Yerevan, Armenia – In an era of increasingly complex and interconnected global trade, customs administrations face unprecedented challenges and opportunities. To address these challenges, Armenian Customs is actively pursuing reforms to improve its efficiency, transparency, and compliance. Recently, the World Customs Organization (WCO) provided a Post-Clearance Audit (PCA) support mission to Armenia's State Revenue Committee (SRC), aiming to help implement a trader-centered audit model that will significantly enhance trade facilitation. This initiative marks an important milestone in Armenian Customs' modernization process and will inject new vitality into the country's economic development.
The support mission took place from March 13-17, 2023 in Yerevan, generously funded by the German Customs Cooperation Fund (CCF/Germany). Its primary objective was to deepen SRC's understanding of PCA implementation in line with Article 7.5 of the WTO Trade Facilitation Agreement (TFA) and WCO's PCA tools. To ensure mission success, WCO deployed a team of experienced experts including a lead PCA officer from the WCO Secretariat and PCA technical/operational advisors from German and Kenyan customs administrations.
Transformative Approach to Customs Audits
During the mission launch, Ms. Gohar Sahakyan, Head of SRC's Post-Clearance Audit Department, expressed gratitude for WCO's support while outlining SRC's vision, implementation strategies, activities, and challenges in PCA operations. She emphasized that SRC's greatest challenge in implementing internationally-compliant PCA lies in transitioning from transaction-based audits to trader-centered examinations.
The five-day mission engaged 15 participants from various SRC departments including Desktop Audit, Customs Information and Risk Analysis, Field Audit, and Customs Transaction Control. Participants received detailed guidance on WCO PCA concepts, targeting frameworks, system-based audit approaches, audit cycle processes, and risk management system reviews. Experts from different jurisdictions shared practical experiences that provided valuable references for Armenian customs officers.
The mission concluded with participants expressing enthusiasm for piloting their first trader-centered audits (system-based examinations) in accordance with WCO PCA guidelines and international best practices. Officials particularly appreciated the practical knowledge shared during the mission, which will prove invaluable during trader-centered audit implementation.
Post-Clearance Audit: A Key Tool for Trade Efficiency and Security
Post-Clearance Audit (PCA) represents a compliance check conducted after goods release to verify the accuracy and completeness of import/export declarations. Unlike traditional transaction-based audits, trader-centered PCA focuses more on evaluating companies' internal control systems, risk management capabilities, and overall compliance levels. This approach more effectively identifies potential violations while improving trade efficiency and security.
Traditional transaction audits primarily examine individual transactions for compliance regarding product descriptions, values, origins, etc. While effective at detecting obvious violations, they often fail to assess overall corporate compliance. In contrast, trader-centered PCA evaluates companies holistically by examining their internal controls and risk management systems to determine compliance risks. This method better identifies systemic risks while improving overall compliance levels.
Trader-centered PCA also fosters cooperation between customs and businesses. Through communication, customs gain insights into business models, internal controls, and risk management strategies. This enables better compliance risk assessments while providing targeted guidance. Simultaneously, businesses can enhance compliance, reduce trade costs, and improve international competitiveness through such cooperation.
WCO's PCA Tools: Comprehensive Guidance for Member Customs
WCO's PCA tools provide member customs with comprehensive guidelines and best practices for establishing and improving PCA systems. These tools cover all PCA aspects including risk assessment, targeting selection, audit procedures, outcome evaluation, and follow-up actions. By adopting WCO PCA tools, customs administrations can improve audit efficiency, reduce trade barriers, and promote healthy international trade development.
The tools emphasize risk management importance, recommending customs concentrate audit resources on high-risk companies and sectors based on risk assessments. This improves audit efficiency while minimizing low-risk business disruptions. The tools also stress transparency and fairness, requiring customs to establish clear audit procedures ensuring equitable treatment for all businesses.
Furthermore, WCO PCA tools encourage customs cooperation with other government agencies and international organizations. Through information and experience sharing, customs gain better trade environment understanding and improved audit effectiveness. For example, customs might collaborate with tax authorities to verify financial information, with border agencies to combat smuggling, or with INTERPOL against transnational crime.
Next Steps for Armenian Customs
Building on this WCO mission, Armenian Customs plans to launch its first trader-centered audit pilot project guided by WCO PCA standards and international best practices. The pilot aims to test and refine PCA processes while accumulating experience for nationwide implementation.
The pilot will select high-risk companies for evaluation of their internal control and risk management systems. Customs will communicate with these businesses to understand their operational models, control systems, and risk strategies while analyzing trade data to identify potential violations. Through this pilot, Armenian Customs can refine PCA processes and prepare for comprehensive rollout.
Additionally, Armenian Customs will continue strengthening cooperation with WCO and other member administrations to learn advanced practices and continuously improve PCA capabilities. This includes participating in WCO training programs, workshops, and technical assistance projects while exchanging knowledge with other customs administrations.
The Importance of International Cooperation
This WCO support mission represents a successful example of international cooperation. Through joint efforts by WCO, CCF Germany, and German/Kenyan customs experts, Armenian Customs gained valuable technical support and experience sharing that laid solid foundations for successful PCA implementation.
In today's globalized context, international cooperation remains essential for promoting trade facilitation and customs modernization. As the global leader in customs matters, WCO will continue playing a vital role by providing member administrations with support and guidance to jointly address challenges and achieve common development goals.
Armenian Customs' advancement of trader-centered audits promises to improve trade efficiency, reduce costs, enhance compliance, and boost international competitiveness. With WCO and international community support, Armenian Customs can overcome challenges, seize opportunities, achieve modernization, and make greater contributions to national economic development. This transformation will benefit Armenian businesses while strengthening cooperation with global trade partners to build a more open, fair, and prosperous international trade system.