The fundamental purpose of verification for the foreign company is to prove the accuracy of the responses it has submitted. One of the most difficult aspects of verification is understanding the methodology used by the Commerce Department to measure accuracy. The Commerce Department does not check every number in the response; to do so would be impossible. Rather, it selects certain transactions as examples. If those examples are verifiable and accurate, and if no problems surface, the Commerce Department assumes that the remainder of the response is also accurate. A few minor mistakes (for example, transcribing the wrong number or arithmetic mistakes) are inevitable. The greater the number of mistakes, however, the greater the risk that the Commerce Department will reject all or part of the response.

It is important to remember that this 'spot check' standard of proof has both subjective and objective aspects. The particular Commerce Department staff person conducting the verification must be satisfied that each element of the response has been adequately verified. Obviously, different people apply somewhat different and subjective standards of proof. Depending on personal attitudes and prior experiences, different Commerce Department staff might be satisfied by different levels of proof.

In addition to being personally satisfied, the Commerce Department staff person must also have sufficient objective information to write a report that will satisfy his or her superiors in Washington DC that the verification was complete and successful.

Is it better for the foreign company to have an inexperienced Commerce Department verifier visit the company? The answer is not as obvious as it appears. On the one hand, a verifier who is not familiar with accounting systems may be more likely to perform a superficial verification that overlooks questionable aspects of the response. A less experienced verifier is also more likely to concentrate on trivial points and to neglect the fundamental portions of the response. If these parts of the response are problematic, then the foreign company might benefit from a verifier who 'cannot see the forest for the trees'.

Nevertheless, because the Commerce Department's verifiers must prepare a detailed report about the verification, a foreign company is often better off with an experienced Commerce Department staff person at the verification. Although the verification itself may be more difficult - the experienced person may have a higher standard - at least at the end of the verification the company will know what was adequately verified and what issues may raise problems. The judgements of inexperienced or lenient staff people are sometimes reversed or ignored by the supervisory staff in Washington. In addition, the verification must ultimately withstand scrutiny by the lawyers for the United States domestic industry, and possibly by the Court of International Trade. A verification by an experienced staff person is more likely to survive this scrutiny.

The level of detail required in a verification is often difficult for a foreign company to understand. For example, the verifiers sometimes ask for individual employee time cards to substantiate labour costs, or daily production records to support the total output recorded in a company's accounting records. Verifiers also often ask for proof, such as bank statements or receipts, that the company paid particular invoices for expenses. The purpose of such inquiries is to reach the most basic accounting records that a company maintains, the records that are least likely to be forged or altered.

Often the requests for underlying source documents seem silly. Often the requests are silly, and provide the Commerce Department staff person with little, if any, useful information. Many companies justifiably ask why, if a company maintains a regularly audited accounting system, the Commerce Department is so suspicious and reluctant to accept the results shown in the normal accounting records and the audited financial statements. It is important for company officials to remember that the verifier may have only a vague idea how accounting systems are structured. Rather than try to educate the verifier, it is usually best just to respond to the request, no matter how pointless, unless the request requires an unreasonable amount of work. Unfortunately, the subjective aspects of the standard of proof are very important, and so foreign companies have little choice but to make good faith efforts to comply with every request.

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