ATF Audit - What to Know and What to Expect

ATF Audit - What to Know and What to Expect
ATF Audit – What to Know and What to Expect

The Gun Control Act of 1968 (also known as GCA) was a monumental change in controlling guns on a national level. In the wake of President John Kennedy, Attorney General Robert Kennedy, and Dr. Martin Luther King Jr.’s assassination, the GCA was enacted to help control the distribution of firearms. This Gun Control Act of 1968 also helped to classify different types of firearms and ammunition, and along with it, different types of firearms offenses.

The GCA became the tip of the proverbial iceberg as additional Acts were incorporated. The Firearms Owners’ Protection Act of 1986, Brady Handgun Violence Prevention Act of 1993 and NICS Improvement Act of 2008 were all enacted to bring cohesion and specificity to the original foundation of gun control.

And, in order to ensure compliance, ATF audits were born. Now, in 2019, the ATF inspected 13,079  of the 130,048 active Federal Firearm Licensees (FFLs) nationally. What’s more astounding is that only 52.84% of FFL dealers inspected had no violations, meaning a little under half of the FFL dealers inspected had reports of violations, or worse, up to and including revocation of their FFL.

In order to stay compliant, it’s imperative to have a clear understanding of what the ATF will be looking for during these inspections.  In this article, we’ll be diving into some ATF facts, the typical ATF audit process, common mistakes FFL dealers make that you can avoid, and finally, steps to ensuring your peace of mind moving forward.

ATF Audit Facts

  • ATF may conduct one unannounced compliance inspection of an FFL annually.
  • ATF inspections are conducted to help FFLs avoid future violations and gain a better understanding of the regulations.
  • ATF randomly selects FFL to be inspectioned; however, not completing ATF trace requests in a timely manner may increase your chances of being inspected.
  • ATF inspections involve Industry Operations Investigators (IOIs) who will review recordkeeping, firearm inventory, and business procedures.
  • IOIs will also provide information on best practices for maintaining compliance with laws and regulations.

The ATF Audit Process: What to Expect When You’re Expecting

Initially, it might sound daunting to have an inspector come to your FFL and view your business processes. But that’s why it’s important to have a clear idea for the day an ATF inspector knocks on your door.

When an IOI visits your shop, they will be performing an audit on every serialized item within your business. Specifically, the inspector will be auditing your Bound Book (also known as a Book of Acquisition and Disposition) and matching the serial numbers in your books with the actual tangible item in your shop. They also will conduct the same trace backwards (auditing your shop, and tracing the serial number in your Bound Book). Either way, your Acquisitions and Dispositions Book should mirror your business’s serialized transitions down to the letter.

If there is a discrepancy in the following, the investigator might give you a citation:

  • Records kept
  • Inventory on site and not on book
  • Inventory on book but not accounted for on site
  • Regulated information not properly recorded (i.e. Manufacturer, Importer, Model, Serial Number and Caliber and Gauge)
  • Discrepancies on your paperwork
    • ATF F 4473s
    • NFA forms
    • Multiple Sale Forms

 Keep reading for a detailed list of the most common violations during ATF inspections.

ATF FFL Audit Violations

Once ATF has conducted their inspection of your FFL, they’ll hold what is known as a “closing conference” with responsible persons on the FFLs.  ATF will provide information in writing letting you know of any violations, or if you have your compliance ducks in a row, they’ll give confirmation that you aced the test with no violations to be reported. The most cited violations to keep in mind while you’re properly maintaining your bookkeeping and files include:

ATF’S MOST FREQUENTLY CITED VIOLATIONS
Provided by atf.gov 2019 fact sheet

Failure to obtain a completed ATF F 4473

Failure to maintain an accurate/complete/timely Acquisition and Disposition (A&D) record

Failure to complete forms as indicated in instructions

Failure to record NICS contact information on ATF F 4473

Failure by transfer to sign and/or date ATF F 4473

Failure to verify or record purchaser’s identification document on ATF F 4473

Failure to report multiple sales or other dispositions of pistols and revolvers

Failure to properly record firearms information on ATF F 4473

Failure to complete a NICS/POC background check

Failure to maintain an accurate/complete/timely manufacture or acquisition record

Notice a pattern here?  Your bound book and ATF F 4473s are keys to you having a successful ATF inspection.  Your FFL’s compliance program or SOP would be well served to be focused on these key recordkeeping requirements of the GCA.

Peace of Mind Moving Forward

There’s nothing more rewarding than the peace of mind that comes when you’ve crossed every “t” and dotted every “i” prior to an ATF inspection. Moving forward, it’s important to implement best practices to ensure that peace of mind is here to stay. We’ve laid out a few tips and tricks to get you going in the right direction:

Rules can change, especially at the state level, so it’s important to stay in the know about what is expected of you while you conduct your business. If you need assistance, there are resources out there to help you, like Orchid Advisors, a software and compliance solutions company that assists in educating and maintaining top-tier ATF compliance.

  • Conduct monthly self audits

Practice evaluations before the “big day” can really help show you where the processes you might need to button up or smooth out. When the ATF does come to make a visit, you’ll have confidence in your processes.

  • Simplify your daily procedures

The more organized you are, the less time it usually takes to complete self-audits or an ATF audit. Software like Orchid’s eBound and the new 4473 Cloud digital 4473 storage solution can help you stay organized by using technology to minimize your compliance risk so that inspections take a fraction of the time they do with paper.

As you can see, ATF audits are extremely important in maintaining ATF compliance. While it may seem daunting at first, there are now modern ways to help fully prepare for an inspection and leave you with the peace of mind to have a smooth-running business, in the books and in the shop. Knowing what the ATF is looking for during their inspections will help you in implementing the right procedures moving forward so that you can be citation-free.

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Travis Glover Oct. 5th, 2021

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