WCO PCA

Question 1

A structured examination of a business’ systems, records, and premises to measure and improve compliance with Customs legal requirements and other applicable laws.

Answer 1

POST CLEARANCE AUDIT (PCA)

Question 2

The system of penalties established in Customs laws and regulations for non-compliance with PCA requirements.

Answer 2

Penalty Scheme

Question 3

The entitlement of auditees to challenge decisions or findings made during a PCA process.

Answer 3

Right of Appeal

Question 4

The development of policies and procedures for PCA, encompassing risk assessment, audit types selection, and standardized techniques.

Answer 4

Strategic Planning for PCA

Question 5

The systematic approach to managing risks in PCA planning, involving steps like risk assessment, treatment, and monitoring.

Answer 5

Risk Management Process

Question 6

Involves identifying overall risk posed by an entire sector or group of importers to target high-risk entities based on various factors.

Answer 6

Strategic Risk Management

Question 7

Focuses on identifying high-risk transactions by specific importers or exporters considering values, volumes, types of goods, and past irregularities.

Answer 7

Tactical Risk Management

Question 8

Involves assessing industry performance, individual auditees, and operational elements to pinpoint potential risks.

Answer 8

Risk Identification

Question 9

Systematically uses available information to determine the likelihood and consequences of defined risks to establish the overall risk level.

Answer 9

Risk Analysis

Question 10

Based on likelihood and consequence, evaluates and prioritizes key risks for detailed analysis and monitoring.

Answer 10

Risk Evaluation and Prioritization

Question 11

Involves implementing control measures to reduce the likelihood or consequence of identified risks to align with organizational tolerance levels.

Answer 11

Risk Treatment

Question 12

Involves documenting audit results transparently, communicating with stakeholders, and consulting throughout the process.

Answer 12

Recording, Communication, and Consultation

Question 13

Integral steps to manage risk by assessing current risks, identifying new ones, and evaluating the effectiveness of compliance measures.

Answer 13

Monitoring and Reviewing Risk

Question 14

Establishing intelligence networks to collect, process, and disseminate information for risk evaluation and decision-making.

Answer 14

Risk Intelligence Systems

Question 15

Guidelines emphasizing integrity, confidentiality, professional competence, and impartiality in conducting Post Clearance Audit (PCA).

Answer 15

Ethical Standards for Auditors

Question 16

A set of instructions aimed at enhancing collaboration between Customs and Tax authorities at the national level.

Answer 16

Guidelines for strengthening cooperation

Question 17

The process of sharing data and details between different entities, such as Customs and Tax authorities, to improve coordination and efficiency.

Answer 17

Exchange of information

Question 18

An importer, exporter, one who engages in transit or the like, who has a relationship with Customs, excluding forwarders, etc., who merely convey international cargos, and Customs brokers who merely submit declarations on behalf of the “trader”

Answer 18

TRADER

Question 19

A entity selected for an audit, not limited to importers, as it can include exporters or transportation companies, Customs broker etc.

Answer 19

AUDITEE

Question 20

Collective term for commercial or industrial enterprises usually referred to as the Customs’ counterpart

Answer 20

Business sector (or business community)

Question 21

Group of productive or profit-making enterprises

Answer 21

Industry

Question 22

Commercial enterprise, regardless of any relationship with Customs

Answer 22

Company

Question 23

One who is involved in or affected by a course of action

Answer 23

Stakeholder

Question 24

A business pattern with particular commercial / physical distribution of an import / export cargo, including the payment conditions

Answer 24

Whole business transaction / transaction / transaction pattern

Question 25

Statement of an administration's overall intentions and direction regarding PCA

Answer 25

PCA Policy

Question 26

Scheme/strategy for audits specifying the objectives, scope, methodologies and assignment of auditor/team members for the audit

Answer 26

Audit Plan

Question 27

An audit conducted at auditors’ premises usually by calling information through correspondence or telephone

Answer 27

Desk Audit

Question 28

An audit conducted at the premises of the auditee

Answer 28

On-site audit

Question 29

The overall objectives of PCA __

Answer 29

Assure that Customs declarations have been completed in compliance with Customs legal requirements as well as other requirements under any other law applicable in respect of import or export, via examination of a traders’ systems, accounting and other business records and premises

Question 30

Means measures by which the Customs satisfy themselves as to the accuracy and authenticity of declarations through the examination of the relevant books, records, business systems and commercial data held by persons concerned.

