Department of Homeland Security 

Office of Inspector General 

Efficacy of Customs and Border Protection’s 
 

Bonding Process 
 

OIG-11-92 June 2011 
Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

June    27, 2011   

Preface 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the department. 

This report addresses the efficacy of U.S. Customs and Border Protection’s bonding 

processes. It is based on interviews with employees and officials of relevant agencies 

and institutions, direct observations, and review and testing of applicable documents. 

The recommendations herein have been developed to the best knowledge available to our 

office, and have been discussed in draft with those responsible for implementation. We 

trust this report will result in more effective, efficient, and economical operations. We 

express our appreciation to all who contributed to the preparation of this report. 

Anne L. Richards 

Assistant Inspector General for Audits 
Table of Contents/Abbreviations 

Executive Summary .............................................................................................................1 
 

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

Results of Audit ...................................................................................................................3 
 

CBP Does Not Have Adequate Controls Over Its Single Transaction Bond Process ...3 
 

Recommendations..........................................................................................................8 
 

Management Comments and OIG Analysis ..................................................................8 
 

Appendices 

Appendix A: Purpose, Scope, and Methodology.......................................................11 
 

Appendix B: Management Comments to the Draft Report .......................................12 
 

Appendix C: Major Contributors to this Report ........................................................14 
 

Appendix D: Report Distribution ..............................................................................15 
 

Abbreviations 

ACE Automated Commercial Environment 
 

ACS Automated Commercial System 
 

AD antidumping 
 

CBP U.S. Customs and Border Protection 
 

Commerce Department of Commerce 
 

CV countervailing 
 

DHS Department of Homeland Security 
 

FY fiscal year 
 

GAO Government Accountability Office 
 

OIG Office of Inspector General 
 

SEB single entry bond 
 

STB single transaction bond 
 
OIG
 
 Department of Homeland Security 

Office of Inspector General 

Executive Summary 

U.S. Customs and Border Protection have responsibility for 

protecting revenue collection and enforcing trade compliance by 

the use of bonds. In fiscal year 2010, Senator Charles Grassley 

expressed concerns about alleged deficiencies in U.S. Customs and 

Border Protection’s revenue collection program. This is the 

second of a series of audits conducted to address Senator 

Grassley’s concerns. Our audit objective was to determine the 

efficacy of U.S. Customs and Border Protection’s process for 

determining and applying bonds in sufficient amounts. These 

bonds serve as insurance for the agency to cover importer duties, 

fees, and taxes should the importer fail to pay revenues as required 

on goods brought into the United States. 

Although U.S. Customs and Border Protection has strong controls 

over continuous bonds, it does not have adequate controls over the 

single transaction bond process, and its method for determining 

and applying single transaction bonds is ineffective. We estimate 

that approximately $8 billion of $12 billion in single transaction 

bonds for importer/broker entries accepted by U.S. Customs and 

Border Protection during fiscal year 2009 contain errors that may 

result in noncollection. Additionally, our analysis shows $1.5 

billion at risk of loss for imports subject to other government 

agency requirements. We attribute this condition to U.S. Customs 

and Border Protection’s need for— 

•	 Oversight for the single transaction bond process; 

•	 A risk-based management approach to reduce potential revenue 

loss associated with bonds; and 

•	 An automated single transaction bonds process. 

Consequently, U.S. Customs and Border Protection’s ability to 

meet its strategic goals of revenue collection and enforcement 

using single transaction bonds is jeopardized. 

U.S. Customs and Border Protection officials concurred with all 

the recommendations. Appendix B contains written responses to 

the recommendations from U.S. Customs and Border Protection. 

Efficacy of Customs and Border Protection’s Bonding Process
 

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Background 

U.S. Customs and Border Protection (CBP) is responsible for 

collecting import duties, taxes, and fees. In fiscal year (FY) 2010, 

imports totaled approximately $2 trillion, and CBP collected 

approximately $32 billion in duties, taxes, and fees. CBP has the 

authority to require bonds from parties that import merchandise 

into the United States.1 A bond is a contract between a principal 

and a surety, with CBP serving as the beneficiary. Bonds serve as 

an insurance policy, protecting CBP from revenue loss when 

importers fail to fulfill their financial obligations. The assessment 

of liquidated damages against a bond also serves to promote 

compliance with laws and regulations. 

