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How to survive an FMCSA off-site audit

For the first time, Federal Motor Carrier Safety Administration officials last year began issuing motor carrier safety ratings based on off-site reviews. While the chances of an auditor showing up on your doorstep is diminishing, the rise in off-site audits opens up a new threat to carriers. And with safety ratings now being issued based on these audits, the stakes have never been higher.

“While a motor carrier’s chance of being selected for an audit is lower than in the past, the potential consequences are high if your operation is selected, despite nearly half of audits being done off-site,” explained Daren Hansen, senior editor of transportation safety for J. J. Keller & Associates Inc. “Statistics show that auditors are likely to find violations and can impose steep penalties and drop your safety rating as a result.”

The rise of off-site FMCSA audits

The off-site audit has been growing in use by FMCSA, which sees the approach as a more effective way to reach more carriers in a timely manner. In a 2017 report to Congress, the agency noted an off-site audit took 33% less time to complete and saved FMCSA 58% on travel costs. Previously, nearly all audits were on-site, causing disruption to the carrier’s operation.

Off-site audits through the first four months of 2022 are on pace to surpass the previous high set last year when 3,098 such investigations were done at the federal level. Through April 29, 1,903 off-site audits have been conducted at the federal level this year, representing 40% of all audits to date.

When an FMCSA auditor visits a carrier for an on-site audit, that auditor will look through records and he or she might talk to fleet personnel. Problems can quickly escalate as auditors conduct comprehensive reviews of the entire operation. Conversely, an off-site audit is less intrusive and often more targeted to specific trouble areas. An auditor will request certain records the carrier must supply — electronically.

“With off-site audits now being one of the FMCSA’s primary enforcement tools, carriers need to be prepared to upload compliance documentation to the agency on short notice. Electronic records are essential for a quick and accurate response to the agency,” Hansen said.

Why FMCSA audits matter 

FMCSA uses audits to discover both acute and critical violations. A carrier is ranked in one of three ways — satisfactory, conditional or unsatisfactory. A conditional rating says the carrier “does not have adequate safety management controls in place to ensure compliance,” a blog posting on J. J. Keller’s Encompass website notes. A carrier with an unsatisfactory rating is prohibited from operating commercial motor vehicles. Audits are typically triggered by incidents, complaints about a carrier or through a random selection process.

Whether they are on-site or off-site, a poor audit can be bad news for a carrier. Third-party logistics provider Armstrong Transportation documents on its website how it uses carrier safety ratings.

“Many customers require the use of satisfactory carriers only,” it said. “To be considered by Armstrong, a conditional carrier must submit their FMCSA cover letter formally requesting an upgraded score based on corrective action. Armstrong will also request the carrier’s SMP to ensure a plan for corrective action is satisfactory to Armstrong.”

2021 FMCSA audit data

According to FMCSA data on its 2021 audit activity, the number of audits increased 6%, with 95% of them resulting in at least one violation. Acute violations, considered the most severe, increased 30% over 2020, and critical violations (which include missing records) increased 37%.

Hansen noted that missing records are easier to document through an off-site electronic audit. At least 65% of all critical violations related to recordkeeping, including seven of the top 10. The top 10 audit violations of 2021 that could affect a carrier’s safety rating:

Not using the proper method to record HOS.

  1. Falsifying HOS records.
  2. Utilizing a driver with a suspended or revoked CDL.
  3. Failing to keep inspection and maintenance records.
  4. Failing to keep driving records.
  5. Using a driver before getting preemployment drug test results.
  6. Failing to keep HOS supporting documents.
  7. Failing to inspect vehicles annually.
  8. Not having a drug and alcohol testing program.
  9. Failing to test drivers randomly.

What FMCSA’s audit data tells carriers

“The outcome of an audit largely rests on the state of your documentation. You may have only a few days to upload requested documents for review, so there won’t be time to fix errors or find missing paperwork,” Hansen said.

Electronic recordkeeping goes a long way to helping navigate an audit of any kind, but especially an off-site audit. J. J. Keller offers the Encompass Fleet Management System that helps carriers organize DOT-required records such as eLogs, driver qualification, and vehicle inspections and maintenance records.

“Motor carriers need to pay attention to HOS records because they alone could result in a downgraded safety rating,” Hansen said. “Being cited for a single critical hours-of-service violation during an audit will automatically bring your safety rating down to conditional. If combined with other violations, a carrier could face an unsatisfactory rating and an order to cease all vehicle operations.”

The average settlement paid after an audit reached $6,626 in 2021, Hansen noted, and smaller carriers are more likely than larger carriers to be audited. FMCSA data showed that 83% of audited carriers last year had 20 or fewer power units, and 54% had six or fewer.

And even though more audits are being conducted remotely, the number of conditional ratings is increasing. The data shows that just 27% of carriers last year received a satisfactory rating, which was down from 40% in 2017. Conversely, 33% of carriers received a conditional rating, which not only can lead to some 3PLs and shippers pulling business but can also increase insurance rates and lead to bigger judgments against the carrier should it end up in court for an incident.

“In the age of off-site auditing, now more than ever, your business survival depends on storing your documents electronically, keeping them up to date and being compliant,” Hansen said. 

Talk with a J. J. Keller compliance specialist about the new features of the Encompass Fleet Management System, including award-winning training, a regulatory library and a new dual-facing dash cam.

Click for more articles by Brian Straight.

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