Post-clearance audit: Why is my company being audited by Jamaica Customs?

Customs House Weekly

Wednesday, May 22, 2019

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Have you ever heard of a scenario where an importer/trader or anyone involved in the importation of goods is subject to a 'post-clearance audit', which is conducted by auditors of the Jamaica Customs Agency?

The practice of conducting audits has been in existence for many years.

In today's article, the Jamaica Customs Agency (JCA) will examine the post-clearance audit (PCA) process and will provide information geared at improving the knowledge of “customs audit” and its potential benefits to the trading community.

In today's international trade environment, customs administrations worldwide, are expected to operate efficiently and effectively. With the ever increasing demand for expedited clearance processes, post-clearance audits have been a proven risk management strategy that offers a balance of public protection with the fostering of customs compliance amongst the private sector.

Post-clearance audits are measures by which customs satisfies itself as to the accuracy and authenticity of declarations, through the examination of the relevant books, records, business systems, and commercial data held by persons and companies conducting international trade.

This exercise is usually conducted at the premises of the trader or, where necessary, at the desk of the auditor based on the nature and scope of the audit being undertaken.

This authority to conduct PCA is contained within:

1. Section 223 of the Customs Act, which provides the right to examine business records, business systems and commercial data relevant to Customs declarations.

2. Section 17(I) of the Revenue Administration Act, confers the right of Customs and Revenue officers to conduct audits, investigations, and inspections on books, records and properties of taxpayers, whether they are importing or exporting entities, or otherwise.

CHECKS AND BALANCES

Post Clearance Audit is a means to measure and encourage compliance by traders as the results are used as part of the risk management cycle, and will assist the JCA to determine what levels of control or checks are required at the borders for future declarations.

This exercise will enhance how trade is facilitated at the borders, as Customs can focus its attention on declarations that pose the greatest risk to border, society and revenue, while allowing low risk declarations to move seamlessly through the ports.

What are the common check areas involved in PCA?

• Compliance with tariff requirements

• Compliance with valuation provisions

• Compliance with 'rules of origin' requirements

• Compliance with other Customs programmes, for example, private bonded warehouse requirements or duty-free regimes.

As an importer/trader it is crucial that you keep the necessary accounting books and records that will facilitate a Customs review to include the following:

• Purchase/sales contracts

• Shipping/Transport documents

• Purchase orders

• Invoices

• Receiving reports

• Debit/credit notes

• General journal

• General ledger

• Subsidiary journal

• Subsidiary ledgers

• Financial statements

The benefits to be derived from confirmation of compliance include:

1. Receiving benefits under the Authorised Economic Operator status.

2. Facilitating compliant traders at the point of customs clearance (that is, utilising more risk-based analysis).

3. Enabling Jamaica Customs to gain a better understanding of clients' business operations.

HOW WILL I KNOW I'M

The JCA through its Post -clearance Audit Unit will notify companies of their selection for audit, and will provide written request for meetings and the production of the required books and records. The Post-clearance Audit Unit operates from both Kingston and Montego Bay and provides islandwide coverage for all audit-based exercises.


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