3.III.5. Parent companies and subsidiaries with common procedures or systems

Regardless of the legal status of each company, the relevant criteria must, in principle, be met by the applicant.

The specificities of outsourced activities have already been explained in Part 2, "AEO Criteria" of these Guidelines. The same principles apply if activities are outsourced within a group of subsidiaries.

In any case, when it comes to parent companies and subsidiaries, there are several factors that must be considered and can influence the risk analysis and audit process. First, the connection between the two must be clarified, as well as whether they influence administrative and operational processes.

There are cases in which the parent company gives autonomy to a subsidiary. There are often at least profit-sharing agreements or similar arrangements between subsidiaries. Sometimes certain activities are outsourced within the group through contracts, which can result in a company lacking its own staff.

In other cases, certain specialized units perform tasks (shared services) for all companies belonging to the group.

In all these cases, the existing link can influence the probability of a risk occurring and the positive and negative impact of such risk.

It may be of practical importance when examining the application for AEO status to note that, in the case of common processes involving related companies, it will often be sufficient to check such processes only once.

This is also relevant if a particular unit of the group carries out specific activities for all subsidiaries (shared services) or if several different legal entities within the same group apply the same principles (corporate rules).

This can streamline the audit process, and specialized knowledge can also enhance the quality of the processes. At the same time, a group company's knowledge must always be assessed in light of the potential impact on subsidiaries. If a subsidiary with common corporate standards fails in its internal control system, it should not automatically be assumed that the same system has also failed in its affiliated companies, although customs authorities should consider reviewing these other systems (in whole or in part).