Preparing for a Post-Clearance Audit: A Guide for Companies

Executive Summary

post-clearance audit is a control mechanism for inspection of customs transactions from the relevant legislation.

It is recommended that companies focus on the following areas when preparing for this time:

1. Creation of customs trade and declaration inventory.
2. Review of GTIP classifications.
3. Evaluation of customs clearance and additional payment elements.
4. Control of origin and preferential trade documents.
5. Comparison of customs data with accounting records.
6. Review of obligations on private customs regimes.
7. Preparation of commercial contracts and supporting documents.
8. Providing coordination between departments.
9. Legal and financial assessment of the detected deficiencies.
10. Central and documentable management of the audit process.

The scope of these studies should be determined according to the company’s operating structure and the issue of audit.

1. What Is post-clearance audit?

After the control is the inspection activity for the inspection of the related transactions and related records within the framework of the legislation.

The basic legal framework of this field in Turkey is evaluated within the scope of Customs Law No. 4458, Control and Risk Operations Regulation and relevant regulations.

Afterwards, check may include comparing different information and documents related to the past operations of the company.

For example, the value specified in the import declaration may be examined with the company’s commercial bills, payment records and related contracts.

The accuracy of GTIP classification can be assessed in the framework of the technical specifications and corresponding tariff legislation of the product.

The concrete scope of the inspection and the procedures to be applied are determined according to the relevant legislation.

2. When Should You Start Control Preparation After?

After receiving the only resmî notification of the control preparation, the launch can limit the time that companies can use to evaluate existing risks.

It can be power to examine all records about past processing in companies with particularly high trading volume in a short time.

Therefore, regular customs internal controls and risk assessments are important.

Companies in certain periods;

• product classifications,
• precious elements,
• documents of origin,
• accounting agreements,
• special regime operations

you can review.

These studies can help identify possible deficiencies prior to audit.

However, resmî claims, durations and related obligations should also be taken into consideration in terms of transactions to be made after receiving audit notice.

3. First Step: Creating Customs Trading Inventory

One of the basic stages of audit preparation is the creation of a reliable inventory of processes that can be reviewed.

For this purpose, customs declarations and commercial records of the company belong to the relevant period must be met.

Sample data fields are:

• Date and number of Beyanname.
• Type of import or export process.
• GTIP.
• Product description.
• Supplier or customer.
• Country of origin and dispatch.
• Customs clearance.
• Applied taxes.
• preferential trade documents.
• Used customs regime.

This inventory can create the basic data source of risk analysis.

However, the inventory is not enough in any case, which only consists of the declaration data.

It is important to be associated with accounting, inventory and purchasing records when necessary.

4. How to Control GTIP Classifications?

GTİP classification is one of the important evaluation areas in customs inspections.

The wrong classification may lead to incorrect determination of taxes and trading policy measures to be applied.

Therefore, classifications of high-risk product groups should be examined in audit preparation.

During control;

1. The technical specifications of the product should be determined.
2. The legal basis of the GTIP used should be examined.
3. The relevant tariff position and classification rules should be evaluated.
4. The classification effect of product changes should be checked.
5. Different GTIP should be used in similar products and not used.

In particular, the statement of the same product with different GTIPs can create a difference that should be explained.

However, the use of different GTIP does not mean error in any case. The technical specifications of the product or corresponding tariff arrangements may be changed.

5. customs value

The customs asset is an area that can give significant financial results in import operations.

It may not only be enough to check the price in the commercial invoice in the audit preparation.

You may need to evaluate the following elements within the scope of the relevant legislation:

• Royalty and license bills.
• Specific commissions.
• Mold, design and so on additives.
• Navlun and fuse elements.
• After import price corrections.
• Transactions between associated companies.
• Specific indirect payments.

All of these elements are not included in the customs value automatically in each transaction.

It is important to evaluate whether the relevant payment or element meets and meet the conditions prescribed in the legislation.

Especially in companies that do not share information between financial and foreign trade departments, it is possible to review some payments linked to asset.

6. Mutagriculture of accounting and customs records

It is an important control tool for the integration of customs declarations with accounting records in the control preparation.

Thanks to this comparison;

• Additional payments made after import,
• price corrections,
• commercial billing differences,
• records that may be linked to customs value,
• unexplained financial differences

can be determined.

For example, regular payments to a specific foreign supplier can be found in accounting records of the company.

