Memo For: FTZ Staff

Re: On Site Monitoring Guidelines

The purpose of our monitoring visits is to physically inspect FTZ facilities and records to determine whether the activity is within and conforms to the scope of authority indicated in FTZ Board Orders, whether the zone/subzone is conforming to general FTZ Board requirements and whether the annual reports submitted to the FTZ Board are accurate. This can be done by observing activity, reviewing the zone record keeping and inventory control system and sampling actual shipment records/entries. This should be done in coordination with Customs (Port Director or FTZ inspector).

1. Review zone structure, zone schedule and zone records of sites and orders with grantee or grantee representative.
2. Inspect the physical facilities and activity as a check to generally assess whether the activity is the type and size of that authorized.
3. Review zone Customs inventory control system with zone operator, including automated Customs reporting procedures, inventory method and software.
4. - Review and discuss the FTZ annual report format to ensure there is a thorough understanding of our reporting requirements and the methodologies involved in calculating the merchandise figures. Provide zone grantee and operator with latest FTZ annual report format.
   - Review the latest annual report submitted by the zone to the FTZ Board and discuss with zone/subzone operator the basis for the numbers.
5. If subject to special restrictions, discuss compliance measures.
6. Sample some weeks from actual record keeping documents (e.g., zone record of receipt supporting the 214, shipment records supporting the entry and export documents, journal entries) Determine whether such weeks are typical, and assess the extent to which the annual report numbers are consistent with the samples.
7. Sample source documents (i.e., invoices, CF-214, 3461, 7501, 7512) and discuss how they are generated.
8. For subzones, review the level of foreign and domestic status merchandise in inventory and determine whether they are consistent with subzone plan. Note labels of components for country of origin, if possible, during plant visit.
9. Discuss and check level of exports.
10. Meet with local Customs officials and discuss the FTZ operational plan and actual operations, including compliance with scope and restrictions. Have there been any problems, issues, fines?
11. Discuss with zone grantee and Customs the results of any recent Customs spot checks, compliance assessments, audits, violations, penalties or liquidated damages. Discuss informed compliance principles.
12. Assess the level of training completed by the grantee and/or zone operators. Discuss the types and content of FTZ-specific training sessions attended and dates, and review the need for further training.