Source documents are extremely important in a verification. The Commerce Department is reluctant to accept testimonial evidence on any point; it wants to see documentary evidence. The particular documents used in individual verifications can vary considerably. The following documents, however, are used in most verifications:

- Financial statements - Foreign companies normally use both the audited annual financial statement and any semi-annual reports.

- Management report/internal profit and loss accounts - These documents are useful for identifying monthly expenses. They also sometimes provide more detailed reporting of expenses than do the financial statements. For example, companies often keep separate, unaudited records by product line prior to aggregating them in the financials.

- Trial balance – The trial balance reconciles the general ledger to the financial statement, but, unlike the general ledger, the trial balance is usually aggregated. At times when the company does not want the verifiers to examine the detail in the general ledger, the trial balance may serve the same purpose without revealing the detail.

- General ledger - This document is usually the crucial link between the other accounting records of the company and the financial statements. A thorough verifier will trace every figure being verified to the general ledger.

- Sales journal - The sales journal is used to show that the response included all of the appropriate sales. Using this document may be a problem because some companies do not incorporate the sales journal into their audited accounting system; instead, they use it as a management tool. When that is the case, the company will have to prepare documentation that reconciles the response, the sales journal and the general ledger.

- Accounts receivable aging report - The verifier will use this document to check the dates of sale and payment for all the individual sales chosen for verification. Receivable periods on individual sales will also be compared to the average receivable period reported in the response (on which the direct credit expense is calculated) to determine whether there are any large variations that call into question the use of an average.

- Cash receipts journal - The verifier will trace sales receipts to this journal to see whether they are properly entering the company's accounting system. The Commerce Department believes that unreported discounts and rebates can be detected in this way.

- Cash disbursements journal - The verifier will trace disbursements for expenses to this journal to check whether expenses claimed in the response are properly reported. This journal is also considered by the Commerce Department a potential location of unreported rebates.

- Loan ledger - Some of the information reported for the direct credit and inventory 'imputed interest' expenses will be traced to the loan ledger. For many companies the loan ledger is simply part of the general ledger.

- Sales documents - Each sale in the United States or other market must have a corresponding purchase order and sales invoice. For export transactions, there are usually a number of other documents (such as bills of lading, letters of credit, shipping documents and export licence documents) that the verifier reviews.

- Payment records - The verifier usually asks to see some documentary proof that the price shown on the invoice is the actual price the company received. This demonstration often involves matching total invoice amounts with cancelled cheques or with the bank statements showing the appropriate amounts being credited to the company's account.

If the investigation involves cost of production, numerous cost accounting records also have to be available for review. The particular documents needed vary depending on the type of cost accounting system maintained by the company. These are discussed in more detail in the chapters on cost and constructed value investigations.

Countervailing duty verifications involve many of the same documents, particularly the financial statements and the basic accounting records. The Commerce Department staff wants to be able to trace through a company's accounting system any subsidies being received. In addition, depending on the types of programmes being investigated, different documents might be necessary. For example, verification of an export loan programme would involve careful review of bank borrowings to establish benchmark interest rates. Verification of a tax benefit would involve careful review of the tax returns for  all relevant years, including those going back a number of years if the programme involves carry-forward issues. Verification of a government equity infusion would require careful review of all studies and reports that discuss the commercial viability of the company and its future prospects.

The Commerce Department insists on copying some of the source documents reviewed during the verification. The purpose of copying is twofold. First, copying the source documents eliminates the need to take detailed notes during the verification; the Commerce Department staff can refer to the documents themselves when they write the verification reports. Second, the documents become part of the administrative record that the Commerce Department (and the parties, including those representatives of the domestic industry with APO access) can use later, in any court appeal, to support its decisions. Because of this Commerce Department practice, the foreign company should plan for copying to take place. If any special permission will be needed to release any of the documents or records to the Commerce Department, or to make copies of certain company records, the company should obtain that permission before the verification starts.

Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures