AES Compliance Best Practices

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Contents:

• Overview of the AES Compliance Review Program
  
  
• BEST PRACTICES:  Training
  • Training Manual
  • Cross-Training
  • Mentor Program
  • Seminars & Workshops
    
    
    
• BEST PRACTICES:  References
  • Contact Information
  • Frequently Asked Questions
    
    
    
• BEST PRACTICES:  Classifying Commodities
  
  
• BEST PRACTICES:  Export Checklist
  
  
• BEST PRACTICES:  Software Enhancements
  • Software Selection
  • Daily Reports
    
    
    
• APPENDIX A:  Sample Training Manual
  
  
• APPENDIX B:  Common Terms and Acronyms
  
  
• APPENDIX C: Helpful Websites
  • Government Agencies
  • Export Regulations
  • Useful References

Overview of the AES Compliance Review Program

In October 2006, the U.S. Census Bureau (Census Bureau), Foreign Trade Division (FTD) developed the Automated Export System (AES) Compliance Review Program.  The program seeks to assist companies in correcting reporting deficiencies that are not in compliance with the Foreign Trade Statistics Regulations (FTSR), Title 15, Code of Federal Regulations (CFR), Part 30.  Section 30.66 (c) of the FTSR authorizes the Census Bureau to visit companies with the purpose of reviewing all documentation pertaining to export transactions.  The ultimate goal of the program is to educate and bring all AES filers into full compliance with the FTSR.  Failure to comply with reporting requirements may result in delayed shipments, civil fines and/or criminal penalties.

The Census Bureau began this project by visiting companies that maintained a compliance rate of 95% or higher to learn their best practices.  The compliance rate is calculated by dividing the number of compliance alerts (designated on the report) by the number of shipments, subtracted from 100%.  As a result, we have compiled this “Best Practices” document to share with AES filers a variety of effective methods to stay compliant with the FTSR reporting requirements.   While this document is not all-inclusive, it does provide several excellent examples of best practices that should assist exporting companies in meeting the FTSR compliance standards.

BEST PRACTICES:  Training

Training Manual

We strongly recommend that companies filing via the AES should develop a formal AES training manual.  A training manual provides the basis for achieving consistent results that will support AES filers’ efforts in achieving and maintaining compliance.  The main purpose of such a manual is to familiarize the user with the AES process.  See Appendix A for a template on how to develop a training manual for your specific company or to improve the content and effectiveness of AES filers’ existing manual.  The manual should be reviewed periodically to ensure that it is current with system enhancements, changes, practices, and requirements.

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Cross-Training

Cross-training is defined as teaching an employee to do different tasks of the organizational unit’s work responsibilities.  Many companies use cross-training to build depth to cover critical tasks for filing in the AES to be sure the company is filing timely and accurately when employees are on leave, travel, other assignments, or otherwise unavailable.  Cross-training employees on both the FTSR and how to file via AES will ensure that export transactions are reported accurately and staff will be knowledgeable and equipped to properly file export shipments.   For example, staff should be familiar with filing export transactions in the AES, including what actions to take for correcting fatal errors.  Cross-training provides improved coverage, increased flexibility, knowledge sharing, and it minimizes or eliminates potential problems that may cause chaotic work conditions.

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Mentor Program

Mentoring allows experienced staff (mentors) to share lessons learned, tips, and suggestions on how to file export transactions accurately and timely.  Mentoring provides ongoing support to new employees, accelerating their learning curve to achieve the level of understanding required to ensure compliance and reporting accuracy.  The mentoring section of a company’s training manual should include internal as well as external contacts who can offer assistance.  Mentors should review the FTSR with all new employees and review such concepts as U.S. Principal Party in Interest (USPPI), reporting requirements of an export transaction, routed export transaction, data elements and export filing exemptions.  The ultimate goal of the mentoring program is to have experienced employees share their knowledge and skills with newly employed staff that will be carrying on the company’s work in the future.  For example, a new employee can shadow an experienced employee, throughout the entire process of receiving/verifying documents, entering information into the AES, responding to error messages and notating loading documents with accurate proof-of-filing citations, etc.  By developing a mentoring program, the organization prepares its new employees to become better equipped with the export filing process.  Emphasizing employee development will yield positive results for both mentors and new employees.

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Seminars & Workshops

A fundamental cause of noncompliance is a lack of understanding of the FTSR, other export control regulations, and the AES process.  If filing via AESDirect or AESPcLink, all the AES staff should study the tutorial and take the certification quiz prior to the initial filing of information.  Once a year as a refresher, your organization’s AES staff should study thetutorial and retake the quiz.  The staff should attend the Census Bureau sponsored training, such as the AES Export Compliance Seminars and the AESPcLink Certification Workshops.  Knowledgeable Census Bureau experts lead the seminars and cover information on the FTSR, researching commodity classifications, and the proper filing of information via the AES.  The seminars and workshops offered by the Census Bureau can be tailored to meet the needs of your organization.  It is suggested that staff should also attend export seminars and workshops hosted by State and local governments, other Federal Agencies, trade groups, consultants and other private companies.  The variety of training options will provide employees with an opportunity to learn all aspects of the export process.  In addition, companies should conduct in-house forums to share best practices, provide updates on the AES and the FTSR along with information on other government export requirements that are relevant to your company’s export process.

BEST PRACTICES:  References

Contact Information

Develop a list of contacts when questions and/or problems arise.  Please refer to the following contact list:

• FTD Census Call Center 800-549-0595
• AES Help Desk–Option 1
• Schedule B/HTS classification assistance–Option 2
• Regulations assistance–Option 3
  
  
• AESDirect Technical Support 877-715-4433 or (301) 562-7790, Ext. 3
  
  
• U.S. Customs & Border Protection – (202) 344-3277
  
  
• Bureau of Industry and Security (BIS)
• Commerce License Help Desk – (202) 482-4811
• Western Regional Office – (949) 660-0144 or (408) 351-3378
  
  
• U.S. State Department, Directorate Defense Trade Controls – (202) 663-2828
  
  
• U.S. Department of Treasury, Office of Foreign Asset Control – (202) 622-2480

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Frequently Asked Questions

Develop a frequently asked questions (FAQs) list to provide explanations and examples designed to clarify complex situations or common misunderstandings specific to your company.  Document commonly asked questions regarding the AES filing process and export regulations.  The FAQs may include examples of:

• Other export regulation requirements, for example: based on the Bureau of Industry and Security (BIS), U.S. Customs and Border Protection (CBP), and the State Department,
  
  
• AES filing requirements,
  
  
• Definitions and explanations of specific terms, such as the USPPI, Routed Export Transaction, Authorized Agent, et cetera
  
  
• Common Terms and Acronyms (example listed in Appendix B), and
  
  
• Helpful Web sites (example listed in Appendix C).

Please visit the FTD website at http://www.census.gov/trade for FAQs compiled over a period of time to view the types of questions the trade asks about the AES, regulations, tariff schedules, and related topics.  For additional assistance in reporting export shipments of commodities on the Commerce Control List, refer to the BIS Export Management System.  The BIS website address can be found in Appendix C.  Information on the different export schedules such as U.S. Customs Ports by code and description, Country and Territory Destination by Code and Description, and Air Carrier Codes listed by name may be found at the following website at http://www.cbp.gov/xp/cgov/home.xml 

BEST PRACTICES:  Classifying Commodities

In order to file your export shipment, you must know the 10-digit Schedule B number(s) for the commodities you are exporting.  The Schedule B and its import counterpart, the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), are based on the six-digit international Harmonized System (HS).  Before attempting to classify a product, you should have its complete description and knowledge of the product’s function, composition, and characteristics.  While AESDirect and AESPcLink offer look up capabilities to classify products, this function provides limited descriptions.  Do not rely solely on the limited lookup functions within the AESDirect and AESPcLink software for classifying merchandise. 

After identifying possible codes, closely read the descriptions for the 4-digit heading and subsequent subheadings in the Schedule B number, paying close attention to indentations and alignments.  Follow through the detailed descriptions until you arrive at a complete, ten-digit classification code.  For further classification guidance, read pertinent section, chapter, and statistical notes in the Schedule B/HTSUSA manual posted at the website cited in the preceding paragraph.  An online search of the Schedule B Index produces a list of descriptions and their six-digit codes or ranges.  Selecting a link from this list brings the user directly to the four-digit heading in the text version of the Schedule B/HTSUSA manual.  After reading the heading and verifying that it is the appropriate location for the commodity in question, the USPPI or AES filer should then compare the subsequent subheadings, paying close attention to indentations and alignment.  Upon determination of the best six-digit subheading, repeat the process of comparison to find the correct Schedule B number.

Use the Schedule B search engine or manual, available at http://www.census.gov/foreign-trade/schedules/b/index.html to assist in your initial classification and for periodic review and updates.

BEST PRACTICES:  Export Checklist

Develop a checklist that identifies what the staff must do prior to submitting a shipment transaction via the AES.  A checklist provides a tool for collecting information and establishing procedures to ensure that your organization complies with FTSR and with export regulations of other government agencies.  The following are some examples of the items that should appear on your checklist:

• Check if the goods being shipped require licenses (Refer to the BIS, State Department, Office of Foreign Assets Control or other government agency website in Appendix C),
  
  
• Check the consignees name against the Denied Parties List (Refer to the BIS website in Appendix C),
  
  
• Verify that the ultimate destination is not a sanctioned country (Refer to the Office of Foreign Asset Control website in Appendix C),
  
  
• Confirm that an Internal Transaction Number (ITN) is received for each shipment submitted,
  
  
• Take appropriate action to correct all fatal errors,
  
  
• Based upon the estimated date of departure, determine the filing deadline:
• Option 2 filers must file prior to export,
• If the USPPI is an Option 4 approved filer (Post Departure), the USPPI or authorized agent must file within 10 working days of exportation, 
  
  
• Verify that the commodity classification code is from the current Schedule B/HTSUSA manual,
  
  
• Ensure the classification code properly identifies the commodity being shipped, and 
  
  
• Verify that the commodity code is 10 digits with no embedded spaces or characters.

BEST PRACTICES:  Software Enhancements

Software Selection

The software (proprietary or purchased) used to file in AES should contain certain edits that will flag/reject invalid export information before it is submitted.  For example, if the product value is missing, the selected software should reject the shipment, requiring the filer to correct the error before it is transmitted to AES.  Once the errors are identified, correct them immediately.   Companies must ensure that they have current updates to code tables as well as the most recent error messages built in the software.  This allows a company to be proactive in identifying errors before the AES records are transmitted.

If you use the standard-edition AESPcLink software, you must update the software and tables on all individual computers using the software.  If you use the network-edition (LAN) software, your network administrator must update the software and tables for all users.  We recommend that you perform the update functions at least once per month, or more often if you experience coding errors. 

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Daily Reports

Develop or purchase software that has the capabilities of identifying unresolved errors by running specific reports based on different types of criteria.  For example, the software could generate a report for “Shipments without an ITN,”  “Shipments with an ITN,”  “Shipments pending response,”  “Shipments reported over 24 hour time period,” etc.   The ability to create these reports gives the filer a snap shot of their progress with compliance alerts, fatal errors, verify messages, etc.  If you are a USPPI with an authorized agent that files on your behalf, request that your agent provide you with reports of these types.

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