******* 

epartment of the Treasury 
. DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 20220 

OFFICE OF 

INSPECTOR GENERAL 

MEMORANDUM FOR ACTING COMMISSIONER CHARLES W. WINWGOD 

UNITED STATES CUSTOMS SERVICE A 

William H. Pugh 


Deputy Assistant Inspector ~enerslfor Financial 


Management and Information Technology Audits 


SUBJECT: 	 Report on Review of Controls Over 

Entry Summaries Subject to Antidumping or 

Countervailing Duty 

This memorandum transmits our report on Review of Controls Over 


Entry Summaries Subject to Antidumping or Countervailing Duty. 


The review was conducted as an addition to the Office of 


Inspector General's Office of Audit Annual Plan for Fiscal Year 

1999, issued October 1, 1998. The objectives of the review were 

to determine whether (1) adequate internal controls existed over 


the processing of entry summaries subject to antidumping and 


countervailing (AD/CV) duty, and (2) Customs was in compLiance 


with the applicable laws and regulations relating to the 


processing of AD/CV entry summaries. 


Our review disclosed that Customs generally had adequate controls 


over entry summaries subject to antidumping or countervailing 


duty. However, we identified certain areas needing improvement 


relating to the processing of entry summaries subject to 
AD/CV

duty. 


Our review further disclosed that Customs did not always comply 


with liquidation laws and regulations. Specifically, we noted 


that Customs did not always liquidate AD/CV entry summaries 


within 6 months of the date of liquidation instructions per 19 


USC Section 1504. Your staff reviewed these findings during our 


audit, and we have incorporated their comments. We have made 


recommendations, which-are also incorporated in the report. 


We appreciate the courtesies and cooperation provided to our 


staff during the review. Should you or your staff have any 


questions, you may contact me at (202) 927-5430, or 


Thomas A. Moschetto, Director, Financial Management Audits at 


(202) 927-5074. 


Attachment 

Overview ..................................................................................................... 1. €

Background ................... .............................................................................2 


ology ..................................................................... 3 


Audit Results ..................................................................................................5 


Appendix 1: Abbreviations .......................................................................... 9 


ajor Contributors to the ort ....................................................... 10 


eport Distribution .........................................................................11 


Page i 
This report presents the results of our audit of the controls over entry 

summaries subject to antidumping and countervailing (ADICV) 

duties. 

Antidumping duties are assessed when (1) merchandise is sold to 

purchasers in the United States (U.S.) at less than its fair value, or 

less than prices at which comparable goods are sold in the domestic 

market of the exporter, and (2) this results in material injury to a 

U.S. industry. Countervailing duties are assessed when grants 

(subsidies) are paid by a foreign country to the manufacturer, 

producer, or exporter of merchandise exported to the U.S. from that 

foreign country. The payment can be direct or indirect. It can take 

many forms such as direct cash benefits, credit against taxes, and 

loans with artificially low interest rates. 

The U.S. Department of Commerce (Commerce) and the U.S. Court 

of International Trade (CIT) investigate whether du 

subsidies exist and whether injury has occurred. he investigation is 

conducted in stages and within specific time peri 

many of these issues take years to reach final resolution. ADICV 

duty provisions are provided for in Title VII of the Tariff Act of 

1930, as amended by the Trade Agreements Act of 1979 (TAA). 

When Commerce issues a preliminary finding of dumping, Customs 

begins suspending liquidation (putting them on hold) of entry 

summaries for the problem merchandise, and requires the posting of 

bonds or other securities by the importer. This is also referred to as 

suspension orders. Entry types 03, 07, 34, and 38 are used to 

automatically suspend liquidation. If both Commerce and the CIT's

final determination are affirmative, Commerce issues an 

Antidumping or Countervailing order requiring a cash deposit rather 

than bonds.  4.a 


The entry summaries are then held until Commerce completes its 

annual reviews and provides liquidation instructions to Customs. 