CBP has two primary types of bonds: continuous and single 

transaction. Importers who have a large number of entries or 

imports during a given year usually obtain continuous bonds, 

which have a term of 1 year, automatically renew annually, and 

remain valid until terminated by the surety or the principal. The 

minimum continuous bond amount is the greater of $50,000 or 

10% of the total taxes and fees paid in the previous 12-month 

period. The Debt Management Branch within the Revenue 

Division of the Office of Administration oversees and administers 

the continuous bond program. 

Single transaction bonds (STBs) can serve as security for 

individual shipments or as additional collateral in conjunction with 

continuous bonds. They cover only the transaction for which they 

were written. Port Directors in the Office of Field Operations have 

the authority to require additional security in the form of an STB, 

and have the responsibility to set the bond amount and to validate 

its accuracy and completeness. The STB amount is generally one 

to three times the total entered value of the merchandise plus 

duties, taxes, and fees, depending on the revenue risk. CBP does 

not have a centralized office responsible for overseeing and 

administering the STB program. 

In 2002, CBP made revenue a Priority Trade Issue, with a focus on 

improving revenue collection, trade compliance, and trade 

facilitation. CBP prepares an annual Revenue Priority Trade Issue 

plan that assesses risks, threats, and vulnerabilities to revenue 

collection. The plan also establishes annual priorities for reducing 

revenue risk and includes milestones, due dates, and performance 

measurements. The plan identifies bonds as a risk mitigation tool 

1

 Title 19, United States Code, Section 1623. 

Efficacy of Customs and Border Protection’s Bonding Process
 


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for various programs. In 2009, CBP created a Revenue Risk 

Working Group to identify ways CBP could better ensure that 

revenue was adequately secured. 

U.S. law authorizes the imposition of antidumping/countervailing 

(AD/CV) duties to remedy the adverse impact of unfair foreign 

trade practices on domestic industries.2 The United States 

Department of Commerce (Commerce) imposes AD/CV duties on 

merchandise imported into the United States at less than its fair 

value (dumping) or that is subsidized by foreign governments 

(countervailing). Commerce is responsible for determining if 

dumping or countervailing has occurred, and the U.S International 

Trade Commission is responsible for determining whether a 

domestic industry is materially injured, or threatened with material 

injury. For CV duties, a “material injury” determination is 

required only for merchandise imported from a “Subsidies 

Agreement Country,” as defined by 19 USC § 1671(b). Once the 

required determinations are made, Commerce directs CBP to 

collect duties at a rate equal to the amount by which the normal 

value of the merchandise exceeds the export price (antidumping) 

or an amount equal to the net subsidy (countervailing). 

If the duty rate paid at the time of import is higher than the final 

duty rate, CBP refunds money to the importer. If the duty rate paid 

at the time of import is lower than the final duty rate, CBP issues a 

supplemental bill to the importer. The Government Accountability 

Office (GAO) found that the entire process takes an average of 3.3 

years.3

 By the time Commerce directs CBP to retrospectively 

collect the final duty amount on an entry, importers may be 

unwilling or unable to pay or may have disappeared altogether, 

resulting in significant revenue loss to the government. 

Results of Audit 

CBP Does Not Have Adequate Controls Over Its Single 

Transaction Bond Process 

Although CBP has strong controls over continuous bonds, it does not have 

adequate controls over the STB process. CBP cannot identify the number 

of STBs, has inaccurate and incomplete bonds, does not maintain and 

review bonds as required, underutilizes its bond authority, and does not 

2

 The Tariff Act of 1930, as amended, authorizes the imposition of these duties. AD duties are authorized 

by 19 U.S.C § 1673 and CV duties are authorized by 19 U.S.C § 1671. 

3 Antidumping and Countervailing Duties: Congress and Agencies Should Take Additional Steps to Reduce 

Substantial Shortfalls in Duty Collection (GAO 08-391), March 2008. 

Efficacy of Customs and Border Protection’s Bonding Process
 

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adhere to its monetary guidelines for entries with other government 

agencies requirements. We attributed these conditions to CBP’s need 

for— 

•	 Oversight over the STB process to ensure that personnel apply 

bonding policies and procedures sufficiently, appropriately, and 

consistently; 

•	 A risk-based management approach that includes identification, 

assessment, and mitigation of the risk of revenue loss associated with 

bonds; and 

•	 An automated STB process. 

Failure to establish adequate controls over the STB process may result in 

revenue loss from fraud, waste, or mismanagement. 

