Did you know that only 44% of ATF compliance audits result in no violations? ATF audits are a fact of life for federal firearms licensees (FFLs), but that doesn’t mean that the audits need to be stressful or result in violations that are due to error. Being fully prepared for an audit is the best way to eliminate errors. You can do that by knowing at least as much as the industry operations investigator (IOI) and by implementing practices and systems that meet ATF requirements.
If you are an FFL, it’s your job to comply with all of the ATF regulations that have come out of the Gun Control Act (GCA) of 1968. Being as smart as an IOI means reading and knowing the regulations. Four resources that are handy to have at your finger tips are:
- International Traffic in Arms Regulations (ITAR): The annual edition of the ITAR is published every April 1. Amendments between periods are published in the Federal Register and is the official record.
- Federal Explosives License: If your ammunitions are greater than 50 BMG you need this license.
- ATF National Firearms Act Handbook: This NFA Handbook is not available in a printed version, so you will want to be sure to download an electronic copy. This is not a law book, but a reference book for you to find answers to your questions quickly.
- Federal Firearms Regulations Reference Guide – 2014 Edition: This guide contains information to help you comply with Federal laws and regulations for FFLs.
When FFLs receive ATF audit violations, it is often a result of inaccurate records. The inaccuracies may be from failing to record an event, entering the wrong date, skipping a field on the form or just typing the wrong information. When it comes to keeping your ATF recordkeeping, details matter. If you know the regulations, the next step is putting the right processes in place to accurately meet those requirements. This is where electronic bound book software makes a difference. Using A&D bound book software like Easy Bound Book™ takes away the headaches of the process. This system streamlines ATF recordkeeping requirements by recording information and automatically transferring that data to your accounting systems. You no longer need to worry about illegible handwriting, duplicate entries or lost pages.
Once your records are pristine and you know the regulations, you are ready for your ATF audit! Here are a few tips to help you breeze through the process.
- Prepare your employees in advance of the audit. Let them know what to expect and how to act.
- The IOI is on your site to review the A&D bound book. Keep your A&D records up-to-date and accurate. If you are using Easy Bound Book™ you can provide a complete record for the IOI and respond to inquiries quickly and easily.
- Don’t be concerned about the IOI’s questions. They are trying to understand what you do, not quizzing you to catch you in a mistake.
- If you have an IOI who is difficult to work with or rude, speak with an ATF field supervisor at the local field office.
- If ATF special agents show up at your site, they are usually not there for your A&D records. You should alert in-house counsel to meet with the investigators. Have at least two people present for any meeting.
- If you do get a violation report or warning letter, respond to the ATF with an action plan to solve the problem.
It’s important to meet federal regulations and keep error-free records, but ATF audits can be handled without stress if you are prepared. You can learn more about ATF compliance by visiting our blog.
Reduce Inventory without Losing Customers
“But customers choose my company because we always have what they want in stock!”
Can you really reduce inventory without losing customers? Some companies build their business model on having plenty of everything in the warehouse so that at a moment’s notice, they can rush out orders. The cost for conducting business this way, however, can be draining. And when you have to maintain A & D book, it can be even more challenging.
Inventory is a significant investment for many companies, sometimes even the largest asset. Sure, you want to reduce your inventory, but to do so without a plan for managing it more effectively can be disastrous. These five steps can help you plan and reduce inventory without losing customers to your competitors through the dreaded “out of stock” messages.
Five Tips to Reduce Inventory Investment
Not every business can reduce their inventory in the same manner, but everyone can probably tighten inventory levels to some degree. Try these five tips to reduce your inventory load and see where you can further reduce stock levels without harming customer relationships.
1. Reduce order times.
One reason why many companies maintain excess inventory is because it’s so hard to get new materials in the first place. Rather than wait weeks or months for an order, they’d rather keep items in stock so they can fulfill customer orders without delay. Yet this adds excess inventory and ties up capital that could better be used elsewhere. The answer may lie in reducing ordering cycles and quantities. With better inventory data, you can potentially order as needed, or order weekly in smaller quantities rather than ordering on a monthly schedule. Negotiating faster shipping times with vendors is another possibility. Seek faster modes of transportation, and understand the trade-offs between fast and inexpensive; you often pay more for faster delivery. Carry some safety stock, but reduce your total inventory to levels that better match customer demand.