If these payments have a relationship with imported goods, there may also be assessment in terms of customs value.

However, each payment or accounting differance does not mean a lack of customs value directly.

The nature of the payment should be examined together with the provisions of the relevant contract and legislation.

7. Origin and preferential trade Documents

The origin is another important area, which should also be evaluated in the control preparation after.

It is necessary to review the documents and conditions of origin that companies use especially in preferential trade applications.

Between control areas;

• country of origin of goods,
• country of dispatch,
• A.TR and EUR.1 documents,
• declarations of origin,
• related preferential trade deals,
• product-based rules of origin

can be found.

It should not be noted that A.TR document does not show the origin of the goods alone.

Similarly, the presence of EUR.1 or another proof document does not eliminate the need for assessment regarding the fact that the related conditions are met.

Therefore, with document control, legal origin assessment should be carried out together.

8. Control of Foreign Trade Policy Measures

GTIP and origin information in import processes can be important in the implementation of various trading policy measures.

According to the activities of companies;

• anti-damping measures,
• protection measures,
• additional customs tax applications,
• surveillance regulations,
• import permissions and other related regulations

should be evaluated.

The date of processing in these areas is important.

The arrangement valid on certain date for a product may be changed in the next period.

Therefore, it is not enough to look at the current legislation when examining past transactions.

Every transaction should be evaluated in the framework of the relevant regulations that should be applied on its own date as a rule.

9. special customs procedures and Permissions

Different control areas may occur depending on the customs regimes used by the company.

For example, there may be specific obligations to the regime regarding processing, temporary import or antrepo operations.

In control preparation;

• permission and documents,
• transactions performed under regime,
• stock and production records,
• time and quantity controls,
• closure or ibra processes

can be examined.

However, the conditions of each regime are different.

Therefore, it is necessary to conduct the regimen-specific legislation and the company's actual operations.

10. Why Should Commercial Contracts Be Reviewed?

Some important information that is not included in the customs declaration can be found in commercial contracts.

For example;

• price determining mechanisms,
• royalty obligations,
• delivery shapes,
• commission agreements,
• product usage rights,
• After import price corrections

may require assessment in terms of customs clearance.

Therefore, it may not only be enough to examine commercial bills.

The connection of purchase, distribution, license and other related contracts should be analyzed with customs clearance.

However, every provision contained in the contract does not automatically give customs clearance or any other customs obligation.

The relevant legal conditions should also be evaluated.

11. What Documents should be prepared for Auditing?

Documents may vary depending on the scope of the audit.

It can be helpful to regularly manage the following group of documents for the purpose of pre-preparation of companies.

It is also important to properly map documents with related transactions.

In addition, personal data, commercial secrets and information security obligations should be applied to appropriate access and sharing controls.

12. How to Create the Audit Team?

After the control process, coordination of different departments within the company is important.

A sample task distribution can be as follows:

• Foreign trade: Declarations and customs clearance.
• Finance: Payments and financial contracts.
• Accounting: Financial records and consensus.
• Buying: Supplier relations and commercial conditions.
• Law: Legal assessments and contracts.
• Product Management: Technical product information.
• Top Management: Surveillance and resource allocation of the process.

The coordinated management of information and document requests related to audit can reduce the risk of unconsistent or missing disclosure.

However, in-house coordination does not limit the direct information and document requests authority arising from the legislation of the competent administration.

13. What should be done first when the Audit Notice is received?

The content and related legislation provisions of the notice should be carefully reviewed when given the official audit notice.

At this stage;

1. The scope of the notification should be determined.
2. The relevant resmî procedures and periods should be checked.
3. In-house responsibilities should be assigned.
4. The protection and accessibility of the relevant records should be provided.
5. The preparation of the requested documents should be planned.
6. Necessary legal and technical assessments should be performed.

It is important not to miss resmî times in the audit process.

However, it should not be assumed for a single general time for control processes from the whole time.

Somut notice and in force legislation should be essential.

14. How to Manage Detected Errors?

Possible errors may be determined on the processing of the past in the audit preparation.

In this case, the nature and scope of the error should be evaluated first.

For example, if the wrong GTIP is used;

• correct classification of the product,
• affected processes,
• related periods,
• required taxes to apply,
• possible legal results

should be examined.

When error is detected, the provisions of the legislation relating to the application, correction or other processes, and the conditions of concrete incident should be taken into account.

