I recently attended a seminar by Debbie Dent of D. Dent & Associates and she caught many by surprise by contending that most cross-border operators will be subject to a focused audit by the Canada Border Services Agency (CBSA) regardless of whether they are FAST-approved or not.

Canadian and American governments are working closely to ensure that all qualified goods, importers, carriers, and drivers are properly identified and documented. That means your business-management and records-keeping systems must meet regulatory obligations, and a CBSA audit is one way to enforce compliance.

A CBSA audit is conducted on-site at the carrier’s premises and can last approximately three to five days. Among the items audited:

Bills of lading; order numbers or unique carrier system numbers; billing invoices; cargo control documentation; company driver and owner/operator listings (including external driver service personnel); equipment listing (owned and leased); equipment usage report (domestic and cross-border); dispatch records; accounts receivable; accounts payable.

CBSA will want to know if you can establish a paper trail for all shipments carried under the Canadian Carrier & Cargo Policy that’s in place for the transport of international shipments.

So ask yourself these questions:

Do I have complete inventory control and a report of all cargo control numbers? How do I report freight overages and shortages? How do I report freight that may have ended up in the U.S. but was actually meant for domestic delivery? How do I report repairs that were made outside of Canada, whether they were planned or emergency repairs?

Ultimately, it’s the carrier’s responsibility to know “what’s on board,” and this includes accounting for the inevitable discrepancies that do occur in the normal course of business. If that’s not enough, CBSA will request a sample of records for your northbound shipments.

Now more than ever, it is critical that your drivers clearly understand their responsibilities when completing cargo documentation from pick up to final delivery. Signed PODs are critical for documenting deliveries to their final destination.

The best plan, according to Dent, is “to cross-reference your unique shipment identification number with the assigned cargo control numbers for all freight that you have carried and ensure proof of delivery for that same group is on file and easily accessible.

“You may want to be directly linked to CBSA through a release notification system. Having a release-management tool can save a carrier thousands of dollars. Having the ability to support your records-keeping practices with information provided directly from Custom’s systems and using that tool will effectively pay for itself over and over. A carrier may be liable for any applicable taxes and duties without a signed POD,” she says. A shipment carried into Canada without proof of release risks a potential $1,000 penalty, and we’ve seen it add up much too quickly when reviewing a year’s carried shipments.”

Can you imagine what you might end up owing if you can’t provide a POD for a high-value load?

CBSA auditors will also review your payables to identify foreign service providers, including any national accounts that you have established. CBSA will also look at your driver expense reimbursements.

There are two basic ways to report. You can leave it to your drivers to report to Customs at the first point of arrival, or you can participate in a carrier-controlled quarterly summary report.

Leaving it to the drivers means each invoice must be stamped by a Canada Customs officer and returned as part of a driver’s trip information for records-keeping. Each failure to report is a potential $100 penalty action against you. Dent recommends contacting your local CBSA office for quarterly reporting approval.

As with all things trucking, non-compliance with regulations comes at a cost. There are 352 possible penalty actions and though not all of them are billable to the carrier, many are. So be proactive and prepared.