The Post Clearance Audit Group (PCAG) selected ABC Brokerage Inc. for a post clearance audit based on several risk criteria. On January 28, 2019, the Commissioner issued an Audit Notification Letter to ABC Brokerage Inc. informing them of the audit. On February 18, 2019, the audit team commenced the audit, examining documents to verify records. On April 2, 2019, the PCAG submitted a Final Audit Report finding deficiencies in duties and taxes due to misdeclared goods, with a 10% discrepancy. The Demand Letter was issued to ABC Brokerage Inc.
The Post Clearance Audit Group (PCAG) selected ABC Brokerage Inc. for a post clearance audit based on several risk criteria. On January 28, 2019, the Commissioner issued an Audit Notification Letter to ABC Brokerage Inc. informing them of the audit. On February 18, 2019, the audit team commenced the audit, examining documents to verify records. On April 2, 2019, the PCAG submitted a Final Audit Report finding deficiencies in duties and taxes due to misdeclared goods, with a 10% discrepancy. The Demand Letter was issued to ABC Brokerage Inc.
The Post Clearance Audit Group (PCAG) selected ABC Brokerage Inc. for a post clearance audit based on several risk criteria. On January 28, 2019, the Commissioner issued an Audit Notification Letter to ABC Brokerage Inc. informing them of the audit. On February 18, 2019, the audit team commenced the audit, examining documents to verify records. On April 2, 2019, the PCAG submitted a Final Audit Report finding deficiencies in duties and taxes due to misdeclared goods, with a 10% discrepancy. The Demand Letter was issued to ABC Brokerage Inc.
The Post Clearance Audit Group (PCAG) selected ABC Brokerage Inc. for a post clearance audit based on several risk criteria. On January 28, 2019, the Commissioner issued an Audit Notification Letter to ABC Brokerage Inc. informing them of the audit. On February 18, 2019, the audit team commenced the audit, examining documents to verify records. On April 2, 2019, the PCAG submitted a Final Audit Report finding deficiencies in duties and taxes due to misdeclared goods, with a 10% discrepancy. The Demand Letter was issued to ABC Brokerage Inc.
Instructions: Read and analyze the case scenario carefully. Answer each questions comprehensively.
Scenario:
On January 13, 2018, ABC Brokerage Inc. lodge a goods declaration to the Bureau of Customs for the 5x40’ container said to contain imported “Motorcycle Tires”. The said importation was released after final payment of duties and taxes from the BOC on January 21, 2018.
On January 15, 2019, the PCAG together with MISTG gathered trade information for the purpose of selection criteria for profiling analysis and possible audit candidate based on the selection criteria for Post Clearance Audit. The ABC Brokerage Inc. was one of the audit candidates selected under the computer- aided risk management system (CARMS) of the Bureau.
The following were the selection criteria used by the CARMS during the profiling analysis and selection of audit candidates: The compliance level of trade sector; The compliance track records of the firm; Relative magnitude of customs revenue to be generated from the firm; The rates of duties of the firm’s imports; An assessment of the risk to revenue of the firm’s import activities; Non-renewal of an Importer’s customs accreditation; and
On January 21, 2019, the PCAG-TIRAO prepared the list of all audit candidates and recommend the same subject to the approval of the Commissioner of Customs.
On January 28, 2019, the Commissioner received the list of audit candidate from the PCAG-TIRAO, the Commissioner then issued an Audit Notification Letter to all the audit candidates after 5 calendar days from the date the list was received. The ANL was served through an electronic notice sent to the registered official electronic mail address of all the audit candidates, on the same day the ABC Brokerage Inc. received and acknowledged the Audit Notification Letter.
On February 18, 2019, the audit team commenced the audit proper, investigation, verification and examination from the date the ABC Brokerage Inc. received the ANL. The audit team went to the principal place of business of ABC Brokerage Inc. presented the ANL and authorization letter given by the Bureau. The Audit Team require the auditee the presentation of necessary documents for the verification of authenticity of records.
On April 2, 2019, the PCAG submitted the Final Audit Report with Demand Letter to the Assistant Commissioner and endorsed the same to the Commissioner of Customs for its approval. The Final Audit Report with Demand Letter were based on the findings during the audit proper that the ABC Brokerage Inc. failed to keep necessary records within the prescribed period under CMTA and CAO 1-2019, and found to have deficiency in duties, taxes, and other charges on their importation of dated back on January 13, 2018 due to the misdeclaration of the quality of goods, the report also indicated that the percentage of discrepancy is equivalent to 10%.
The Commissioner signed and issued the Demand Letter and the same was submitted to the ABC Brokerage Inc. by the Post Clearance Audit Group after 3 calendar days. Questions:
Answer the following questions comprehensively:
1. Is the conduct of Post Clearance Audit valid? Yes or No. Why?
2. Did the PCAG follow the proper procedures and formalities in conducting the Audit Proper? 3. What are the responsibilities of auditee in the conduct of Post Clearance Audit? 4. What are the liabilities of ABC Brokerage Inc.? 5. When will the Audit Proper be deemed completed? 6. Is fraud present in the case? 7. If the result of the audit is against the ABC Brokerage Inc. , what are the remedies available in order to protect their interests? 8. Make a detailed summary report of the case.
Short Answer Test Assessment Rubric
No Needs Improvement Adequate Quality Exemplary
Answer 2 pts 4 pts 6 pts 10 pts 0 pts Content No Needs Improvement Adequate Quality Exemplary Answer Answers are Answers are Answers are Answers are partial or not accurate comprehensive, Did not incomplete. comprehensiv and accurate and answer Key points e or completely complete. complete. question. are not stated. Key points Key ideas are clear. Key points are are stated clearly stated, Question not addressed, but and explained, and adequately not well supported. well supported. answered. supported. Organization No Needs Improvement Adequate Quality Exemplary (Answers are Answer Organization Inadequate Organization Well organized, clearly thought and organization or is mostly coherently out and Did not structure development. clear and developed, and articulated.) answer detract from Structure of easy to easy to follow. question. the answer. the answer is follow. not easy to follow. Writing No Needs Improvement Adequate Quality Exemplary Conventions Answer Displays Displays three Displays Displays no (Spelling, over five to five errors in one to three errors in punctuation, Did not errors in spelling, errors in spelling, grammar, and answer spelling, punctuation, spelling, punctuation, complete question. punctuation, grammar, and punctuation, grammar, and sentences.) grammar, sentence grammar, sentence and structure. and structure. sentence sentence structure. structure.
