                                                     
  process prior to the                                                                  
  first importation?                                                                    
  Documentation should                                                                  
  indicate that approval                                                                
  was granted to contract                                                               
  with new factories                                                                    
  before importation.                                                                   
  Documentation may                                                                     
  include a check list or                                                               
  standard approval form                                                                
  indicating quality,                                                                   
  quantities, machinery &                                                               
  equipment, and                                                                        
  production lead times.                                                                

                                                                                        

  Do procedures require                                                                 
  the company to obtain                                                                 
  and analyze Factory                                                                   
  Profiles to determine                                                                 
  whether the factory can                                                               
  produce the desired                                                                   
  quantities? Profiles                                                                  
  should be validated                                                                   
  during the company\'s                                                                 
  on-site visits.                                                                       

                                                                                        

  Do procedures require                                                                 
  factory visits to be                                                                  
  unannounced and                                                                       
  conducted by different                                                                
  company staff or agents?                                                              

                                                                                        

  Do procedures require                                                                 
  the factory visits to be                                                              
  fully documented?                                                                     
  Documentation should                                                                  
  include: 1) an                                                                        
  observation of all                                                                    
  phases of the production                                                              
  process from the receipt                                                              
  of raw materials to the                                                               
  work-in-process of the                                                                
  sewing and cutting                                                                    
  operation to the                                                                      
  finished goods and sale;                                                              
  and, 2) a comparison of                                                               
  the number of sewers to                                                               
  number of machines in                                                                 
  relation to production                                                                
  and the number of sewers                                                              
  to number of packers.                                                                 
  The visits and                                                                        
  documentation should                                                                  
  identify specific styles                                                              
  and all processes must                                                                
  relate back to the                                                                    
  purchase order.                                                                       

                                                                                        

  If an import is detained                                                              
  at a port and                                                                         
  productions records                                                                   
  requested, do procedures                                                              
  require the company to                                                                
  do a complete review of                                                               
  the internal control                                                                  
  process that was in                                                                   
  place to select this                                                                  
  manufacturer?                                                                         

                                                                                        

  If weakness were found                                                                
  during internal control                                                               
  testing, were corrective                                                              
  actions implemented?                                                                  

                                                                                        

  Is one                                                                                
  department/individual                                                                 
  primarily responsible                                                                 
  for the prevention of                                                                 
  transshipment and                                                                     
  meeting country of                                                                    
  origin requirements?                                                                  

                                                                                        

  Does the individual                                                                   
  responsible for                                                                       
  prevention of                                                                         
  transshipment, country                                                                
  of origin have adequate                                                               
  knowledge and training?                                                               

                                                                                        

  Is Customs assistance                                                                 
  sought regarding                                                                      
  transshipment or quota                                                                
  (e.g., requesting                                                                     
  binding rulings)?                                                                     

                                                                                        

  Do procedures require                                                                 
  periodic monitoring of                                                                
  overseas factory\'s                                                                   
  production and review of                                                              
  factory capacities in                                                                 
  relation to the                                                                       
  company\'s imports?                                                                   

                                                                                        

  Do procedures include                                                                 
  monitoring specific                                                                   
  quota closures for                                                                    
  specific commodities                                                                  
  from certain factories                                                                
  with a past history of                                                                
  transshipping?                                                                        

                                                                                        

  Do procedures require                                                                 
  periodic reviews of                                                                   
  changes in freight                                                                    
  companies used by                                                                     
  overseas suppliers?                                                                   

                                                                                        

  Do procedures require                                                                 
  periodic review for new                                                               
  manufacturers that                                                                    
  appear after country                                                                  
  closures of specific                                                                  
  categories?                                                                           

                                                                                        

  Do procedures require                                                                 
  the importer to evaluate                                                              
  overseas agent                                                                        
  activities? Are                                                                       
  evaluations documented                                                                
  and updated                                                                           
  periodically?                                                                         

                                                                                        

  Do procedures require                                                                 
  overseas agents to                                                                    
  receive training or                                                                   
  demonstrate knowledge                                                                 
  regarding transshipment                                                               
  issues?                                                                               

                                                                                        

  Do procedures require                                                                 
  suppliers to maintain                                                                 
  ISO 9000 certification?                                                               

                                                                                        

  Do procedures require                                                                 
  verification that the                                                                 
  foreign company/person                                                                
  completing required                                                                   
  documentation (textile                                                                
  declarations,                                                                         
  Certifications of                                                                     
  Origin) is knowledgeable                                                              
  about Customs                                                                         
  requirements?                                                                         

                                                                                        

  Do procedures require                                                                 
  review of Outward                                                                     
  Processing Agreements                                                                 
  (OPA)? OPA is a document                                                              
  which states factories                                                                
  in more than one country                                                              
  are involved in the                                                                   
  manufacturing process or                                                              
  subcontract to other                                                                  
  factories in other                                                                    
  countries than their                                                                  
  own.                                                                                  

                                                                                        

  Do procedures require                                                                 
  that commercial invoices                                                              
  contain the same                                                                      
  specific and adequate                                                                 
  garment styling                                                                       
  description as listed on                                                              
  the PO?                                                                               

                                                                                        

  Do procedures require                                                                 
  the Cut, Make, and Trim                                                               
  operations to be visited                                                              
  and approved? (Applies                                                                
  to importers whose major                                                              
  programs consist of                                                                   
  buying fabrics and                                                                    
  sending the fabric for a                                                              
  Cut, Make & Trim                                                                      
  operation.)                                                                           

                                                                                        

  Do procedures require                                                                 
  that payment be made                                                                  
  only to quota holders or                                                              
  manufacturers who are                                                                 
  listed as obtaining the                                                               
  quota?                                                                                

                                                                                        

  Do procedures require                                                                 
  periodic review of the                                                                
  quota allocations of the                                                              
  factory?                                                                              

                                                                                        

  **Internal Control                                                                    
  Conclusions**                                                                         

                                                                                        

  Does the company have                                                                 
  adequate broker                                                                       
  oversight?                                                                            

                                                                                        

  Did PAS testing verify                                                                
  that control procedures                                                               
  were being followed?                                                                  

                                                                                        

  Did interviews with                                                                   
  responsible persons                                                                   
  support control                                                                       
  procedures?                                                                           

                                                                                        

  Does the company have                                                                 
  adequate internal                                                                     
  control to address                                                                    
  specific issues                                                                       
  identified in the                                                                     
  profile?                                                                              

                                                                                        

  **List company-specific                                                               
  procedures and controls                                                               
  below (if applicable)**                                                               
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