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Four Pillar Approach for Improved Customs
Compliance & Trusted Trader - Australia & New
Zealand
Russell Wilkinson – National Lead Partner – Customs and International Trade
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Crowe Horwath Australasia
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About Crowe Horwath International
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Four Pillar Approach for improved customs compliance
 Crowe Horwath’s International Customs Evaluator (ICE) Data Interrogation
software provides an evaluation of a company’s previous four years of import
declaration data by producing a one page dashboard, as detailed on page three
 Once produced, the dashboard is examined to identify certain compliance
irregularities and acts as a roadmap to commence the Four Pillar Approach to
improved customs compliance
ICE Savings
Review
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ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
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Pillar One – ICE savings review
 Identify refund opportunities
 Investigate and confirm actual refunds and where necessary apply to customs
for rulings
 Prepare and lodge refund applications
 Confirm prospective savings
 Re-evaluate average duty rates using ICE
ICE Savings
Review
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ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
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Pillar Two – ICE risk review
ICE Savings
Review
ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
 Review import data for potential underpayment of Customs duty i.e. via Tariff Concession Orders
(TCOs) and Duty Free Tariff Classifications
 Analyse import data for exceptions relating to valuation, origin status, exchange rates, Incoterms etc
 Perform analysis of import data to evaluate reporting inconsistencies of mandatory fields on import
declarations, i.e. descriptions of goods having multiple tariff classifications
 Design sampling of import and export documentation based on our compliance methodology
 Provide extensive feedback on the qualitative issues affecting declaration quality and feedback on the
declaration data quality in such key areas as tariff classification, claiming of concessions, valuation, and
under payment of customs duty
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ICE Savings
Review
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ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
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Pillar Two – Top 30 Duty free descriptions
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Pillar Two – Supplier/Incoterms Analysis
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Pillar Three – Systems compliance
ICE Savings
Review
ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
 Physical check of sample paperwork for top 50% (indicative) of import declarations lodged over the last
4 years
 Samples will be chosen based on the top duty free import declarations by Customs value, with a
particular focus on potential risk of duty underpayment identified in Pillar Two
 Our audit will involve a review of import documents submitted to the relevant Customs agency with
reference to technical information from the client SKU listing to determine accuracy of Tariff
Classifications and other disclosures
 Provide feedback on the initial document review phase, including key findings on risk, underpayments
of duty, Full Import Declaration (FID) errors (both revenue and non-revenue in nature), exposure to
penalties if detected by Customs, and compliance with Tariff Advice Rulings and relevant expiry dates.
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Pillar Three – Systems compliance (cont.)
 Provide a report on our findings as well as our “compliance rating” out of 10 for your company
 Compliance rating calculated from a questionnaire to be completed by client as well as the percentage
of errors and inconsistencies identified during our import data and import document review
 Our compliance rating methodology is weighted according to the relevant Customs agency Penalty
Scheme in order to reflect the increased risk associated with revenue errors over non-revenue errors
(see following for example of compliance rating components)
 Review and map client systems and controls from a Customs Compliance perspective (i.e. from
placement of the purchase order through to in store receipt of goods and offshore payment, see
following)
 Detail our areas of compliance improvement and outcomes of the risk review.
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Pillar Three – Systems compliance (cont.)
 Review and map Client’s systems and controls from a Customs Compliance
perspective (i.e. from placement of the purchase order through to in store
receipt of goods and offshore payment).
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Pillar Three – Examples of compliance rating components
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Pillar Four – Customs compliance improvement strategy
 Provide an outline of our compliance improvement strategy and key areas for improvement, including
possible staff training, system changes, record keeping etc, as well as timelines for implementation
 Develop Self Operating Plan (SOP) in respect of handling and retaining import documentation as per
the Customs Act for 5 years
 Provide staff training regarding the checks required on returned shipping documents and customs
entries
 Develop a strategy for the classifying of new parts / stock keeping units (SKUs).
ICE Savings
Review
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ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
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Pillar Four – Customs compliance improvement strategy
 Recommend areas that may require Tariff Advice and Tariff Valuation Rulings based on outcomes of
Pillars 2 and 3
 Provide the Customs Compliance Director (Australia or NZ) with our report and implemented
improvement strategy for review and acceptance, including potential removal from future desk top and
compliance auditing in the future
 A separate quotation can be prepared for access to our Tariff Database (IDM) to be implemented
before the completion of Pillar Four to further satisfy the Customs agency when signing off on our
improvement strategy.
ICE Savings
Review
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ICE Risk
Review
Systems &
Compliance
Rating
Customs
Compliance
Improvement
Strategy
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CROWE HORWATH’S INTERNATIONAL TRADE EXPERTISE
ICE RISK REVIEW
Automated risk assessment of import declaration data
Customs transaction flows and controls
Establish / Identify risk review strategy
SYSTEMS & COMPLIANCE RATING
Review Broker performance
Review the client systems and map the processes and document
sampling methodology
Provide our compliance continuum rating
CUSTOMS COMPLIANCE IMPROVEMENT STRATEGY
Provide draft report on our review findings
Implementation of the agreed compliance improvement strategy
Approach Australian Customs and Border Protection Service for
acceptance
Develop product compliance database for future compliance (web based)
CROWE HORWATH’S INTERNATIONAL TRADE EXPERTISE
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REVIEW OPINION
Risk Focussed Approach
Interrogation software to identify savings/refunds
Quantify Customs duty savings
Apply for rulings and lodge refund applications
Compliance Improvement Report
CUSTOMS RISK ASSESSMENT
ICE SAVINGS REVIEW
International Data Management (IDM)
Online Tariff Database
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International Data Management (IDM)
Crowe Horwath’s International Data Management (IDM) system provides unique
management of your company's import and export data in relation to the key Customs
Compliance information underpinning the declaration process.
A few key features and benefits of IDM are:
 Management of “Big SKU Data” sets utilised for international sourcing of products, both
import and export
 Tariff Classification compliance for all internationally sourced products, both international
aligned classifications (i.e. to six figures) and to eight figure classifications for Australia
and NZ
 Maintains consistency of Customs reporting data, thereby minimising overpayment of
Customs Duty and future penalties being applied by the Australian Customs and Border
Protection Service (ACBPS)
 Storage of international purchase orders, invoices, declaration information, product
information and payment details in order to comply with Section 240 of the Customs Act
1901
 Can be a key supporting tool for any future “Trusted Trader” scheme in Australia and NZ
 Following is a series of screenshots providing an illustration of the IDM online tariff
database
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Trusted Trader Program and Four Pillar Benefits
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Overview of Trusted Trader Program
 The Trusted Trader Program (TTP) aims to provide trade facilitation benefit to entities that
demonstrate that they meet minimum trade compliance and supply chain security
standards, in accordance with the World Customs Organisation’s SAFE Framework of
Standards to Secure and Facilitate Global Trade.
 A key advantage is that it allows facilitation of Mutual Recognition Arrangements (MRAs).
This means that an action, decision or authorization by one customs administration can
be accepted by a customs administration from another jurisdiction.
 In the context of TTP, MRAs allow two or more customs administrative parties to
recognize each others audits, controls and authorizations as equivalent.
 TTP will reduce transaction costs and clearance delays at the border by streamlining
customs procedures, however, with MRA’s, TTP benefits can extend beyond Australian
and/or New Zealand borders.
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Four Pillar Benefits
Four Pillar Review