Answer 30

Audit-based control

Question 31

a mechanism to verify and review, either conducted by a company to review its own internal procedures or by Customs to review Customs’ own internal rules and procedures

Answer 31

PCA

Question 32

May be useful for management purposes and are an important part of an integrity programme but are quite distinct from the concept of PCA.

Answer 32

Internal Audits

Question 33

Types of Audit:

Answer 33

* Comprehensive audit (Systems-based audit) * Focused audit (Issue-based audit) * Post-importation Transaction-based audit (TBA)

Question 34

This type of audit looks at the entire business control environment and the impact this might have on Customs compliance.

Answer 34

Comprehensive audit (Systems-based audit)

Question 35

Used heavily and substantive testing is reduced where control environment and corporate governance systems are good.

Answer 35

Analytical procedures

Question 36

The amount of information to be examined by auditors is potentially large although it depends on __

Answer 36

Frequency Audit

Question 37

Mostly relevant for administrations with a trader-focused targeting approach

Answer 37

Comprehensive audit (Systems-based audit)

Question 38

This type of audit concentrates on one or a few areas of Customs e.g. valuation, country of origin etc. Tests on related systems and controls and substantive tests may also be carried out.

Answer 38

Focused audit (Issue-based audit)

Question 39

On focused audit --- will be necessary to decide which type of audit is appropriate in each case, based on the most effective use of resources and the desired objectives

Answer 39

Criteria

Question 40

Mostly relevant for administrations with an issue-focused targeting approach

Answer 40

Focused audit (Issue-based audit)

Question 41

Post-importation Transaction-based audit (TBA) can work in two ways:

Answer 41

1) Referrals from the port/border post when an officer has doubts concerning a particular declaration at the time of clearance. 2) A targeting team scrutinizes individual Customs declarations after clearance and selects those where doubts arise regarding their accuracy.

Question 42

Types of organizational structure:

Answer 42

* Centralized audit * Decentralized audit

Question 43

This structure has established a single PCA unit within the administration

Answer 43

Centralized Audit

Question 44

This structure seeks to establish several PCA units within the administration.

Answer 44

Decentralized Audit

Question 45

Advantages of Centralized audit:

Answer 45

* Enhanced communication, coordination and sharing of knowledge; * Better supervision and management control; and * More effective risk management.

Question 46

Disadvantage of Centralized audit:

Answer 46

* Difficult to physically verify the business premises of trader prior to the start of the audit; and * Field audit may be time consuming and costly particularly when auditors have to travel a long distance to conduct this exercise.

Question 47

Advantages of Decentralized audit:

Answer 47

* Easy to locate and contact importer/exporter; * Cost and time effective – more audits can be performed; * Auditors of different regions can compete to perform better; * Knowledge is improved in specific trade sectors; and * Local risk factors are considered more effectively.

Question 48

Disadvantage of Decentralized audit:

Answer 48

* Difficult to coordinate with other units; * Lack of effective communication with each regional PCA units; and * May lead to high administrative cost due to recruitment of additional auditors, managers and cost of training.

Question 49

Aims to improve the level of voluntary compliance of traders and create the conditions necessary to facilitate voluntary compliance as the most cost effective and efficient approach.

Answer 49

Voluntary Compliance Framework

Question 50

Segmentation of traders:

Answer 50

* Type 1 traders are voluntarily compliant; * Type 2 traders try to be compliant but do not necessarily always succeed; * Type 3 traders will avoid complying if possible; * Type 4 traders deliberately do not comply

Question 51

Voluntary compliance can be achieved through three broad ways:

Answer 51

1) Decreasing compliance cost; 2) Increasing incentives on compliance; and 3) Increasing probability of exposure.

Question 52

“coordinated activities undertaken by administrations to direct and control risk.”

Answer 52

risk management

Question 53

Often driven by necessity, as Customs administrations are often required to deliver better results with the same or fewer resources.

Answer 53

risk-based approach

Question 54

risk management process:

Answer 54

1. Establishing the context 2. Risk assessment 2.1. Risk identification 2.2. Risk analysis 2.3. Risk evaluation and prioritization 3. Risk treatment 4. Recording, communication and consultation 5. Monitoring and review

Question 55

These will form a fundamental basis for decisions made in the later steps of the cycle.

