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solutions for the effective management of compliant traders and global supply chain security
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Participants understand:
1) Background on Risk Based Approach 2) WCO Concept of PCA3) Articles on PCA in the WTO TFA4) Objective of PCA5) Difference between AEO Audit and PCA6) AEO Validator Guide7) WCO Tools on PCA8) WCO Tools on AEO
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1. Background
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Risk based approach◦ Revised Kyoto Convention
6.4. Standard
The Customs shall use risk analysis to determine … which goods … should be examined ...
◦ WTO Trade Facilitation Agreement 4.4. Each Member shall base risk management on an assessment
of risk through appropriate selectivity criteria.
…because It is impossible to check all the cargo
It is impossible to correct all the irregularities.
Of course, we try to minimize irregularities.
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To minimize the irregularities with limited resources, Customs…
◦ need to use the most cost-effective method
◦want to manage the risk
Minimize the risk of cargos which will go through border without Customs’ check
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“A means to measure and improve compliance”
WCO PCA Guidelines (2012)
The PCA process is the structured examination of a business' relevant commercial systems, financial records etc.
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a) Measure the compliance
Trustworthy?(signs, appearance)
Corresponds to import goods? Understand the manufacturing process
Properly kept records?
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PCA provides a perfect system to lead the tradersto be more compliant by:
Feed back the results to risk management cycle
More compliant =Less border control
and/or audit
b) Improve the compliance
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Also Lead the traders by direct contact:
directly responding to queries / requests from traders
directly providing guidance on Customs procedures
or book keeping practices, about benefits of being compliant
directly requesting cooperation to Customs
It is an opportunity to
educate the trader and
build a mutual trust
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(1) Establish or Maintain PCA – 7.5.1
(2) Using Risk Management – 7.5.2 & 7.5.4
(3) In a transparent manner- 7.5.2
(4) Information can be used for future actions - 7.5.3
For selection
and feedback
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At Border Customs Post Clearance Audit
Security / social Risk
Revenue Risk
Informal Trader
HS Origin Valuation
Physical Inspection Questioning
Ease the congestion at the border
a) Trade Facilitation
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Selectivity Criteria are encouraged to be defined by PCA team
Example: PCA by ASYCUDA
Decla
ratio
n
Green Channel
Yellow Channel
Red Channel
Blue Channel
Clearance without interception
Clearance without interception, but documentary checks on the revenue purpose, after the release.
Documentary examination
Physical examination
Invoice
HS 1609
$400 /pc
by comparing with value database to see if the value need to be further examined
by checking already submitted documents or request additional docs
HS 1609$450 ~ $ 600
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Price actually paid or payable for the goods
plus : Selling Commissions
“Assists”
Dutiable Royalties
etc.
* Unless- there is no sale, or- transaction value cannot be confirmed
[example] WTO Valuation Agreement
b) To verify the declarations
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Checks on procedure for duty exemption schemeAudit on strategic goods (i.e. dual use goods)
c) To verify Customs procedures
Purpose? End user?
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d) Verification of compliance
Measure the compliance level, Lead the traders, Educate the trader, and
Build a mutual trust.
As a result, revenue can be recovered but ultimate goal is to reduce the recovery at PCA and collect the right amount at the border.
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Doubtful declaration!
1. Information from Customs / business rivals / open resources
2. Visit company
After confirming the fraudulent activities, audit is conducted to collect the evidence.
This company is cheating on Customs
value !!
e)To fight against fraud?
“Bru co. made record profits”
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Direction/ Purpose
◦ AEO Audit or validation: verify that the applicant meets, and the AEO continues to meet, the requirements of the scope of authorization.
◦ PCA: audit to check the trader’s books, records and systems of internal control to measure and improve compliance
5. Difference between AEO audit and PCA
Application of AEOValidation
audit
Authorization
as AEO
Clearance as
AEO
Post-
validation
audit
Clearance Audit
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Target traders for audit What to audit (Scope)
◦ AEO
Company’s compliance assurance system
Security requirements
Financial status
◦ PCA
Contracts to reveal the transaction
Accounting books and records to check the payment
Catalogues for classification
etc.
AEOCompanies
GeneralImporters/Exportersetc.
Difference between AEO and PCA
AEO AuditPCA
(in terms of number of auditees)
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Inter-link between AEO and PCA
Take AEO status into account
Bring the results to AEO validation audit
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1. Demonstrated Compliance
with Customs requirements and
other related laws and
regulations
2. Satisfactory system for
management of commercial
records
3. Financial Viability
4. Consultation, Co-operation
and Communication
5. Education, Training and
Awareness
Provides Validation Testing Techniques
6. Information Exchange,
Access and Confidentiality
7. Cargo Security and
Conveyance Security
8. Premises Security
9. Personnel Security
10. Trading Partner Security
11. Crisis Management and
Incident Recovery
12. Measurement, Analysis
and Improvement
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PCA Guidelines
PCA Diagnostic Tools
PCA Implementation Guidance
How to audit typology
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AEO Implementation Guidance
AEO Compendium - 2017 edition
Model AEO Appeal Procedures
AEO Benefits: Contribution from the WCO Private Sector
Consultative Group
The Authorized Economic Operator and the Small and Medium
Enterprise
Mutual Recognition Arrangement/Agreement Guidelines
AEO Template
AEO Validator Guide
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1) Background on Risk based approach
2) WCO Concept of PCA
3) Articles on PCA in the WTO TFA
4) Objective of PCA
5) Difference between AEO Audit and PCA
6) AEO Validator Guide
7) WCO Tools on PCA & WCO Tools on AEO Presenter: Thabo Pase
WCO PCA Content SpecialistCompliance and Facilitation Directorate
+32(0)[email protected]