Bond Universe 

CBP cannot identify the number of STBs because of limitations in 

the Automated Commercial System (ACS), which is used to report 

entry data. Although the Automated Commercial Environment 

(ACE), CBP’s system of record, has the capability to enter bond 

information for multiple bonds, CBP does not currently require 

importers to file all entries in ACE. ACS has only one field for 

bond coverage, and it cannot record bond information for imports 

that require both a continuous bond and an STB. In such cases, the 

system defaults to a continuous bond, thereby not capturing actual 

revenue exposure on high-risk imports. This limitation creates a 

challenge when CBP attempts to collect past-due revenue. Since 

ACS does not contain any STB information, CBP’s Debt 

Collection Division must manually call each port to determine if 

STBs exist. The port conducts a manual search to identify STBs 

and forwards the information to the Debt Collection Division. 

This labor-intensive practice hinders CBP’s debt collection process 

and reporting. 

CBP has attempted to mitigate the system limitations by requiring 

ports4

 to record general STB information for AD/CV entries using 

the ACS notes section. However, our review showed that ports do 

not consistently follow this direction. Two out of nine importers 

with both continuous bonds and STBs for their AD/CV entries in 

ACS did not have system notes with the required STB information. 

4

 CBP Memorandum, Procedures for AD/CVD Entries with a Single Entry Bond, September 26, 2003; 

CBP Memorandum, Single Entry Bond (SEB) ACS Note Requirement, February 24, 2004. 

Efficacy of Customs and Border Protection’s Bonding Process
 

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Inaccurate and Incomplete Bonds 

CBP has experienced significant losses from weaknesses in bond 

validation and approval controls. From FY 2007 through FY 2010, 

CBP has written off $46.3 million5

 in revenue because of 

inaccurate, incomplete, or missing bonds. 

Although CBP guidance exists regarding STB approval and 

validation, ports do not consistently apply it. Federal regulations 

provide specific information that STBs must include prior to 

CBP’s approval.6 We reviewed a statistical sample of FY 2009 

STBs7

 totaling $8.3 million. Our review showed that 230 of 382 

(60%) of the STBs, totaling approximately $5.3 million, had one or 

more errors that may impact CBP’s ability to recover revenue, if 

necessary. CBP should have rejected these bonds because of 

inaccuracies and incompleteness. 

Included in the $5.3 million noted above, STBs totaling 

approximately $1.1 million had major omissions or errors such as 

missing signatures and inaccurate transaction numbers, which may 

create collection challenges. Based on these testing results, we 

conclude that approximately $8 billion of the $12 billion in STBs 

accepted by CBP during FY 2009 contain errors that may result in 

noncollection. 

Bond Maintenance 

CBP does not always maintain original STB documents at the 

ports. Of the 71 ports responsible for processing STB entries, our 

structured interview questionnaire showed that 18% (13) do not 

maintain copies of all the bond files and/or allow brokers to 

maintain the STBs. Federal regulation requires that Port Directors 

retain copies of all approved bonds at the port unless otherwise 

directed in writing by the Director of the Border Security and 

Trade Compliance Division.8 

If CBP relies on the broker to ensure a bond’s existence, it has no 

assurance that the broker can produce the bond when needed for 

collection purposes. Additionally, there is a potential for collusion 

between the broker and the importer. For example, in some 

5 Write-offs include losses from continuous bonds accepted prior to the centralization of the CBP program
 


in Indianapolis. 
 6

 19 CFR § 113.21 (2010). 
 7

 Because of scope limitations in identifying the total STB universe, we limited our testing to FY 2009 
 

importer/broker entries secured exclusively by STBs. 
 8

 19 CFR § 113.15 (2010). 
 

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instances, it may be cheaper for the importer to pay liquidated 

damages for failure to produce the bond document than to purchase 

an STB and attach collateral. 

Underutilization of Bond Authority 

Port Directors do not consistently exercise their authority to 

require additional security on high-risk imports when reasonable 

evidence exists showing revenue risk. Port Directors do not 

always require STBs for high-risk practices such as entries with 

undervalued merchandise, misclassifications resulting in higher 

duty rates, or liquidated damages and penalties assessed for prior 

noncompliance with laws, regulations, or policies. Port Directors 

should require STBs in instances where the continuous bond does 

not adequately protect against noncompliance. 

Federal regulation gives CBP Port Directors the authority to require 

additional security if accepting a transaction secured by continuous 

bond would put the revenue at risk or otherwise hamper the 

enforcement of Customs laws or regulations.9

 Responses to our 

structured interview questions of Port Directors indicated that 85% 

of the ports do not perform any type of revenue risk analysis to 

determine the need for an STB. When the Port Directors recognize 

the need for additional security, approximately 72% of the ports 

rarely or never require an STB. Port personnel stated that CBP 

guidance provided to them regarding how to estimate the actual 

level of revenue risk and to document the risk is not clear. Other 

CBP personnel expressed concerns that STBs have a negative 

impact on trade facilitation and may cause some importers financial 

hardships because of the additional cost of STBs and the collateral 

required by many sureties. 