Answer 55

Risk Criteria

Question 56

Risk Management Techniques:

Answer 56

(a) Strategic risk management (b) Tactical risk management

Question 57

Based on Customs being able to identify the overall risk posed by an entire sector or a group of importers. By identifying such a group, a Customs administration will be able to target all or selected companies within an industry sector identified as high risk.

Answer 57

Strategic risk assessment

Question 58

This is the process of identifying groups of high-risk transactions by particular importers or exporters.

Answer 58

Tactical risk management

Question 59

The systematic use of available information to determine how often defined risks may occur and the magnitude of their likely consequences.

Answer 59

Risk Analysis

Question 60

Based on the determined likelihood and consequence of each risks. By considering the level of each risks, it is possible to evaluate and prioritize the key risks that need to be analysed in more detail and monitored thereafter.

Answer 60

Risk Evaluation

Question 61

The key risks which were identified as to be monitored by the administration should be treated in order to reduce the likelihood or consequence of the risks occurring by putting in place control measures and actions that are intended to modify the level of risks to fit the organizational tolerance.

Answer 61

Risk treatment

Question 62

integral steps in the process of managing risk. This is necessary to:  determine if previously identified risks are still current/valid;  identify new risks;  reevaluate risk levels assigned previously in the light of updated information;  and evaluate the effectiveness of compliance activity/measures undertaken

Answer 62

Monitoring and reviewing risk

Question 63

a product, derived from the collection and processing of relevant information, which acts as a basis for evaluating risk and making informed decisions when developing an audit plan.

Answer 63

Intelligence

Question 64

units based in ports and airports

Answer 64

local intelligence units

Question 65

unit that is able to collect and collate information and disseminate it throughout the entire service.

Answer 65

central intelligence unit

Question 66

should proactively seek information from all available sources, which includes border authorities, all other national government agencies, taxation authorities, open sources as well as from any other country / jurisdiction.

Answer 66

Intelligence officers

Question 67

publishes list of jurisdictions with strategic anti-money laundering (AML) / combating the financing of terrorism (CFT) deficiencies

Answer 67

Financial Action Task Force (FATF)

Question 68

may serve the whole Customs department.

Answer 68

risk and intelligence team

Question 69

cycle for planning a comprehensive audit (systems-based audit) programme/ audit cycle:

Answer 69

1. Review and update risk management data 2. Plan audit programme 3. Select companies to audit 4. Prepare for audit 5. Conduct field audit 6. Conclude: report, evaluate, follow up

Question 70

This work could be carried out by a dedicated risk analysis/targeting team.

Answer 70

Targeting: selection for audit

Question 71

based upon meeting the aims and objectives of the PCA team, which is also in alignment with overarching strategy of the Administration.

Answer 71

Job profiling

Question 72

essential to qualify a new post when setting up a new job, and a job description is virtually indispensable when the Administration starts to recruit for a vacant post, either internally or externally.

Answer 72

A good job profile

Question 73

Ethical standards for auditors:

Answer 73

(a) Integrity (b) Confidentiality (c) Professional competence, due care and diligence (d) Equity/Impartiality

Question 74

The WCO has developed a Model Code of Ethics and Conduct that sets out the minimum required attitude and behavior expected of all Customs officers. The Code of Conduct should be respected in the context of conducting PCA.

Answer 74

Integrity

Question 75

Auditors must maintain adequate levels of confidentiality when accessing and examining auditees’ records. Auditors should not disclose any business/Customs information they have acquired during the performance of their duties, unless national laws provide for disclosure of information in specific cases.

Answer 75

Confidentiality

Question 76

Auditors should act diligently and in accordance with applicable technical and professional standards. Further, they should take due care of the auditee’s property including account books, systems etc., and respect company health and safety and security policies and requirements (e.g. wearing of safety helmets).

Answer 76

Professional competence, due care and diligence

Question 77

Auditors are required to be objective, maintain fair and just judgment over similar cases and not to treat them arbitrarily or allow bias, conflicts of interest or undue influence of others to override professional or business judgments. They should not misuse their authority over the auditee.

Answer 77

Equity/Impartiality

Question 78

FREE

Answer 78

CARD