BULACAN POLYTECHNIC COLLEGE

Bulihan, Malolos, Bulacan

BS Customs Administration

CAF 325
Customs Post Clearance Audit Fraud Management
(POST CLEARANCE AUDIT (PCA) AND
RELATED CUSTOMS FUNCTIONS)

An Assignment submitted to Mr. Eugene Ruano in partial fulfillment of the academic requirements
for the course Customs Post Clearance Audit Fraud Management, under the
Bachelor of Science in Customs Administration – 3A

Group 4

Arquinez, Herenio Jr.

Cano, Melissa Noreen
De Guzman, Garilyn
Galang, Camila
Gutierrez, Jonalyn
Umali, Ian Bethelmar

January 2026

Customs Post Clearance Audit Fraud Management CAF 325

1
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

I. FUNCTIONS OF THE POST CLEARANCE AUDIT GROUP (PCAG)

The Post Clearance Audit Group (PCAG) is a specialized unit of the Bureau of Customs (BOC)

tasked to ensure that importers comply with customs laws after the release of imported goods.

Unlike border controls that focus on physical inspection, PCAG emphasizes documentary and

systems-based audit. Its expanded functions are as follows:

1. Conduct of Post Clearance Audit

PCAG performs a comprehensive audit of importers’ records to verify whether customs duties, taxes,

and other charges were properly declared, assessed, and paid at the time of importation.

2. Validation of Customs Declarations

The group verifies:

 Customs value

 Tariff classification

 Quantity and description of goods

 Country of origin

This ensures that importers did not intentionally or unintentionally misdeclare information.

3. Recovery of Lost Government Revenue

PCAG identifies deficiencies in customs payments and issues audit findings that lead to:

 Collection of deficiency duties and taxes

 Imposition of penalties, interest, and surcharges

Customs Post Clearance Audit Fraud Management CAF 325
2
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

This function plays a crucial role in revenue generation for the government.

4. Investigation of Fraudulent Importation

PCAG detects schemes such as:

 Undervaluation

 Misclassification

 Splitting of shipments

 Use of fake invoices

These practices undermine fair trade and deprive the government of lawful revenue.

5. Improvement of Compliance Culture

Through consistent audits, PCAG promotes voluntary compliance among importers, encouraging

them to adopt proper accounting systems and truthful declarations.

Customs Post Clearance Audit Fraud Management CAF 325

3
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

II. FUNCTIONS OF THE TRADE INFORMATION AND RISK ANALYSIS OFFICE (PCAG-

TIRAO)

The Trade Information and Risk Analysis Office (TIRAO) is a specialized office under the Post

Clearance Audit Group (PCAG) of the Bureau of Customs (BOC). It plays a vital role in

strengthening the risk management and intelligence-based audit system of the Bureau by

analyzing trade data and identifying potential risks related to customs compliance.

The primary functions of PCAG-TIRAO are as follows:

1. Collection and Management of Trade Information

PCAG-TIRAO is responsible for gathering, organizing, and maintaining trade-related data from

various sources, including:

 Customs declarations

 Import and export records

 Data from other government agencies (OGAs)

 Information from foreign customs administrations

This information serves as the foundation for identifying irregularities and trends in import and export

activities.

2. Risk Analysis and Profiling of Importers

One of the core functions of PCAG-TIRAO is to conduct risk analysis by evaluating importers’

historical data and trade behavior. Through risk profiling, the office identifies:

Customs Post Clearance Audit Fraud Management CAF 325

4
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

 High-risk importers

 Patterns of undervaluation or misdeclaration

 Repeated violations of customs laws

This allows the Bureau of Customs to focus audits and enforcement actions on importers with a

higher probability of non-compliance.

3. Support to Post Clearance Audit Selection

PCAG-TIRAO provides analytical support in selecting importers and transactions for post clearance

audit. By using data analytics and intelligence reports, it helps ensure that:

 Audit resources are efficiently utilized

 Selection of audit subjects is objective and evidence-based

 Legitimate traders are not unnecessarily burdened

4. Identification of Revenue Risks and Leakage

The office analyzes trade data to detect possible revenue leakage, such as:

 Under-declaration of value

 Incorrect tariff classification

 Misdeclaration of quantity or origin

By identifying these risks early, PCAG-TIRAO contributes to the protection of government revenue.