Commerce issues these instructions to Customs via the Automated 

Commercial System (ACS) E-mail. Customs Headquarters forwards 

the liquidation instructions to the field through the ACS E-mail 

REVIEW OF CONTROLS OVER ENTRY SUMMARIES Page 1 

SUBJECT TO ANTIDUMPING AND COUNTERVAILING 

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Bulletin Board, The oard instructions are very complex 

and often specify product, manufacturer, importing country, and 

other data. Once the liquidation instructions have been received by 

the ports, actions are taken to remove the liquidation hold and 

liquidate the entry summaries at the rate determined by Con 

Liquidations may result in billings, refunds, or no change. 

USC 1504, "When suspension required by statute or 

er is removed, the Customs Service shall liquidate the entry 

onths after receiving notice of the removal from the 

t of Commerce, another agency, or a court with 

jurisdiction over the entry. Any entry not liquidated by the Customs 

Service within 6 months after receiving such notice shall be treated 

as having been liquidated at the rate of duty, value, quantity, and 

amount of duty asserted at the time of entry by the importer of 

record." After 6 months, the entries should be "deemed liquidated" 

with no changes and entered, as such, by the import specialists. 

However, the importer is able to protest entries that are "deemed 


liquidated" that should have resulted in a refund. 


Once the Commerce decision bulletin is posted in ACS, it is the 


import specialists' responsibility to review the bulletin and liquidate 


all applicable entries timely and accurately. The ADiCV entry 


summaries are filed and stored manually by the decision number and 


other data. Customs' officials can only access liquidated or 


outstanding ADICV entries in ACS by entry number, 
i.e., not by

case number. 


This audit was in addition to the Office of Inspector General's 
Ofice

of Audit Annual Plan For Fiscal Year (FY) 1999, issued on October 


1, 1998. 


The Tariff-Act of 1930, as amended by the TAA, provides in section 


731 for the imposition of antidumping duties when the Commerce 


Department's International Trade Administration (ITA) determines 


that subject foreign merchandise is being sold in the U.S. at less than 


fair value, and the ITC determines that, as a result, an industry in the 


U.S. is materially injured or threatened with material injury, or that 


REVIEW OF CONTROLS OVER ENTRY SUMMARIES Page 2 


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the establishment of an industry is materially retarded 

the imported merchandise. 

Section 701 of the TAA provides for the imposition of countervailing 

duties if Commerce determines that a country that is a signatory to 

the World Trade Organization's agreement on Subsidies and 

Countervailing Measures is providing a subsidy with respect to the 

manufacture, production, or exportation of subject merchandise 

imported into the U.S., and the ITC determines that such imports are 

causing the injury described above. 

The ADICV duty laws changed significantly as a result of the 1979 

TAA. The TAA repealed the Antidumping Act of 1921 and 

consolidated the ADICV duty provisions in a new Title VII of the 

Tariff Act of 1930, as amended. The revised regulations governing 

ADICV duties are specified in Part 351, Title 19 of the Code of 

Federal Regulations (CF 

The sensitivity of ADICV issues makes the proper administration of 

ADICV duty laws crucial. Customs initiated a review of the ADICV 

duty process in June, 1999, because of the sensitive nature of the 

program and this audit. As a result of this review, Customs initiated 

implementation of many of the recommendations in this report. Our 

findings note the actions Customs has taken towards the 

implementation of our recommendations. 

The objectives of our audit were to determine whether: (1) adequate 

internal controls existed over the processing of entry summaries

subject to ADICV duties, and (2) Customs was in compliance with 

the applicable laws and regulations relating to the processing of 

ICV entry summaries. 

