The Customs Act provides the ABF with the authority to conduct audits of activities relating to import declarations including tariff classification, use of tariff concession orders, valuation, usage of permits and taxes payable on imports.
Every importer, exporter and customs broker dealing with the ABF has a chance of being audited to make an assessment as to risks and levels of compliance, either through a targeted audit directed at, for example, usage of a specific tariff classification or tariff concession order or as part of a random sampling of targeted goods or companies.
Various types of audits of import and export consignments are undertaken by the Australian Border Force and authorised under the Customs Act 1901. The ones brokers would readily identify are redline entries and monitoring audits.
· Desktop audits (“redline entries”)
Desktop audits are conducted on nominated transactions as a random sampling or where a specific risk can be addressed by examining a transaction. They are authorised by Customs Act s.71DA and undertaken at ABF offices on import declarations routed red line on lodgement and undertaken before delivery of the goods. Queries relating to import declarations after they have been “dealt with” in accordance with the Authority to Deal are undertaken as monitoring audits.
· Targeted (“monitoring”) audits
The ABF Compliance Audit team undertakes post-delivery audits for periods up to five years after the transaction to verify into compliance of entities with the payment of duties and taxes and with other regulatory requirements. Any noncompliance detected may lead to increased intervention, demands for shortpaid duties, and significant administrative penalties.
Monitoring Officers visiting client premises must exercise their powers under the provisions of s214AA-214BB of the Act, which provides specific requirements as to notification, consent and the powers of the officer.
Monitoring powers can only be exercised with the written consent of the occupier or under a monitoring warrant. The "occupier" of premises includes a person who is apparently in charge of the premises, so if everyone else is away it could even be a receptionist, s.214AA refers. It would be wise therefore to ensure that businesses have procedures in place in case of this circumstance. Consent to enter premises can be refused or once given, withdrawn in writing at any time.
Monitoring powers can only be exercised for the purpose of verifying compliance, they cannot be used to search for evidence of an offence – what we call a “fishing expedition”. For this reason, a written list of FIDs to be reviewed is required to be provided by ABF prior to the audit. Those documents should be made available at a suitable desk or location such as the Board Room for the officers’ use. It would be unwise to suggest that the Customs officers should pull the files from the records themselves. Brokers should encourage their clients to advise them if they receive any notice of intent to exercise monitoring powers so that they can attend and advise as necessary. They should also review the audit report before it is finalised.
It should be noted that all officers exercising monitoring powers must be authorised by the Chief Executive Officer (CEO) of Customs and must produce a photo identification card identifying them as a monitoring officer before exercising monitoring powers. They are also, according to guidelines, supposed to have a certain level of training, although the nature of that training has not been disclosed.
Given that the legislation appears to provide ABF with audit powers before and after delivery of the goods, it would be reasonable to assume that those legislated conditions were sufficient to ensure compliance, right? Wrong. Sections 240AA and 240AC of the Act provide that an authorised officer may require persons to produce commercial documents to verify the information provided to the ABF on import declarations (and other documents). I have seen documents requested from the broker under this section and an audit then launched with no further advice. Although I've received an opinion that ABF is within its powers to audit via 240AA, there is not the level of formality as in monitoring powers and the process does concern me. If a s40AA request is received, you are therefore strongly encouraged to audit the documents yourself. Remember however that voluntary admissions cannot be made, amongst other reasons, where an officer exercises a power under a Customs -related law to verify information in the statement.
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