5. Intelligence Sharing and Inter-Agency Coordination

Customs Post Clearance Audit Fraud Management CAF 325

5
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

PCAG-TIRAO coordinates with:

 Other units of the Bureau of Customs

 Other government agencies

 International customs organizations

This coordination enables the exchange of intelligence information that supports investigations,

audits, and policy formulation.

6. Development of Risk Indicators and Profiles

The office develops and updates risk indicators, parameters, and profiles that are used by the BOC

in:

 Post clearance audit

 Enforcement operations

 Policy analysis

These indicators help improve the effectiveness of the Bureau’s risk management system.

7. Monitoring Trade Trends and Patterns

PCAG-TIRAO continuously monitors changes in trade volumes, commodity flows, and valuation

trends to:

 Identify emerging risks

 Detect unusual trade patterns

Recommend preventive measures against fraud


Customs Post Clearance Audit Fraud Management CAF 325
6
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

This proactive approach allows the Bureau of Customs to respond promptly to potential threats.

8. Support to Policy and Management Decisions

The analytical reports prepared by PCAG-TIRAO are used by BOC management in:

 Formulating customs policies

 Improving audit strategies

 Enhancing trade facilitation measures

These reports contribute to informed decision-making at the institutional level.

Customs Post Clearance Audit Fraud Management CAF 325

7
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

III. TWO (2) INSTANCES WHEN THE BUREAU OF CUSTOMS MAY CONDUCT POST

CLEARANCE AUDIT

1. Risk-Based Selection

The BOC may conduct PCA when:

 An importer is classified as high-risk

 There is unusual trade behavior

 There are inconsistencies in declarations

This selection is based on risk management systems and intelligence reports.

2. Presence of Information Indicating Non-Compliance

PCA may be initiated when:

 Reports from other government agencies are received

 Foreign customs authorities share adverse information

 Internal BOC data show discrepancies

This ensures accountability even after goods are released.

Customs Post Clearance Audit Fraud Management CAF 325

8
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

IV. WHEN MAY THE BOC / PCAG CONDUCT AUDIT, EXAMINATION, INSPECTION,

IDENTIFICATION, AND INVESTIGATION PERTAINING TO GOODS DECLARATION

The BOC or PCAG may conduct these activities after the goods have been released, subject to the

following conditions:

 The audit is conducted within the period of limitation

 There is a lawful authority or audit order

 The purpose is to verify compliance with customs laws

These activities may include:

 Examination of documents

 Interviews with importers

 Physical inspection (if necessary)

 Validation of accounting systems

This authority prevents abuse of post-release privileges by importers.

Customs Post Clearance Audit Fraud Management CAF 325

9
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

V. RECORDS INCLUDED IN THE SCOPE OF PCAG

The Post Clearance Audit Group (PCAG) is authorized to examine all records related to import

transactions, whether these records are directly or indirectly connected to the importation of

goods. These records serve as the basis for verifying the accuracy of customs declarations,

valuation, tariff classification, and payment of duties and taxes. The records included in the

scope of PCAG are discussed below:

A. Commercial Documents

1. Commercial Invoice

Definition:

A commercial invoice is a document issued by the exporter or seller to the importer that contains

detailed information about the goods sold, including description, quantity, unit price, total value, and

terms of sale.

Sample:

An invoice issued by a Chinese supplier showing 1,000 units of mobile phone accessories at USD 5

per unit, FOB Shanghai.

2. Packing List

Definition:

A packing list provides details on how the goods are packed, including the number of packages,

weight, dimensions, and contents of each package.

Customs Post Clearance Audit Fraud Management CAF 325

10
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

Sample:

A packing list indicating 10 cartons, each containing 100 pieces of garments, with gross and net

weights.

3. Sales Contract

Definition:

A sales contract is a legally binding agreement between the buyer and seller that outlines the terms

and conditions of the sale, such as price, delivery terms, payment method, and responsibilities of both

parties.

Sample:

A contract stating CIF Manila terms, payment via letter of credit, and delivery within 30 days.

4. Purchase Order

Definition:

A purchase order is a document issued by the importer to the exporter specifying the quantity,

description, price, and terms of goods to be purchased.

Sample:

A purchase order requesting 500 sacks of rice at USD 20 per sack, delivery to the Philippines.

Customs Post Clearance Audit Fraud Management CAF 325

11
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

B. Transport Documents

1. Bill of Lading

Definition:

A bill of lading is a transport document issued by a shipping line that serves as a receipt of goods, a

contract of carriage, and a document of title.

Sample:

A bill of lading issued by a shipping company showing electronics shipped from Busan to Manila.