Savings Review

Risk Review

IDM

Security Review
Trusted Trader

Pilot Program

Tiers Involved (Tier 3 involves
streamline reporting)
Optimal solution for Tier 3 Approval
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Why are we concerned with “Trusted Trader”
Australian Customs and Border Protection Service (ACBPS) & Department of Agriculture
Exports
 Mutual Recognition (MR) of Trusted
Trader status by overseas Customs
administrations
 Export declaration simplified processing
(Monthly)
 Reduced Quarantine Processes and Fees
(Agriculture fees)
 Enhanced supply chain security & smooth
passage into the destination country
 Increased export sales with the combination
of MR and access to foreign markets with
less border scrutiny
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Imports
 Mutual recognition of Trusted Trader
status by Customs administrations
 Expedited processing and release of
shipments
 Duty Deferral (BAS)
 Case Manager
 Priority Customs’ processing,
particularly during a period of elevated
threat conditions
Proposed Tier Structure of Trusted Trader
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Attempting a Combined Approach on Trusted Trader
ACBPS
Agriculture
Impact of Trusted Trader at the Customs Barrier
Agriculture’s “Risk Based” Approach at the barrier

Potential for Duty deferment (BAS)

Reduced inspections and cargo release delays

Streamline reporting (Monthly)

User pay fee reductions

Case manager

Pre-clearance of cargo and minimal inspections

Expedited clearances in a security shut down

Exports, reduced inspections and interference
Implications and differences for companies involved in Trusted Trader
 Without Trusted Trader, importers will continue to face the time pressures of transaction reporting
 Exporters will not be able to avail themselves of Mutual Recognition into other countries with similar programs
 For the first time, nirvana can be achieved with CBP and Agriculture under a “Trusted” environment
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Mutual Recognition Arrangements (MRAs) Two-Way Trade
Australia’s Top 15 Export Value Destinations by
Trusted Trader Equivalent Program Jurisdictions
Australia’s Top 15 Import Value Sources by Trusted
Trader Equivalent Programme Jurisdictions
1.
1. European Union
China
2. Japan
2. China
3. Korea (Republic of)
3. United States of America
4. Singapore
4. Singapore
5. European Union
5. Japan
6. United States of America
6. Malaysia
7. Hong Kong
7. Korea (Republic of)
8. Taiwan
8. Hong Kong
9. New Zealand
9. New Zealand
10. India
10. Thailand
11. Thailand
11. Indonesia
12. Indonesia
12. Vietnam
13. Malaysia
13. Taiwan
14. Philippines
14. Papua New Guinea
15. Vietnam
15. Switzerland
*shaded countries do not currently have an established trusted trader equivalent programme
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Potential Benefits of MRAs
 A study on the impact of the trusted trader equivalent MRA for Korea and China was
recently conducted, which included a time release study and participant survey.
 Five industry sectors were studied including electronics, chemicals, textiles, machinery
and automobiles, which captured more than 300 companies including both Trusted Trader
and non Trusted Trader entities.
 The study found that import clearance times for Trusted Traders to be greatly reduced
after MRA for all five sectors.
 It also identified that the percentage for cargo inspection for Trusted Traders reduced
significantly.
 MRAs also provide intangible trade facilitation benefits such as strengthening trade
competitiveness and improving brand image.
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Disclaimer
While all reasonable care is taken in the preparation of this presentation, to the extent allowed by
legislation Crowe Horwath (Aust) Pty Ltd accept no liability whatsoever for reliance on it.
All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but
are subject to change without notice by Crowe Horwath (Aust) Pty Ltd. Crowe Horwath (Aust) Pty Ltd
assumes no obligation to update this presentation after it has been issued.
You should seek professional advice before acting on any material.
Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or
omissions of financial services licensees) in each State or Territory other than Tasmania.
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