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How to Survive an FMCSA Offsite Audit

For the first time, Federal Motor Carrier Safety Administration officials last year began issuing motor carrier safety ratings based on offsite reviews. As the chances of an auditor showing up at your doorstep decrease, the increase in offsite audits opens up a new threat for carriers. And with security ratings now issued based on these audits, the stakes have never been higher.

“Although the chances of a motor carrier being selected for an audit are lower than in the past, the potential consequences are high if your company is selected, even though almost half of the audits are carried out off-site”, explained Daren Hansen, Transportation Safety Editor for JJ Keller & Associates Inc. “Statistics show that auditors are likely to find violations and can impose severe penalties and lower your safety rating accordingly.”

The Rise of Offsite FMCSA Audits

Offsite auditing is increasingly being used by the FMCSA, which sees this approach as a more efficient way to reach more carriers in a timely manner. In a 2017 report to Congress, the agency noted that an offsite audit took 33% less time and saved FMCSA 58% in travel costs. Previously, almost all audits took place on-site, disrupting carrier operations.

Offsite audits in the first four months of 2022 are on track to surpass the previous record from last year, when 3,098 such investigations were conducted at the federal level. Through April 29, 1,903 offsite audits have been completed federally this year, representing 40% of all audits to date.

When an FMCSA auditor visits a carrier for an on-site audit, that auditor will review the records and he or she may speak to fleet personnel. Problems can escalate quickly when auditors perform comprehensive reviews of the entire operation. Conversely, an offsite audit is less intrusive and often more focused on specific problem areas. A verifier will ask for certain documents that the carrier must provide — electronically.

“With offsite audits now a primary FMCSA enforcement tool, carriers should be ready to upload compliance documentation to the agency at short notice. Electronic records are essential for a quick and accurate response to the agency,” Hansen said.

Why FMCSA audits are important

FMCSA uses audits to uncover acute and critical violations. A carrier is rated in one of three ways: satisfactory, conditional, or unsatisfactory. A conditional note says the carrier “did not have adequate security management controls in place to ensure compliance,” notes a blog post on JJ Keller’s Encompass website. A carrier with an unsatisfactory rating is prohibited from driving commercial vehicles. Audits are usually triggered by incidents, carrier complaints, or a random selection process.

Whether onsite or offsite, a bad audit can be bad news for a carrier. Third-party logistics provider Armstrong Transportation documents on its website how it uses carrier security ratings.

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

FMCSA 2021 Audit Data

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

Hansen noted that missing records are easier to document with offsite electronic verification. At least 65% of all critical record-keeping violations, including seven of the top 10. The top 10 audit violations of 2021 that could affect a carrier’s security rating:

Not using the correct method to record HOS.

  1. Falsification of HOS records.
  2. Use a driver with a suspended or revoked CDL.
  3. Not keeping inspection and maintenance records.
  4. Not keeping driving records.
  5. Using a driver before obtaining the results of the pre-employment drug test.
  6. Do not keep supporting documents from HOS.
  7. Not inspecting vehicles annually.
  8. Not having a drug and alcohol testing program.
  9. Don’t randomly test drivers.

What FMCSA Audit Data Tells Carriers

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

Electronic record keeping is a great help in navigating an audit of any kind, but especially an offsite audit. JJ Keller offers the Encompass fleet management system that helps carriers organize DOT-required records such as electronic logs, driver qualification, vehicle inspections, and maintenance records.

“Motor carriers should pay attention to HOS records because they alone could lead to a downgrade in safety rating,” Hansen said. “Being cited for a single critical hours of service violation during an audit will automatically reduce your security rating 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 carriers audited last year had 20 horsepower units or fewer, and 54% had six or fewer.

And while more and more audits are being conducted remotely, the number of conditional ratings is growing. Data shows that only 27% of carriers received a satisfactory rating last year, compared to 40% in 2017. Conversely, 33% of carriers received a conditional rating, which may not only lead some 3PLs and shippers out of business, but can also increase insurance rates and lead to larger judgments against the carrier if it were to end up in court for an incident.

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

Chat with compliance specialist JJ Keller about new features in the Encompass fleet management system, including award-winning training, a library of regulations, and a new dual-sided dash cam.

Click for more articles from Brian Straight.

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