OUTLINE

 CHAPTER ONE
 PCA concept
 The purpose of PCA
 Objectives of PCA
 Benefits PCA
 PCA scope and coverage
 CHAPTER TWO
 Legal & Operational frame work Pca
 CHAPTER THREE
 Taxpayer’s Rights

 What is expected from the tax payers

 CHAPTER FOUR
 AUDITING STANDARDS AND CODE OF CONDUT OF
AUDITRS
 General Standards
 Standards of field work
 Standards of reporting

 AUDITING STANDARDS FOR PCA

 CHAPTER FIVE
 STRATEGIC PLANNING
 Objective
 Scope
 Risk areas
 Resource Management
 CHAPTER SIX
 Risk management process
 General risk indicators
 Specific risk indicators
 CHAPTER SEVEN

 AUDIT PROCESS

 Audit preparation

 Pre plan audit

 Planning

 Audit Execution

 Audit closure

 Evaluation and follow up

INTRODUCTION
Rationale for PCA
Increase in international trade
limited resource of customs
 the concept of risk based control
 to balance control and facilitation

 PCA- CONCEPT
Post-clearance audit means audit-based Customs
control performed subsequent to the release of the
cargo from Customs' custody.
The purpose of PCA audit
 To verify the accuracy,
 Authenticity of declarations and
 Covers the control of traders’
 commercial data, business systems, records, books
and any other relevant customs commercial data
held by persons directly or indirectly involved in the
international trade that is import or export of
goods.
Generally Accepted Auditing
Standards ( GAAS )
 Auditing Standards

 The general, field work, and reporting standards

(the 10 standards) approved and adopted by the
membership of the American Institute of Certified
Public Accountant ( AICPA), as amended by the
Auditing Standards Board (ASB), are as follows:
General Standards

1. The audit is to be performed by a person or persons

having adequate technical training and proficiency as an
auditor.

2. In all matters relating to the assignment, an

independence in mental attitude is to be maintained by
the auditor or auditors.

3. Due professional care is to be exercised in the

performance of the audit and the preparation of the
report.
Standards of Field Work

1. The work is to be adequately planned and assistants, if

any, are to be properly supervised.
2. A sufficient understanding of internal control is to be
obtained to plan the audit and to determine the
nature, timing, and extent of tests to be performed.
3. Sufficient competent evidential matter is to be
obtained through inspection, observation, inquiries,
and confirmations to afford a reasonable basis for an
opinion regarding the financial statements under
audit
Standards of Reporting

1. The report shall state whether the financial statements

are presented in accordance with generally accepted
accounting principles (GAAP).
2. The report shall identify those circumstances in which
such principles have not been consistently observed in
the current period in relation to the preceding period.
3. Informative disclosures in the financial statements are
to be regarded as reasonably adequate unless
otherwise stated in the report.
4.The report shall contain either an expression of
opinion regarding the financial statements, taken as a
whole, or an assertion to the effect that an opinion
cannot be expressed. When an overall opinion cannot
be expressed, the reasons therefore should be stated.
In all cases where an auditor's name is associated with
financial statements, the report should contain a clear-
cut indication of the character of the auditor's work, if
any, and the degree of responsibility the auditor is
taking.
AUDITING STANDARDS FOR PCA
The Audit Standards are an adaptation of the

Generally Accepted Auditing Standards and the

internationally recognized Codification of Standards

for the Professional Practice of Internal Auditing from

the Institute of Internal Auditors.

4. Audits should be conducted with objectivity

5. Sufficient and appropriate Audit information should be

obtained by inspection, observation, inquiry,

confirmation, computation and analysis, to afford a

reasonable basis upon which to support the findings,

conclusions and recommendations of the report

9. Reporting Standards

 Reporting is the manner by which Officers communicate

the results of Audits to the client and to senior
management.
 Reports should include the purpose, objectives, scope, and
summary of errors, as well as applicable conclusions,
requirements and recommendations.
 Reports should be accurate, objective, clear, concise,
constructive, complete and timely.
 The communication of findings to the client is an ongoing
process, which takes place throughout all phases of the
Audit. Findings may be communicated by exit interviews,
letters and final reports. It is important to remember the
main user of the report is the client
 Strategic planning is critical to the success of PCA through:

1. Optimum use of resources ( Time, budget , personnel )

2. Minimum disruption of Trade

3. Uniformity of Standards

 In this phase it define:

1. - Objectives of PCA
2. - Scope and coverage;
3. - Risk areas;
4. - Resource management.
5. Promoting compliance
Strategic Planning
2. Scope
 PCA is retrospective examination.

