The first point is to know if your company has any direct or indirect (for which you can also be responsible and liable) import-export transactions. Many companies are simply unaware of the scope of their trade risks in this area, but ignorance is no excuse under the law and luck is not a strategy!

In another blog post, we’ll discuss how to get complete and accurate import-export data[1] for your company so you make data-driven decisions, but for this month, we’ll assume that you have the data, are aware of your trade flows, and have instituted internal controls.

Any organization must know that there are hundreds, perhaps thousands, of laws and regulations that define the legal requirements for imports, exports, deemed exports, technology transfer,  and re-exports. Given this complexity, how can an organization meet its objectives and manage its trade  risks? By implementing an internal control system for this business-critical area!

So what is internal control? According to Wikipedia, “Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization’s objectives [emphasis added] in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls trade risks to an organization.” See

Further, after financial turmoil in the 1980s, certain standards were developed to guide companies on essential elements in their internal control efforts. Notably, the Sponsoring organizations of the Treadway Committee (“COSO”) identified five key elements of adequate internal controls. See  If you deal solely in import-export operations and other trade matters, talk to your company’s finance and accounting Directors: they will be very familiar with the COSO standards. You can learn a lot form them, and then apply those principles to the import-export area.

trade risks import exportThe five key internal control elements to better manage trade risks in import/export are:

How can this translate to your import-export control program?

COSO Element Trade Program Element Comment
Control Environment Policy/Code of Conduct Tone at the Top
Risk Assessment “Heat Map” – ID areas/priorities Risk Analysis
Information /Communication Meetings/Training/Email Adequate Resources
Control Activities Documented SOPs Interdependent/Core Areas
Monitoring Pre-, Post-Review/Correction Audit/Assessment


If you haven’t got documented evidence of your control activities, from a government-review perspective, they don’t exist! And here are some of the major control areas that a good trade risks compliance program should have:

If you aren’t sure if your controls are adequate, let us know! We have scalable solutions to identify any gaps you may have and help you close them in the most efficient and effective way possible.


[1] Livingston International can help you request and receive all your trade data. )

Let Livingston Global Trade Management help you identify your trade risks today!

© Randi S. Waltuck, 2014 All Rights Reserved.


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