Risk-Based Bonding 

CBP has not yet developed a risk management process that 

effectively uses bonds to mitigate the revenue loss on high-risk 

imports, such as AD/CV. AD/CV activities of high-risk imports 

have resulted in significant revenue loss over the past several 

years. AD/CV write-offs from FYs 2007 through 2010 total $48 

million and represent 51% of the total charge-offs for these years. 

As of June 2010, CBP had approximately $1 billion in AD/CV 

past-due bills that is at risk of revenue loss because of inadequate 

security. 

9 19 CFR § 113.13(d) (2010). 

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We reviewed 4,559 past-due AD/CV duty bills as of FY 2010 

totaling $145.8 million from 13 importers. These importers had 

continuous bonds and also paid AD/CV duties in cash at the time 

of importation. However, following the completion of 

Commerce’s required administrative review, AD/CV duty rates on 

these shipments increased significantly, requiring CBP to issue 

supplemental bills for additional AD/CV duties. With only 

$2 million in current continuous bond coverage (approximately 

1.5% of the outstanding bills), CBP will not collect $143 million in 

unsecured revenue. 

CBP can improve revenue collection by developing a risk-based 

bonding approach that considers continuous bonds and STBs. 

While we acknowledge that CBP cannot eliminate all risk, it can 

improve revenue collection by developing guidelines that evaluate 

the revenue risk of imports and delineate risk levels that would 

require additional bonding. 

CBP recognizes the need to improve revenue collection for highrisk imports. Despite its legal failure to implement an enhanced 

continuous bond requirement for AD/CV entries, it continues to 

consider other options. It developed an FY 2011 annual Revenue 

Priority Trade Issue Plan and established the Revenue Risk 

Working Group in 2009 to identify high-risk revenue areas. 

Although it is moving in the right direction, CBP needs to continue 

to take action to reduce and mitigate revenue risk for high-risk 

revenue areas, especially AD/CV entries. 

Nonadherence to Monetary Guidelines for Entries With Other 

Agency Requirements 

CBP does not follow its monetary guidelines for setting STB 

amounts for merchandise, such as chemicals, food, or drugs for 

human use and consumption. Other government agency 

requirements could include redelivery requests by the 

Environmental Protection Agency and the Food and Drug 

Administration for merchandise that poses a risk to the public 

health and safety. Entry of merchandise with other government 

agency requirements has a higher risk for liquidated damages than 

other entries. These entries can result in significant losses because 

the merchandise may be subject to recall because of potential 

public health and safety threats. CBP is required to set STBs in 

amounts no less than three times the total entered value of such 

merchandise. 

Efficacy of Customs and Border Protection’s Bonding Process
 

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From our statistical sample of FY 200910 STBs totaling 

$8.3 million, we tested bond sufficiency for merchandise subject to 

other government agency requirements. Our testing showed 31 

insufficient STBs totaling $623,855 that were insufficient by 

approximately $1 million. The average shortfall on the STBs was 

approximately $17,000. 

Based on our testing, we project that CBP should have required 

approximately $1.5 billion more in STBs during FY 2009 to cover 

risk of imports subject to other government agency requirements. 

Failure to require sufficient security on these higher-risk imports 

may result in significant loss if importers fail to comply with 

health and safety standards and CBP has to recall the merchandise. 

Recommendations 

We recommend that Customs and Border Protection’s Assistant 

Commissioners— 

Recommendation #1: Appoint a centralized office with the 

responsibility for developing and implementing single transaction 

bond policy, reporting on activities, and monitoring results. 

Recommendation #2: Consider automating the single transaction 

bond process to provide enhanced tracking ability and control over 

these bonds. 

Recommendation #3: Develop formal policies and procedures for 

the validation, approval, sufficiency, and storage processes for 

single transaction bonds. 

Recommendation #4: Improve revenue risk management by 

developing a risk-based bonding methodology for use on high-risk 

revenue imports that incorporates continuous bonds and single 

transaction bonds. 

Management Comments and OIG Analysis 

We obtained written comments on the draft report from CBP’s 

Assistant Commissioner, Officer of Internal Affairs. We included 

a copy of the management comments in their entirety in Appendix 

B. The following is an evaluation of CBP’s official response. 

10 Because of scope limitations in identifying the total STB universe, we limited our testing to FY 2009 

importer/broker entries secured exclusively by STBs. 