 Most efficient to:

 Companies who have continuously deal with customs for a
certain period, based on prior analysis of historical records.
Strategic planning
4. Resource management

 Key is to have a PCA plan in place ( annually-Monthly)

 To make best use of resources
 Review existing resources and identify potential obstacles)
 Personnel Management
 Required expertise ( EDP- auditors, Accountants, etc)
 Professional skills ( auditing techniques )
 Training policy ( permanent education, best practices etc)
 CHAPTER 7
AUDIT PROCESS
 The audit process has the
following phases
1. Audit preparation
a) Pre plan audit
b) Planning
2. Audit execution
a) Initial conference

b) Conduct system review &walkthrough

c) Select/review sample transactions for audit

d) Complete the audit,analysis and evaluation

e) Prelimiary audit report

3. Audit closure

a. Exit conference

b. Final report

4.Evaluation and follow up

 AUDIT PREPARATION

 The audit preparation maily has two parts, i.e pre-

planning and planning.
 The pre- planning phase includes;
a) Developemnt of audit program drawn from the strategic
plannig of PCA
b) Identifcation of potential risks- as determined in the
scope of PCA, the importer/declarant is the main
targate of the audit to verify his compliance with laws
regarding specific/general customs areas.
c) Selction of audits case by using audit
pramaters(volume,value,orgin e.t.c)
d) Allocation of audit case
e) Pre- audit survey
Analysis of basic data

 client profiling and transaction profiling

 audit sampling)

 The planning phase includes

 Audit planning objective,scope, and resources

 Client notification

 Client profile update

 Pre- audti survy

1. Analysis of basic data (client profile and transation

profiling)

2. Analysis of the Import Declarations -informations

contained in the decalaration

3. Analysis of the Commercial Invoice (Participation of

third parties in a transaction, Delivery terms,
Additional payment or refund, Shipping points, Unit
price, etc)
 Audit survey and planning checklist
 Consolidation of findings
1. Valuation declaration/ valuation detailed declarations/

VDD/(Relation between a seller and a buyer, Price list,

Separate payment, etc )

2. Statistical data sheets on past imports and paid Customs duty from

ASYCUDA

3. Cross-checking with relevant units (internal and external)

 Perform audit sampling from the potentail

targates by using either of the follownig

methods
PLANNING PHASE
 PLANNING PHASE – IT SHOUL INCLUDE; The audit plan is a summary of
the information gathered about the Company. Which includes
 Reason(s) for selection.
 Type, objectives and scope of Audit
 Company Profile.
 Resources needed for the audit.
 Roles and responsibilities of auditors.
 Tests to be performed (for example valuation, HS
classification, origin, quantities and others.) Auditors
should develop detailed audit program for the test to be
conducted.
 Time frame for each activity to be carried out.
NOTIFICATION TO CLIENT –
 Audit Questionnaire to be sent with
the notification letter
2 . CLIENT PROFILE UPDATES
3. Develop audit program/check list
Audit execution( conducting audit )
Prepare and perform initial aduit conference
--- key steps
 Arrange time and location of initial conference
 Complete analysis of requested information and
questionnaires
 Prepare draft Agenda including a list of questions and
concerns for the conference
 Ensure required support information is on hand
 Meet with Client to make presentation and provide
opportunity for questions and answers.
 CONDUCT SYSTEM REVIEW AND WALK-THROUGH
--- key steps
 Review outstanding issues with System Questionnaire with
Client
 Walk-through of transactions with key personnel in
purchasing, receiving and accounting to determine how
information relating to import and export activity is
captured. (process and document flow)
 Determine if links are in place for Customs control.
 Tour plant if required
 Analyze information received, validate understanding of
process flow with Client, complete working papers and
draft systems report for review by Client
 Determine approach to be taken for sampling..
 General Overview of the Systems & Walk-Through

has three issues

1. Information Gathering Techniques by--

 Inquiries of Client Personnel:

 Inspection of Documents and Records

 Observation of Entity Activities and Operations:

 Review Client’s Policies and Systems Manuals:

2. Methods of Documenting by usig the

following methods

a) Systems Review Questionnaire:

b) Narrative Descriptions:

c) Flow Charting
 Determining Where Errors Can

occur and Assessing the Adequacy

of the Client’s Systems and

Procedures based on the gathered

data
 SELECT OR REVIEW SAMPLE TRANSACTIONS FOR AUDIT

 Identify data source. (Custom’s data or Client’s

data)
 Determine the population of transactions to be
audited.
 Select number of transaction items for
representative sample.
 Obtain documents from client and ensure
documents are sufficient and appropriate
Complete the Audit, analysis and evaluation of the
program

-----Key steps
1. Review Audit procedures for all programs that are to
be covered in the scope of the Audit (explained in
detail below).
2. Determine adequacy of samples selected to ensure
appropriate coverage.
3. Complete the Audit program(s) using the sample
selected to ensure compliance with Customs laws
and regulations.
1. Complete working papers in preparation
for internal and external reporting
requirements

2. Complete any required reassessments and

penalty documentation.