Assess whether voluntary disclosure or other legal mechanisms are available in light of the transaction and the stage of the audit.

It is also important to be addressed by the right method of law until the errors are detected.

15. Things to Do During Audit

After the control process, the following approaches can create significant risks:

1. The delay of formal notification and demands.
2. Providing documents from control or context.
3. Providing conflicted information by different departments.
4. Transfers as precise information of what I want.
5. Change the records in the form of reality after registrations.
6. Disinfected differences without being explained.
7. The declarations that are not based on the issues that require legal assessment.

Accurate, complete and traceable information sharing is essential in the inspection process.

It is important to meet the records of companies in accordance with the regulations and to obtain expert support in the necessary cases.

C-INSPEC Perspective

Then Control Preparation Is Not A Document Collecting Activity

Then the first reflex in the companies receiving control notice may be the combination of past declarations and related documents.

This study is not enough alone, but it is necessary.

Because the fundamental issue in audits is not only available of the document, but the connection of the document with the relevant process and the compliance of the process to the legislation.

For example, all import invoices of the company may be archived.

However, the declarations of these invoices may not be associated with payment records and price corrections, strengthen the asset analysis.

Similarly, the presence of product catalogs does not display the GTIP classification alone.

Therefore, after C-INSPEC approach, the control preparation is based on three basic questions:

First question: What did we do?

The company’s past customs clearance and related commercial activities are determined.

Second question: Why did we do this way?

The legal and technical bases of GTİP, precious, origin and other declaration elements are evaluated.

Third question: Can we show this in a reliable way?

The traceability of documents and records that support the accuracy of transactions is reviewed.

This approach supports companies not only respond to audit demands, but also better understand their customs processes.

The company prepared for inspection is the company that can only store the documents of past transactions, which can explain why these processes are correct.

16. Sample 30 Daily Preparation Plan For Companies

The following calendar is an example for companies who want to carry out volunteer internal preparation prior to audit.

This plan does not substitute for the specified time in the check notice from the resmî post or does not extend these times.

1–7. Days: Transaction and Document Inventory

• Customs declarations are determined.
• The related commercial documents are collected.
• Accounting and customs data are matched.
• Critical product and processing groups are determined.

8–15. Days: Risk Analysis

• GTIP classifications are evaluated.
• Customs clearance risks are reviewed.
• The documents of origin are checked.
• Special regime transactions are reviewed.

16–23. Days: Detailed Review

• Risk transactions are reviewed by sample or full-range methods.
• Accounting differences are investigated.
• Commercial contracts are evaluated.
• Possible deficiencies are documented.

24–30. Days: Results and Action Plan

• Results are classified according to the degree of importance.
• Legal and financial effects are evaluated.
• Corrective activities are determined.
• Management report is prepared.

This calendar can be changed according to the trading volume and risk profile of the company.

17. Afterwards Control Preparation Indicators For Upper Management

These indicators are recommended for in-house management purposes; there is no mandatory audit reporting format in the legislation.

18. How to Manage Process After Auditing?

After that the control process is completed, companies may not only focus on auditing conclusion.

The causes of detected findings and the effects on related processes should also be evaluated.

If a systematic GTIP error is detected in a specific product group, it should be reviewed not only past processes, but also product classification procedure.

If the payment deficiencies associated with customs clearance are determined, the information sharing mechanism between finance and foreign trade should be strengthened.

Application or objection paths, which may be applied as a result of auditing, must be evaluated through the relevant legislation and concrete process.

In this process, it is necessary to follow resmî times.

Frequently Asked Questions

Conclusion

post-clearance audit is an important control mechanism in the evaluation of the compliance of the company’s past customs transactions to the legislation.

It is not enough to store only documents to be prepared for this time.

A consistent control structure should be created between GTİP, customs asset, origin, trade policy measures, special regimes and accounting records.

The combination of information in different departments can facilitate the correct evaluation of past transactions.

Perform regular internal controls and risk assessments of companies can support more effective management of the control process.

After successful, the control preparation is a continuous control discipline, which is not an operation starting when the inspection notice comes, the company is formed in the daily customs compliance processes.

Legislation and Official Sources

1. Customs Law No. 4458 — Customs controls and related provisions.
2. Then Control Regulation of Control and Risk Procedures.
3. Customs Regulation.
4. The Ministry of Commerce — the official explanations on the application of the control and customs inspection from the later.
5. Regulations on relevant import regime and trade policy measures.