The scope ~f our audit focused principally on (1) gaining an €

understanding of the entry summary process and related internal €

controls, (2) reviewing ADICV cases, ACS reports, and other €

management reports, (3) following up on a prior OIG report, and (4) €

following up on Arthur Andersen's review of the antidumping €

module in ACS during FY 1997. €

REVIEW OF CONTROLS OVER ENTRY SUMMANES Page 3 €

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We conducted our fieldwork during June and July of 1999; however, €

we followed up with Customs' personnel and updated our report, €

where applicable, to reflect activity that occurred through January €

2001. This report reflects the most recent activity that has occurred €

within the ADICV program. We conducted our fieldwork at €

Customs' Headquarters (Headquarters) in Washington DC, and at €

Customs facilities in Chicago, New York City, Los Angeles and €

Atlanta. €

To accomplish our review o ectives, we: (1) met with Headquarters €

personnel to determine thei le and responsibilities with regards to €

AD/CV duties, (2) reviewed reports and data queries used by €

Headquarters and field offices in €AD/CV entry summary

liquidations, (3) reviewed the ADICV Duty Handbook for Import €

Specialists, is rch 1998, (4) reviewed the procedures €

performed by of Strategic Trade (OST) relating to ADiCV €

duty cases, and (5) conducted walk-throughs, at field sites, of €

Customs' controls over entry summaries subject to ADICV duty. €

We conducted our audit in accordance with Government Auditing 


Standards, issued by the Comptroller General of the United States. €

REVIEW OF CONTROLS OVER ENTRY SUMMARIES Page 4 €

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Customs did not always liquidate ADICV entry summaries within six 

months of the receipt of liquidation or ers from Commerce. In 

accordance with Title 19 of the United States Code (USC), 1504, 

when a suspension required by a statute or court order is removed, 

the Customs Service shall liquidate the entry summary within six 

months after receiving notice of the removal from Commerce, 

another agency, or a court with jurisdiction over the entry summary. 

Any entry summary not liquidated by Customs within six months 

after receipt of such notice shall be treated as having been liquidated 

at the rate, value, quantity, and amount of duty asserted at the time 

of entry by the importer of record. 

Customs Office of Field Operations (OFO) at Headquarters notifies 

the field office of liquidation orders for an ADiCV case received 

from Commerce through the ADKV electronic bulletin board. 

However, until recently, there was no follow up by either 

supervisory import specialists (at the field offices) or OF0 to ensure

that the applicable entries had been liquidated. At field offices we 

visited, new procedures had been issued which require the import 

specialists' supervisors to run a report three to four months after 

receipt of the liquidated orders to verify that the applicable entries 

have been liquidated. Customs Headquarters personnel informed us 

that these reports are being run timely. 

As part of Customs internal review, field offices have made 

considerable progress in this area. A national management oversight 

program called Self-Inspection Worksheets (SIW) is used to measure 

this progress. During the last SIW reporting period, an average of 

one to twomAD/CVentry summaries were not liquidated timely and 

these were isolated to only six ports. 

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Recommendation 

We recommend Customs ensure that the procedures requiring (1) 

supervisors to verify that applicable entries have been liquidated, and 

(2) OF0 to follow up with field personnel on all unliquidated entry 

summaries open four months after liquidation instmctions were 

provided, are properly implemented and effective. 

To address this recommendation, Customs plans to issue a directive 

requiring the use of the newly revised A79 - ADIC 

Item Report, which is a proven comprehensive tool that identifies all 

affected entry summaries and provides users with detailed ADICV 

Duty line item data. In addition, the Directive will include 

instructions to field supervisors regarding the use of this report as a 

management oversight tool to track the progress of the liquidation 

process. Issuance of the directive is planned for June 2001. As 

additional oversight, internal operating procedures will be developed 

for the Other Government Agencies Branch at Headquarters to 

monitor and report the status of the liquidation process for individual 

cases. 

The OIG believes the above actions adequately address the 

recommendation. 

Customs did not always maintain a cumulative listing of AD/CV

cases for which suspension orders and liquidation orders had been 

received. Information concerning AD/CV cases is disseminated to 

the field offices by Headquarters through Customs AD/CV electronic 

bulletin board. Within approximately 90 days of being posted on the 

bulletin board, the ADICV case information is removed from the 

bulletin board and is posted to the ADiCV module. However, we 

identified instances where liquidation orders had not been posted to 

the AD/CV module. Thus, field personnel did not have the required 

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information to identify entries for liquidation. If the liquidation 

orders do not post to the ADICV module the field offices may not 

have the necessary information to liquidate the entries. 