3. Review File Completion Checklist to

ensure all steps have been completed
 Review Audit procedures
This Icludes
1. Accounting for goods checklist (EXHIBIT A)

2. Duties relief/drawback/concession checklist

(EXHIBIT B )

3. End – Use Checklist/(EXHIBIT c)

4. Tariff treatments /importer checklist(EXHIBIT D)

5. origin(exporters checklist)(EXHIBIT E)

6. Tariff Classification Checklist(EXHIBIT F)

7. Valuation Checklist( EXHIBIT G)

1. Accounting for goods checklist
 to determine whether all imported goods have been
accounted for to Customs.
Has two tests
 analytical procedure used to determine the potential
risk of non-account for specific significant vendors
 sample from the client’s records used to substantiate
/validate the assessed risk/
Objectives----
 Determine whether all imported goods are completely
and accurately accounted for to Customs (including
reporting of any overages).
 Determine whether the client has on file a copy of the
Customs import Document
Duties relief/drawback/concession checklist
 deals with a variety of Customs Programs that
provide the importer with relief from paying duty
and/or taxes (the time of Customs accounting; by
way of license or special authority, or by way of
refund after accounting
Objectives of audit
 Ensure that the importer using a Duties Relief
certificate/license is entitled to do so and that all
conditions of duties relief are met
 Ensure relief or drawback claims are not subject to
time limits imposed by regulations
 Ensure that goods qualify for any relief currently
being utilized by the company ----etc
3.END Use
 This section deals with a those instances where the
customs Tariff contains provision that require that a
specific use be made of imported goods in order to
be classified under a specific ( usually beneficial
classification )
Objectives of audit
 Ensure that the goods qualify for the provisions of
the customs tariff
 Ensure that the client has a system for recording and
reporting diversions
 Ensure that the times for reporting of diversions are
in accordance with the regulations
 Ensure that the appropriate end-use provisions form
an integral part of the classification rating guide.
4. Tariff treatments (importer checklist)
 To enssure that Customs Legislation requires Importers to
support their claim for preferential tariff treatment,

Audit Objectives; :
 To ensure that the appropriate tariff treatment has been
claimed for the goods in question.
 To ensure that the direct shipment requirements have been
met.
 To ensure that proof of origin requirements have been
satisfied.
5. Origin (exporters checklist
Customs Legislation contains provisions for reduced
tariff rates under a preferential tariff treatment.
Objectives-
 To calculate the revenue risk should the goods
from a foreign supplier be determined to be non-
originating under a preferential tariff treatment
 To ensure that the Certificate of Origin is
completed in accordance with the preferential
tariff regulations
 To determine the most effective method for
Officers to utilize in order to verify the validity of a
claim for preferential tariff treatment---------- etc
6.Tariff Classification
Checklist
Determination of tariff classification under the Harmonized Commodity
Description and Coding System (HS)

Audit Objectives;

 Determine whether the imported goods are properly and accurately

described.

 Determine whether the tariff classification applied to the imported

goods is in full accordance with the Customs legislation.

 Determine whether the commodity profile (rating guide) is maintained

by the importer/broker and is accurate
7. Valuation Checklist
 The determination of Value for Duty
objectives
 The proper valuation method is being used as set out
in the Customs Legislation.
 The declared value is in agreement with the
importer’s financial records and documents.
 In the case of transaction value method: that the
price paid or payable, and the specified additions or
deductions have been properly declared.
 In the case of other methods of valuation, verify that
the declared values are in accordance with the
Customs Legislation
Preliminary audit report
 Having concluded the examination of the taxpayer’s

records, the audit team shall summarize the findings

and generate a preliminary audit report to the

supervisor for review and approval in preparation for

the exit conference.

CLOSURE OF FIELD AUDIT
 EXIT CONFERENCE

 FINAL REPORT

 REPORTING RESULTS TO CLIENT

 COMPLETE REPORTING REQUIREMENTS

Evaluation and follow-up
 Demand note/assessment

 Internal management report

 Closure of the audit and file archiving

 Returning of clients’ records