PCA and PCA internal audit overview The metrics: how successful have we been?
STRATEGIC PLANNING FOR Post-Clearance Audit (PCA)
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Transcript of STRATEGIC PLANNING FOR Post-Clearance Audit (PCA)
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STRATEGIC PLANNING FOR
POST-CLEARANCE AUDIT (PCA)
(based on WCO PCA Guidelines, Vol.1)
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SUMMARY OF SESSION What PCA is/isn’t Objectives & benefits of PCA Process and considerations for
introduction of PCA processLegislationTraining needsStrategic managementResource considerations
Limitations of PCA
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“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.”
WHAT IS POST CLEARANCE AUDIT (PCA)?
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WHAT PCA ISN’T! AN ENFORCEMENT TOOL
NOT A MEANS OF INVESTIGATING POSSIBLE FRAUD
WHERE FRAUD IS SUSPECTED, REFER TO INVESTIGATION SPECIALISTS
A FORM OF INTERNAL AUDITNOT DESIGNED AS A MECHANISM FOR
CHECKING CONTROLS CONDUCTED BY CUSTOMS AT THE FRONTIER
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WHAT ARE THE OBJECTIVES OF PCA? 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
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BENEFITS DERIVED FROM PCA 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
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TYPES OF POST-IMPORT CONTROLS
Post-importation transaction verificationPort referralsRisk selectionDisputed decisions/ importer requests
Field / on-site auditRisk selection
Office/ desk auditRisk selection
Large business focus – special teams
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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
STEPPING STONES TOWARDS AN EFFECTIVE PCA SYSTEM
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PROCESS FOR INTRODUCING AN EFFECTIVE PCA SYSTEM
Legal and operational framework
Strategic Planning
Risk Management
Relationship with other departments
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OVERVIEW OF THE PCA PROCESS
REVIEW AND UPDATE
MANAGEMENT DATA
PLAN AUDIT PROGRAMME
SELECT COMPANIES FOR AUDIT
PREPARE FOR AUDIT
CONDUCT FIELD AUDIT
REPORTEVALUATE
FOLLOW UP
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List:
1. Legal powers for Customs2. Legal obligations on commercial
operator3. Legal rights of commercial operator
GROUP EXERCISE ON LEGAL POWERS, RIGHTS AND OBLIGATIONS
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LEGAL AND OPERATIONAL FRAMEWORK
- AUTHORITY AND POWERS OF CUSTOMS OFFICERS
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.
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LEGAL AND OPERATIONAL FRAMEWORK
- OBLIGATIONS AND RIGHTS OF AUDITEES (I)
Customs laws and regulations should set out the rights and obligations of persons & companies involved in international trade. Provisions should include:
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)
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LEGAL AND OPERATIONAL FRAMEWORK
- OBLIGATIONS AND RIGHTS OF AUDITEES (II)
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.
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INTRODUCTION OF STRATEGIC PLANNING FOR PCA
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.
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TRAINING NEEDS AND PROFESSIONAL SKILLS (I)All auditors need a range of general skills
including: accounting techniques and principles, based on
Generally Accepted Accounting Principles (GAAP);
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
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TRAINING NEEDS AND PROFESSIONAL SKILLS (II)Additional specialist skills include: Customs Valuation, Rules of Origin, Tariff
Classification (as required) I.T.-based accounting Multi-national corporation accounting,
including transfer pricing specialist trade sector knowledge
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COMPETENCIES OF AUDITORS
PROFESSIONAL SKILLS AND
KNOWLEDGE
INTEGRITY
CONFIDENTIALITY
DUE CARE AND DILIGENCE
EQUITY AND IMPARTIALITY
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LIMITATIONS OF PCAPCA 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.