(based on WCO PCA Guidelines, Vol.1) “A structured examination of a business’ relevant commercial systems, sales contracts, financial and non-financial records, physical stock and other assets as a means to measure and improve compliance.” AN A ENFORCEMENT TOOL NOT A MEANS OF INVESTIGATING POSSIBLE FRAUD WHERE FRAUD IS SUSPECTED, REFER TO INVESTIGATION SPECIALISTS FORM OF INTERNAL AUDIT NOT DESIGNED AS A MECHANISM FOR CHECKING CONTROLS CONDUCTED BY CUSTOMS AT THE FRONTIER To assure that Customs declarations have been completed in compliance with Customs requirements, via examination of a trader’s systems, accounting records and premises; To verify that the amount of revenue legally due has been identified and paid; To facilitate international trade movements of the compliant trade sector; To ensure goods liable to specific import/export controls are properly declared, including prohibitions and restrictions, licenses, quota, etc.; To ensure conditions relating to specific approvals and authorizations are being observed Compliant trade facilitated at time of Customs clearance Customs gain better information and understanding of clients’ business Risk levels more easily assessed and reviewed Facilitates client education and comprehensive compliance management focus Customs can promote concept of voluntary compliance and self-assessment Customs administrations’ resources more effectively deployed Suspected fraudulent activities may be identified Provides platform for evaluating entitlement to certain authorisations; e.g. AEO status Post-importation transaction verification Port referrals Risk selection Disputed decisions/ importer requests Field / on-site audit Risk selection Office/ desk audit Risk selection Large business focus – special teams Transition from border-focused controls to PCA as the prime basis for Customs controls typically evolves over several years PCA implementation should be embedded in a wider facilitation/modernization context Infrastructure considerations Consider as a first step, post-importation transaction-based controls Legal and operational framework Strategic Planning Risk Management Relationship with other departments Customs laws and regulations should provide the authority to conduct an audit at the premises of the auditee. Necessary powers include the right to: access auditee’s premises; examine business records, business systems, commercial data relevant to Customs declarations; inspect auditee’s premises; uplift and retain documents and business records; inspect and take samples of goods. Customs laws and regulations should set out the rights and obligations of persons & companies involved in international trade. Provisions should include: The requirement to maintain specified documentation, information and records The duration for retaining such records (no less than the maximum period after importation for effecting duty adjustments) requirement to make such documentation, information and records available in a timely manner; right to appeal ; right to an explanation from Customs concerning determination of Customs value; right to expect confidential treatment of business documentation; right to clearance of goods at the frontier with provision of security. The audit plan should include the following : How importers will be selected/targeted How to improve compliance via self-assessment How to manage resources for PCA Relationship with other Customs sections: e.g. border control, risk management, enforcement etc. All auditors need a range of general skills including: accounting techniques and principles : knowledge of auditing standards and procedures; familiarity with Customs laws and regulations; general knowledge of Customs procedures (valuation, classification, origin, etc.); knowledge of computer-based accounting systems; commercial awareness and knowledge of business strategies in international trade Additional specialist skills include: Customs Valuation, Tariff Classification (as required) I.T.-based accounting Multi-national corporation accounting, including transfer pricing specialist trade sector knowledge PROFESSIONAL SKILLS AND KNOWLEDGE EQUITY AND IMPARTIALITY DUE CARE AND DILIGENCE INTEGRITY CONFIDENTIALITY PCA is the most effective means of ensuring compliance : thorough verification requires access to importers’ records and accounting system. Not a practical tool for informal traders : Problems locating the trader Lack of a structured accounting system and supporting books and records, etc. Cash payments etc. Customs should encourage all operators to improve compliance, including informal sector Provide opportunity and incentive to formalize their procedures in line with Customs requirements.
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