By “post audits” I am referring to audits conducted by either yourself (i.e. annual self-audits), an independent auditor or post-audits conducted by SARS Customs.
Just like many organisations, SARS too has its resource ups and downs. One of my former (late) Customs colleagues occasionally put a failure of the division into perspective. He would say that just because we have not made a finding during an audit, does not mean that industry are compliant. It may simply be a reflection of our own abilities to make audit findings, he would say.
Looking at this from the other side of the fence (i.e. a clearing agent or trader) reveals a similar perspective. The consequence of compliance issues not detected (regardless by who) poses a greater future risk to us all.
Imagine something simple which could have being detected within the first few months of its occurrence only gets picked up two or three years later. The financial impact of a shortfall in duties and taxes in the longer term (of repetitive occurrences) would be more severe. Alternatively, imagine having paid too much duties and taxes. How would this have impacted on cash flow over a long period of time? This is why it is crucially important to make discoveries early in the game and to rectify these.
Incidentally, SARS audits and schedules currently go two years back. Refund claims also go back two years. In the new legislation this will be three years for both schedules and refunds alike.
So, what do you do when findings are made? Aside from bringing the duties and taxes to account (to be discussed in the following blog) or claiming refunds, the status quo needs to change. This might seem obvious but implementation is not always straight forward.
Firstly, you should make 100% certain that the finding is valid. Often what might seem obvious at first glance becomes more complex as more information comes to light. One way to resolve uncertainties is to obtain a firm Ruling or Determination from SARS Customs. Once absolute certainty on the way forward is reached, one should update all operational requirements. This applies not only to your internal operations but especially also to your LSP (Logistics Service Provider).
Don’t forget to update all systems settings. Some systems have what I refer to as “stop-block” facilities, a term used in the woodwork industry. In IT and in other industries this is referred to as “fail-safe”, “fail-secure” or “fool-proof” mechanisms. The Japanese call them “poke-yoke”. Use them judiciously.