SOE: Supply Chain Audits

February 2, 2024

SOE: Supply Chain Audits

Leading up to the implementation of the Strengthening Organic Enforcement (SOE) Rule approaching on March 19, 2024, this article is in relation to the regulation change regarding: Supply Chain Audits.

Supply Chain Traceability Audits
This new regulation is under §205.501(a)(21) and allows for all accredited certifiers to conduct supply chain traceability audits. Supply Chain Traceability Audits are defined under §205.2 as the process of identifying and tracking the movement, sale, custody, handling, and organic status of an agricultural product along a supply chain to verify the agricultural product’s compliance.

Selection Criteria
We at PAO will be selecting operations based off of a risk assessment, and conduct these supply chain inspections throughout the year.

The selection criteria includes, but is not limited to the following:

1. Operators involved in investigations/ complaints

2. Operators that handle/produce high risk commodities, per the NOP’s criteria

3. Operators involved in residue detection cases

4. Operators chosen per the NOP’s request

5. Operators chosen per PAO’s request, based on investigation results

Please note: operators selected for these types of audits are those considered “higher risk”. PAO will select operators based on the criteria listed above.

Organic Supply Chain Audits may be conducted at an annual inspection, or may be independently scheduled at any time. They also may or may not be unannounced and may be utilized as a full inspection as per requirement §205.403.

Audit Criteria
If your operation is chosen, the following areas will be reviewed/conducted during the onsite inspection that include, but are not limited to:

• Traceability system & exercise

• Organic Fraud Prevention Program

• Mass Balance exercise

• Master Supply Chain & Product List and related supply chain documentation

• Any previous non-compliances in relation to any of the above mentioned areas

Scheduling Procedure
PAO will communicate with operators and disclose if chosen for a Supply Chain Audit via a letter. These may be scheduled at the time of your annual inspection, or conducted independently.

 If the audit is announced, the operator will need to contact PAO within the specified timeframe to schedule the onsite inspection. If the audit is unannounced, the operator will be presented with a letter stating the reason for the visit.

If a Supply Chain Audit is rejected, a Noncompliance may be issued and PAO will follow up at a later time to schedule the audit.

Be aware that per 205.504(b)(7) the audit findings can be shared with other certifying agents as needed, to determine compliance.

Supply Chain Audit Cost
If chosen, operators will be responsible for the cost of the Supply Chain Audit. This cost is a result of operations requiring additional compliance oversight. Please reference “Supply Chain Audit” in our fee schedule. Our Fees can be reviewed here.

If additional follow up with other certifying agencies is required to verify compliance of your supply chain, an additional Investigation Fee will apply.

Failure to Comply
Failure to not meet these new requirements after March 19, 2024, may result in Non-Compliances or further adverse actions. For information on all SOE updates, click here.

Addtional Information

For Information on all SOE updates, click here.

If you have any questions regarding Strengthening Organic Enforcement, please do not hesitate to contact us at: QAOrganics@pao-usa.com or 805-623-5248.