System reevaluations

Course: Authorized Economic Operator

Unit 3: How to access the AEO program
 Contents

1. Internal reevaluation .............................................. 2

1.1. What, when and why ........................................................... 2
1.2. Apply necessary improvements ............................................ 2
1.3. Communications with customs ............................................. 2
1.4. Suggest temporary certification suspension ........................ 3
2. External reevaluation .............................................. 3
2.1. Auditing result ..................................................................... 4
2.2. Consequences ...................................................................... 5
2.3. Suspension and revocation periods ...................................... 5
2.4. AEO certificate validity periods ............................................ 5

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1. Internal reevaluation
In addition to regularly performing system maintenance in order to keep it
continuously updated, we must also include an internal reevaluation during the
certification process.

1.1. What, when and why

This involves carrying out a complete internal audit that enables us to validate all
procedures and the integrity of the supply chain.

We shall check if training needs have been addressed, if reception plans had been
properly applied, and if risk analysis criteria for trade partners has been fulfilled. We
will also check access controls, compliance with verification rounds, packing areas,
goods loading or reception... All in all, the entire system will be reevaluated.

This type of evaluation should be performed at least once a year.

1.2. Apply necessary improvements

Here as well, the same as with maintenance procedures, the obtained results and
conclusions will be highly valuable, providing us with a reliable reflection of the
company’s current situation and of both its strengths and weaknesses. It will then be
essential to analyze these conclusions and apply the necessary improvements.

1.3. Communications with customs

Very important: if we detect any type of security error that could compromise (or has
been able to compromise) supply chain security, we must immediately inform the
customs authority of the error, and indicate what has been done to correct the

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©2017 Inter-American Investment Corporation, all rights reserved, for authorized use only.
situation. The customs administration is our partner and we should always act in a
fully transparent manner.

As a result of this evaluation, we may detect supply chain security failures that entail
the need to change part of our procedures, or that indicate chain integrity is not
guaranteed.

For example, we could detect that part of the closed-circuit television image in the
loading zone is not broad enough to clearly see the entirety of operations. Or, we may
detect that the company that manages the shipping from our factory to the port
cannot guarantee the integrity of their portion of the chain. In these cases, we must
evaluate the situation and know that in these circumstances, our certification is not
meeting the security requirements.

1.4. Suggest temporary certification suspension

If we detect any type of security failure in the supply chain, we must immediately
inform customs and suggest a suspension of our certification for the period necessary
to resolve the anomalies detected. It is always preferable to suggest suspension of
our own accord, rather than have customs, during a check, suspend our certification.

Once these failures have been solved and their functions properly tested, we may
then inform the customs administration that we once again are able to meet the
conditions to guarantee chain integrity. At this time, customs may want to check our
compliance with said conditions and once again activate our AEO certification.

2. External reevaluation
The other possibility is that an external reevaluation will be performed by the
customs administration whenever it considers appropriate, in order to verify our

FINPYME and CII brands, names and logos are the intellectual property of CII.

©2017 Inter-American Investment Corporation, all rights reserved, for authorized use only.
degree of compliance. In this case, the customs administration will perform the audit
and check of all procedures are functioning properly.

2.1. Auditing result

Its conclusions may imply three types of action:

1. Recommendations for improvement to offset errors or mild deviations, granting

a set period of time for execution of the same.
2. Certification suspension when the detected shortcomings are severe and prevent
the guarantee of security. Suspension represents an automatic temporary loss of
our certification. Once the situation has been resolved, customs may perform
another compliance audit to verify that our company is once again secure. This
doubtlessly means that our company’s internal controls have not been
performed correctly as we should have detected said errors either through
maintenance or through reevaluations. As such, when this occurs, we must
perform an internal system review to prevent similar situations in the future.
3. Cancellation and revocation of our accreditation as an AEO business, when
customs has detected errors or deviations severe enough to permanently prevent
our business from being considered a secure business. This is different from the
previous situation which only implied a temporary suspension. In this situation
our company has severely failed to comply with AEO criteria, abandoning the
responsibility implied by accreditation and violating the trust bestowed upon us
by the customs administration.

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©2017 Inter-American Investment Corporation, all rights reserved, for authorized use only.
2.2. Consequences

Both suspension by customs and cancellation and revocation represent additional

damage beyond the loss of the AEO advantages and benefits. Suspension perhaps to a
lesser degree, but both entail a loss of prestige and credibility that is not easily
quantified and carries irreparable consequences.

2.3. Suspension and revocation periods

These periods may not be the same in different countries throughout the region. Each
program may set its own specific periods for both suspension and revocation.

a. In the case of suspension, a minimum period may be established during

which the company will not be certified, such as 3 or 6 months, for example.
b. In cases of cancellation or revocation, each customs administration may
decide the exclusion periods. For example, a company whose certification
has been revoked may not reapply for certification during a 3 year period.

2.4. AEO certificate validity periods

Each country also has the power to establish its own validity periods for AEO
certification. Some countries have opted to create a certification with no expiration
date and subject to both internal reevaluations and regular customs audits, while
others have set a fixed validity period of 2, 3 or 4 years, at which time businesses
must go through the established application process once again.

FINPYME and CII brands, names and logos are the intellectual property of CII.

©2017 Inter-American Investment Corporation, all rights reserved, for authorized use only.
 6

FINPYME and CII brands, names and logos are the intellectual property of CII.

©2017 Inter-American Investment Corporation, all rights reserved, for authorized use only.