Customs Post Entry Audit Rules 2002

Compliance audit is a post-clearance control mechanism allowing low-risk imports to be released with minimal intervention.
Customs may verify accuracy and truthfulness of import declarations within three years from the filing date.
Verification includes records of importers and brokers.

Importers and customs brokers must keep accurate records for Customs to verify compliance with tariff classification, customs value, quantity, and country of origin.
"Importer" includes importer of record, beneficial owner, agents, and any person who knowingly causes importation.
"Knowingly causes importation" also covers domestic transactions where parties control terms or supply parts used in imported goods production.

Audits selected via a risk management system considering customs revenue magnitude, duty rates, compliance history, and risk.
Audits also triggered by discovered errors causing significant revenue loss or upon voluntary firm request.
Customs brokers are audited to validate importer audits or fill information gaps.

Authorized customs officers may enter business premises during office hours to conduct audits.
Audits include document flow, financial flow, goods inventory, and related business processes.
Officers may require certified document copies; originals borrowed must be returned within 24 working hours.
Denial of access presumes inaccuracies and can lead to reassessment and penalties.
Foreign language documents must be accompanied by English or Filipino certified translations.

Keep all importation records and relevant commercial data for three years from import entry filing.
Records include company structure documents, purchase orders, shipping/import/export documents, manufacturing and sales records, banking and accounting records, and system documentation.

Must keep copies of importation records related to transactions they handle for three years.
Includes documents relating to importation, accounting systems, and stored data media.

Initially managed by the interim Post Entry Audit Unit (PEAU) pending PEA Office creation.
Firm selection for audit is risk-based and includes voluntary and enforced compliance audits.
Voluntary audits focus on assisting firms to become compliant with Customs regulations.
Enforced audits are conducted on firms with compliance issues identified by several Customs units.

Profiling and information analysis through data collection and risk identification.
Audit Notification Letter issued with audit schedule, team, and required documents.
Audit Plan customized based on company data to verify flows and declarations.
Pre-audit conference sets expectations, introduces audit team, and tours company facilities.
Field audit examines records, interviews personnel, and verifies valuation, classification, quantity, origin, and tariff application.
Brokers may be audited to validate findings.
Exit conference discusses findings, underpayments, penalties, and recommendations.
Final Audit Report submitted for Commissioner approval and provided to auditee.
Ongoing monitoring ensures timely completion and implementation of audit recommendations.

Failure to keep required records: 20% ad valorem administrative fine, hold on deliveries, criminal penalties including fines and imprisonment.
Denial of access to records: contempt charges, reassessment with presumptive inaccuracies, administrative fines, hold on deliveries, and criminal prosecution.
Underpayment of duties and taxes categorized by culpability:
- Negligence: Administrative fine 0.5 to 2 times revenue loss.
- Gross Negligence: Administrative fine 2.5 to 4 times revenue loss.
- Fraud: Administrative fine 5 to 8 times revenue loss.
- Criminal prosecution under the Tariff and Customs Code.
Voluntary disclosure before audit may lead to compromised fines.

Decisions imposing penalties can be appealed as per the Tariff and Customs Code.
Procedures governed by Customs Memorandum Order No. 1-2002.