Control exports and imports: how the process runs, step by step

Export and import control starts when an item is classified and ends when the records survive an audit. In between, orders are screened, licences secured, declarations filed and duties settled. Trade compliance owns the rules, logistics and the customs broker move goods and paperwork, finance pays and reconciles, and internal control tests it all.

The steps in order

1. Classify each item. Product engineering supplies technical specifications. A trade compliance specialist assigns the tariff code and any export control classification, then writes both into the item master with a short note explaining the reasoning.

1. Screen every party to the transaction. When an order is entered, the order management system checks the customer, consignee, end user and any intermediary against restricted party lists. Potential matches land in a queue for a compliance analyst. Sales staff cannot clear them.

1. Decide whether a licence is required. The compliance specialist weighs the classification against destination and stated end use. If government authorisation is needed, that specialist applies for it and logs the conditions and limits attached to the approval.

1. Block or release the order. Order management holds the order until screening and licensing are both resolved. Only compliance staff lift the block, and the system records who did it.

1. Prepare shipping documents. A logistics coordinator produces the commercial invoice, packing list and any certificate of origin. Compliance checks declared values and origin claims before anything leaves the building or is booked to arrive.

1. File the customs declaration. The broker submits the export or import entry from data the coordinator sends. Broker queries go back to that coordinator, who pulls in compliance when the question concerns classification or valuation.

1. Settle duties and taxes. The broker estimates what is owed. Finance approves payment, charges the duty to the correct cost centre and confirms the spend sits within the amount authorised for that budget line. In public sector bodies this check is a legal limit on obligations. Elsewhere it is a budget control.

1. Receive goods and reconcile. The warehouse confirms physical receipt. Accounts payable matches the broker invoice, the duty statement and the customs record to the purchase order and the ledger. Mismatches go to the logistics coordinator first.

1. Correct errors after entry. When a wrong code or value surfaces, compliance files an amendment or, for serious cases, a voluntary disclosure. Finance books the refund or the additional charge.

1. Keep the records. Compliance retains classification notes, screening results, licences and entries for the period the law requires, in a place auditors can reach.

1. Review the controls. The internal control team tests samples of shipments, writes cycle memos describing how the process actually works and answers auditor document requests. Findings become tracked adjustments with named owners.

1. Update the rules. Lists, tariffs and regulations change without warning. Compliance revises screening content, classification tables and licence conditions. IT applies the system changes, and compliance confirms the blocks still fire.

Where it tends to break

Most failures happen at handoffs. Classification done once at item creation goes stale when engineering changes the product and nobody tells compliance.

Screening often runs at order entry but not when a ship-to address is edited later. Finance frequently pays broker invoices without seeing the entry data, so overpaid duty is never noticed and never reclaimed.

Questions to ask the people who run it

Written procedures describe the intended process. The people doing the work know the shortcuts. Ask them directly.

• When engineering changes a product, how does compliance find out, and has a change ever been missed?
• Who can release a screening hold in practice, and has anyone outside compliance ever done it under pressure from a customer?
• What happens when an order address or end user changes after the first screening?
• How does the broker get product data, and who corrects it when the broker queries a code?
• Does finance see the customs entry when paying the broker, or only the invoice?
• Who checks whether duty paid matches duty owed, and how are refunds pursued?
• Where do licence conditions live, and who tracks usage against them?
• When the last audit asked for documents, which ones were hard to find?
• Which audit findings from earlier reviews are still open, and why?
• Who learns first when a sanctions list or tariff changes, and how quickly does that reach the system?
• Are there shipments, such as samples, returns or hand-carried items, that bypass the normal route?

The answers to the last question usually reveal the biggest gap between what is documented and what really happens.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.