Efficacy of Customs and Border Protection’s Bonding Process
 

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Management Response on Recommendation #1 

CBP concurred with this recommendation and has already begun 

delineating the roles and responsibilities among offices. 

Centralization will focus on two main program areas: bond 

administration and bond policy, which will include risk-based 

assessments and analysis for determining when an STB should be 

used as additional security. 

OIG analysis: We consider CBP’s proposed action responsive to 

the recommendation and consider the recommendation resolved. 

However, it will remain open until CBP provides evidence to show 

how the centralized process works in relation to policy development, 

reporting, and monitoring of the STB process. 

Management Response on Recommendation #2 

CBP concurred with this recommendation and has incorporated the 

requirement for bond automation into the ACE Cargo Release 

requirements. 

OIG analysis: We consider CBP’s proposed action responsive to 

the recommendation and consider the recommendation resolved. 

However, it will remain open until we receive evidence showing 

that the ACE Cargo release requirements properly address STB 

automation. CBP should also provide a deployment schedule for 

the new capability. 

Management Response on Recommendation #3 

CBP concurred with this recommendation and will review and 

update policies. 

OIG analysis: We consider CBP’s proposed action responsive to 

the recommendation and consider the recommendation resolved, but 

it will remain open until we receive copies of the revised policies 

that adequately address problems identified during the audit. 

Management Response on Recommendation #4 

CBP concurred with the recommendation and will continue 

working on the development of a risk-based bonding methodology 

for high-risk imports that considers the use of continuous and 

single transaction bonds. 

Efficacy of Customs and Border Protection’s Bonding Process
 

Page 9
 
OIG analysis: We consider CBP’s proposed action responsive to 

the recommendation and consider the recommendation resolved. 

However, it will remain open until we receive evidence showing 

that CBP has developed a risk-based bonding methodology that 

addresses high-risk imports and reduces revenue risk. 

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Appendix A 

Purpose, Scope, and Methodology 

This report provides the results of our work to determine the 

efficacy of Customs and Border Protection’s process for 

determining and applying bonds in sufficient amounts to cover 

importer duties, fees, and taxes should the importer fail to pay 

revenues as required on goods brought into the United States. 

We visited seven ports of entry that handle STBs, in Long Beach 

and San Francisco, CA; New York, NY; Newark, NJ; Chicago, IL; 

Miami, FL; and Baltimore, MD. At each site, we interviewed Port 

Directors and port personnel, and directly observed CBP’s bonding 

process. 

We judgmentally selected and reviewed 100 continuous bonds 

from a statistical sample of 383 active continuous bonds as of May 

2010. We reviewed 382 STBs from a statistical a sample of 384 

single-transaction-type entries from the universe of FY 2009 

single-transaction-type entries in the Automated Commercial 

System. We tested continuous bonds and STBs for accuracy, 

completeness, and sufficiency of bond amounts. To compensate 

for system limitations in identifying entries with both a continuous 

bond and an STB, we reviewed bond coverage for 6,221 AD/CV 

open bills as of FY 2010 related to 21 importers. 

We assessed the existence and implementation of CBP’s policies 

and procedures for the bonding process. We used a structured 

questionnaire to interview 71 Port Directors responsible for the 

STB program. We interviewed officials and personnel from 

various offices and groups within CBP involved in the bond 

process, including the Office of Administration, Revenue Division 

of the Debt Management Branch; Chief Counsel at the National 

Finance Center in Indianapolis; the Revenue Risk Working Group; 

Office of International Trade; Office of Field Operations; and 

Management Inspections Division at Internal Affairs. We also met 

with personnel from the Department of Commerce to discuss risks 

involved with AD/CV cases. 

We conducted our audit between March 2010 and January 2011 

under the authority of the Inspector General Act of 1978, as 

amended, and according to generally accepted government 

auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based 

on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions. 

Efficacy of Customs and Border Protection’s Bonding Process
 

Page 11
 
1300 P nos)·lval1l' Avenue NW

WashIngton, DC 20229

u.s. Customs and

Border Protection

May 16,2011

MEMORANDUM F

ERAL FOR UDIT

D EC RITY

FROM: A iSlam Commissioner

Office of Inlernal Affairs

. . Cusloms and Border n

I3JE T: Response lO the Offiee of Inspector General's Draft Repon

Entitled. "Efficacy ofCu lom and B rder Prolection's

Bonding Procc s"

Thank.ou for providing us with a copy of your draft repon entilled "Efficacy 0 u loms

and Border Protection's Bonding Process:' and the opporlunity (0 ommem on the i ue

in this repon.

