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Post clearance audit

The guidelines set forward by the World Customs Organization mention, while as a result of the implementation of the World Trade Organization Trade Agreements, it is observed that there is a tendency to decrease customs tariff rates, the fact that some countries still set their customs tariff rates high serves as the main factor for commercial fraud and consequently this results in a major negative impact on the economy and the budget in both the public and the private sectors.

Commercial fraud entails many forms of customs offences and therefore it should not be treated in a manner that is merely restricted to valuation issues. In addition to commodity valuations, it is important to consider the classification and rules of origin matters that are contained in the national and trade security policies. For instance: commercial fraud can range from a simple discrepancies in the quantity during customs clearance to covert forms of attempt to evade tax that became evident from official records, financial accounts and balance sheets.

Those who commit commercial fraud use all the possible the advantages from many types of transport system and the normal trade process in many types of activities. While some offences are detected at the clearance stage from the lodged documents or physical inspection, some other covert forms of offences are impossible to detect in the customs control zone.

It can be seen from the WCO guidelines and from the experience of other countries that as international trade expands, traders and legal entities' interest in increasing their profits and revenues illegally, which enables a trend for such entities to commit covert form of commercial fraud intentionally or accidentally. This form of offence may be detected during post clearance audit through crosschecking of customs declaration against financial account, records, and reports that are verified by documentary evidence in accordance with the official decisions of the management and in accordance with the laws and legislations after the customs clearance has been completed and the goods are transferred to the recipient.

Post clearance audit is a unique form of inspection as certain terms of trade agreements tend to avoid from prepayments and lean towards post payments, it is only possible to prove the amount of payments and the time of transaction after reviewing the financial documents and related records after some time.

In short, post clearance audit is not a mere inspection procedure, but rather it is a cycle of activities that are interrelated which include assessing risk, determining the grounds for the violations that occurred, evaluating realistically, providing assistance and advice in order to correct the errors and to prevent from recurrence, building an information database to create basis for future risk assessments and exchanging information with the customs houses and branches.