A steady stream of inventory can be better for cash flow, warehouse management and filling customer orders, rather than larger, infrequent orders that fill the warehouse.
2. Change your order cycle.
A benefit to data systems such as ERP systems is that you can see when items need to be ordered in real time. You aren’t locked into an arbitrary order cycle. By changing up your order cycle and ordering in a way that’s better aligned with demand cycles, you can reduce your investment in inventory without sacrificing service to your customers.
3. Improve forecasting.
We mentioned that ERP systems provide real-time data, including inventory and order data. Reviewing orders and using the data found within your ERP system can help you improve forecasting. The better your forecast, the more accurately you can maintain inventory levels without overstocks.
4th Quarter 2016
In This Issue:
+ Are You as Smart as an ATF Industry Operations Investigator?
+ Reduce Inventory Without Losing Customers
+ Fun Facts about ATF Compliance Audits
+ Take Action When You Receive a Violation After Your ATF Audit
Fun Facts about ATF Compliance Audits
We can’t make ATF audits fun for you, but we can help ease the audit process with Easy Bound Book™. In the firearms industry, ATF audits are a fact of life. While you can’t avoid them, you can make sure that you have the processes and software in place so that you are a part of the 44% of compliance inspections that had no violations.
Here are a few ATF compliance audit facts based on 2015 data:
- In 2015, there were 139,484 federal firearms licensees—including dealers, manufacturers, importers, and collectors.
- The ATF conducted 8,696 firearms compliance audits. They closed 8,282 cases that had been recommended for prosecution. Of those, 4,031 resulted in convictions.
- The typical ATF case recommended for prosecution remains open over a period of about 4 years.
- Of the 8,696 compliance audits, only 44.25% had no violations.
- No violations: 3,848 – (44.25%)
- Report of violations: 1,162 – (13.36%)
- Warning letter: 1,021 – (11.74%)
- Warning conference: 444 – (5.11%)
- Revocations/Denials: 46 – (0.53%)
- Surrender in Lieu of Revocation: 20 – (0.23%)
- Other (out of business, etc.: 2154 (24.77%)
- Among the most frequently cited violations are several relating to ATF recordkeeping including:
- Failure to timely record entries in bound record (Acquisition and Disposition Book)
- Transferee did not properly complete Section A, F 4473
- Failure to complete forms as indicated in instructions
- In 2015, the ATF had 811 IOIs and 2,618 special agents. In 1976, when the ATF was established it had 828 IOIs and 1,822 special agents. However, the ATF budget grew in that time from $74 million to $1.201 billion.
Would you like to make sure that your ATF compliance audit goes as smoothly as possible? Learn more about audits with Easy Bound Book
Take Action When You Receive a Violation After Your ATF Audit
Finding out you have a violation after your ATF audit probably makes your heart race a bit. Here is a problem you don’t want to face! Of course, ignoring it won’t make it go away, so facing it and taking action is what you need to do.
In 2015, over 13% of audits resulted in a report of violations. This report outlines the rules that have been violated and what you need to do to correct it. If these are minor infractions, this is the end of the process. However, you can expect the ATF to keep the paperwork and check to see that you are doing it right at the next audit. Even so, it is best to respond with documented steps you plan to take to alleviate the problem.
Warning letters were issued 11.7% of the time after ATF audits in 2015. This is a formal response from the ATF and will let you know the penalties you face if you make further mistakes. Again, you aren’t being penalized yet, but you better make sure that you fix it for the future. Again, your best action is to respond with a formal letter stating what actions you plan to take.
Warning conferences are more serious and require a formal meeting at an ATF location. These happened about 5% of the time after ATF audits. The ATF expects you to provide an action plan for preventing further mistakes and measuring the effectiveness of the plan. You should submit the remediation plan in advance, but don’t write the letter unless you intend to follow through with the actions.
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