Post-clearance audits useful tool if implemented in the NMI—Customs

Customs officer Patrick Camacho holds up a certificate he earned after completing a recent audit workshop in Suva, Fiji. (Dennis B. Chan)

A CNMI Divisions of Customs officer recently attended a post-clearance audit workshop in Suva, Fiji, to help customs officers from all over the world learn better revenue collection and risk assessment methods.

Customs officer Patrick Camacho said a post-clearance audit, also known as PCA, is essentially an area of law that would give Customs the authority to enter any business to obtain any records for audit purposes, and potentially show if these businesses were “honest” in giving the values of their goods at CNMI ports.

“That is not yet applicable here but it’s a good concept,” said CNMI Customs Division director Jose Mafnas in a recent interview.

During the workshop in Fiji in late November, Camacho said one officer from the Cook Islands shared they had done a PCA on cigarettes and were able to collect over $200,000.

Camacho said when the Cook Islands officer looked at their records, they saw a discrepancy in how a business was giving the value to Customs. Giving the wrong values basically lowered the taxes Customs assessed.

“We do not have the authority,” said Camacho. “There are workarounds, through warrants and subpoenas, but if PCA was implemented here in the CNMI, it would require businesses to keep records for a certain amount of years and that amount of years, Customs could come in any time and collect document and records. It is a really detailed audit.”

Right now, Camacho said, the CNMI Customs does “desk audits,” or transaction-based audits on documents done during cargo clearance at the port. But with PCA, Camacho said, it would allow Customs to get their hands on bank records, businesses’ accounting books, or basically any data for their business to do their accounting.

“And hopefully, we implement that program in the CNMI. Because I am sure applying for warrants and subpoenas would take time. If we had PCA it would greatly lower that time frame of gathering documents to do more detailed audits,” Camacho told Saipan Tribune this month.

“The problem here is manpower,” Camacho added, as the workshop—sponsored and paid for by the Oceania Customs Organization, of which the CNMI is a member—recommends a three-man team to conduct the audit.

Camacho said he is the sole person in Customs designated to strictly do desk audits, with other officers helping when they complete their specific assignments.

Camacho was one of several other Customs officers who completed “Intelligence Analysis” and “rules of origin” training last month, sponsored by the Oceania Customs Organization.