The report eonlain four recommendations directed to .. u loms and Border

Protection ( BP). A summar ofCBP action and orrecti e plan ( address the

recommendations is provided belo' :

Recommendation #1; ppoint a centralized office with the re pon ibility for

developing and implementing single tran action bond policy, reporting on acH ities,

and monitoring results.

CRP I~csponse: Concur. CBP agrees that ingle lransa lion bond ( TB) policy.

reponing on aClivilies and moniloring re ults hould be cemraliz d. \ e have alrcady

begun delineating the roles and responsibililie as igned among our various offices.

II wever. bond policy cncompasses two main program areas; one is bond administration.

regarding the pr per completion. applicalion procedures and required minimum bond

amount. The other program area includes de eloping policies, risked based assessments

and analysis needed lO determine when TB' should be u ed a additional eeurity to

protect against rcvenue loss. and whatthc amounts should be. Both competencie are not

I ated in anyone office. We will proceed to\ ards eemralization with thi a premise.

ompletion Date; May 15.2012

Recommendation #2: Consider automating thc single transacti n b nd pr ces to provide

enhanced tracking abilil ' and control 0 er lhese bonds.

 

Appendix B 

Management Comments to the Draft Report 

Efficacy of Customs and Border Protection’s Bonding Process
 


Page 12
 

2

eBP Respon e: Concur. CBr has already considered automating the transaction bond

process to provide enhanced tracking ability and control over these bonds. The process

has been incorporated a part oflhe requiremenl in lhe AUlomated ommercial

Environment (A E) argo Release.

ompletion Date: June 30.2011

Recommendation #3: evelop fomlal policies and procedures for the validation.

approval. sufficiency. and storage processes for single transaction bonds.

eBP Response: Concur. Current policies will be reviewed and updated in order to

properly meellhi recommendation,

ompletion Date: May IS. 2012

Recommendation #4: Improve re enue risk management by developing a risk-ba cd

bonding methodology for use on high-risk revenue imports that incorporates continuous

bonds and ingle transaction bonds.

enr Rcspon c: Concur. CBr will continue with il FY 2011 Revenue Priority Trade

I sue Plan to determine whether a continuous bond policy can be implemented that

replace lhe Enhanced Bond requirement (EBR) poli y for hrimp imports that CBr

implemented to addre the retrospective nature of the U Antidumping! ountervailing

duty (ADCYD) system. The EBR was found to be inconsistent with World Trade

Organization (WTO) guidelines, and rescinded, As a result of the WTO guidelines, CBr

cannot rai e importer bondsju t based upon the "Iikelihood" thaI the Department of

Commerce can retTOspectively require importers to pay higher amounts of AD YO duties

than tbey originally deposited at entry. ADCYD duties have represented 87% of all

uncollectible duty, most of which is the result of higher final ADCVD duty assessments,

However. even though, under a retrospective AD YO ystem. no [mite bond amount can

guarantee coverage of potential ADCYD final assessments, ome form of combined

continuous bond and single transaction bond policy for high risk importcrs may lessen the

amount ofuncolleetible duty.

omplction Date: May 15, 2012

With regard to the sensilivity of the draft report. CBr did nOI identify any sensitive

information that would require a "For Official Usc nly' designation or warrant

protection under the Freedom of Information Act. Technical comment to the draft report

arc provided in an attachment to this lelter.

If you ha e any questions regarding thi respon e, plea e contact me or have a member of

your sian' conIact Ms. Ashley Boone. CBP Audit Liaison at (202) 344-2539.

Alta hment

Appendix B 

Management Comments to the Draft Report 

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Appendix C 

Major Contributors to this Report 

Jewel Butler, Director, Customs and Revenue Division 

Ruth Blevins, Audit Manager 

Yeseira Diaz, Audit Manager 

Melissa Woolson, Program Analyst 

Megan McNulty, Program Analyst 

Irene Aultman, Referencer 

Nancy Pergolizzi, Referencer 

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Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Assistant Commissioner, Office of Field Operations 

Assistant Commissioner, Office of Administration 

Assistant Commissioner, Office of International Trade 

Assistant Commissioner, Office of Internal Affairs 

Deputy Director, Office of Audit Management and Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

Efficacy of Customs and Border Protection’s Bonding Process
	
 

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ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.