In addition, since eadquarters did not require the field offices to 

provide any status reports on the liquidation of ADICV entries, 

management could not be certain that the field offices had received 

all ADICV liquidation orders that had been issued. 

Customs informed us they developed and implemented a 

mechanism that identifies all of the instructions issue 

y using a national scripting methodology, users in the field are 

able to access all Commerce issued instructions for whatever date 

parameter that they desire. The data is written to the users7hard 

drive in the form of a flat file. 

Recommendation 

Customs should provide its field offices, on a monthly basis, an 

updated comprehensive listing of ADiCV cases for which suspension 

and liquidation orders have been issued. 

Customs agrees with the above recommendation and has taken action 

to begin addressing this issue. Specifically, Customs has developed 

a script entitled "ADICVD ADIL Report." This report will provide 

a comprehensive listing of all Commerce-generated ADICV Duty 

messages, thus enabling field personnel to identify and track the 

liquidation and suspension activity of ADICV Duty cases. In 

addition, a "flat file" of the report data is automatically written to the 

user's computer hard drive to enable the user to upload the report 

data to another program such as MS Access or MS Excel, for data

manipulation. Upon approval of the directive discussed in 

management's response to recommendation number 1 above, the

script will be disseminated to all field offices for immediate

implementation. 

The OIG believes the above actions adequately address the 

recommendation. 

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Customs field offices were not able to provide a listing of all AD/CV 

cases and the number of entry summaries associated with each case. 

The field offices were able to provide a report which identifies the 

number of entries affected by all A ort, commodity 

code; however, the a does not provide this 

specific AD/CV case. 

With improved reporting capability, the fie1 offices will be better 

able to manage the work-load associated with AD/CV entries for 

their commodity teams and to forecast future obligations. 

We were informed that reporting capabilities were enhanced to 

include all line item AD/@Vinformation that is resident in ACS. 

Customs should develop procedures and produce reports that enable 

its field offices to identify and retrieve the A /CV cases, associated 

number of entries, and dollar amounts associated with these cases at 

their ports to better forecast future obligations. 

Customs agrees with the above recommendation. 

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ADICV 


U.S. 


Comerce 


CIT 


TAA 


ITA 


ITC 


CFR 


ACS 


Headquarters 


OST 


USC 


OF0 


SIW 


ing and Countervailing 

ent of Commerce 

U.S. Court of International Trade 

Trade Agreements Act of 1979 

International Trade Administration 

International Trade Commission 

Code of Federal Regulations 

Automated Commercial System 

Customs Headquarters 

ffice of Strategic Trade 

United States Code 

ffice of Field Operations 

Self-Inspection Worksheets 

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of the Treasury 

William H. Pugh, Deputy Assistant Ins ector General for Financial Management and 

Information Technology Audits 

schetto, Director, Financial 

ro, Audit Manager 

Ronda Richardson, Auditor 

US. customs 

Betsy Durant, irector, Office of Field Operations 


Paul Schwartz, Director, Office of Fie 


Alfred Morawski, Chief - Other Cove 


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artmernt of the 

ffice of the Under Secretary of the Treasury for Enforcement 

Assistant Secretary for Enforcement 

Office of Organizational Improvement, Departmental Offices 

Office of Strategic Planning, Departmental Offices 

Office of Accounting and Internal Control, Departmental Offices 

. Customs Service 

Commissioner 


Deputy Commissioner 


Assistant Commissioner, Office of Strategic Trade 


Assistant Commissioner, Office of Field Operations 


Chief Counsel, Office of Chief Counsel 


Chief Financial Officer, Office of Finance 


Director, Accounting Services Division, Office of Finance 


Director, Office of Planning 


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