2. Airway Bill

Definition:

An airway bill is a document issued by an airline or air cargo carrier acknowledging receipt of goods

for air transport.

Sample:

An airway bill for pharmaceutical products shipped by air from Singapore to Manila.

3. Delivery Receipt

Definition:

A delivery receipt confirms that the imported goods were delivered and received by the importer or

consignee.

Customs Post Clearance Audit Fraud Management CAF 325

12
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

Sample:

A delivery receipt signed by the importer upon receiving containers delivered from the port to the

warehouse.

C. Financial and Accounting Records

1. General Ledger

Definition:

The general ledger is the main accounting record that summarizes all financial transactions of a

company, including purchases, expenses, and payments.

Sample:

A ledger entry recording importation expenses and customs duties paid for a shipment of machinery.

2. Cash Disbursement Book

Definition:

A cash disbursement book records all cash payments made by the importer, including payments for

duties, taxes, freight, and insurance.

Sample:

An entry showing payment of customs duties amounting to PHP 250,000.

Customs Post Clearance Audit Fraud Management CAF 325

13
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

3. Bank Statements

Definition:

Bank statements show the inflow and outflow of funds in the importer’s bank account and are used to

verify actual payments made for import transactions.

Sample:

A bank statement reflecting wire transfer payment to a foreign supplier.

4. Proof of Payment

Definition:

Proof of payment includes official documents that confirm settlement of financial obligations related to

importation.

Sample:

Official receipts showing payment of customs duties, VAT, and other charges.

D. Customs Records

1. Goods Declaration

Definition:

A goods declaration is an official document submitted to the Bureau of Customs containing details of

the imported goods for assessment and clearance.

Customs Post Clearance Audit Fraud Management CAF 325

14
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

Sample:

A Single Administrative Document (SAD) declaring HS Code, customs value, and quantity of

imported goods.

2. Assessment Notice

Definition:

An assessment notice is issued by the Bureau of Customs indicating the amount of duties and taxes

assessed on the imported goods.

Sample:

A notice showing customs duties and VAT totaling PHP 500,000.

3. Official Receipt

Definition:

An official receipt is issued by the Bureau of Customs as evidence of payment of duties, taxes, and

other charges.

Sample:

A BOC-issued receipt confirming full payment of assessed customs charges.

E. Electronic Records

Customs Post Clearance Audit Fraud Management CAF 325

15
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

1. Emails

Definition:

Emails include electronic correspondence between the importer and supplier relating to pricing,

shipment details, or contract negotiations.

Sample:

An email discussing revised unit prices before shipment.

2. Accounting Software Records

Definition:

These are digital accounting entries stored in accounting systems that record import transactions and

financial data.

Sample:

Import expense records stored in QuickBooks or SAP accounting software.

3. Digital Transaction Histories

Definition:

Digital transaction histories consist of electronic records of payments and financial transfers related to

importation.

Sample:

Online banking transaction logs showing international fund transfers to suppliers.

Customs Post Clearance Audit Fraud Management CAF 325

16
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

VI. PURPOSE OF AUDIT AND EXAMINATION OF RECORDS UNDER SECTION 1000

Section 1000 of the Customs Modernization and Tariff Act (CMTA) provides the legal basis for

customs audit and examination of records.

Primary Purposes:

1. Protection of Government Revenue

To ensure the government collects the correct amount of customs duties and taxes.

2. Verification of Legal Compliance

To confirm adherence to:

 Tariff classification rules

 Customs valuation methods

 Rules of origin

3. Detection and Prevention of Customs Fraud

To identify fraudulent schemes and deter future violations.

4. Strengthening Post-Clearance Control

To balance trade facilitation with enforcement by shifting controls from border inspection to audit-

based systems.

5. Promotion of Fair Trade

Ensures that compliant traders are not disadvantaged by dishonest competitors.

Customs Post Clearance Audit Fraud Management CAF 325

17
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

VII. SECTION 430 – PERIOD OF LIMITATION (DETAILED EXPLANATION)

Section 430 of the CMTA sets the timeframe within which the BOC may assess and collect customs

duties and taxes.

General Rule

 The BOC may conduct PCA within three (3) years from:

o The date of final payment of duties and taxes, or

o The date of release of goods

Exception: Fraud Cases

 If fraud, misrepresentation, or falsification is present, the period extends to ten (10) years

Purpose of the Period of Limitation

 Protects importers from endless audits

 Encourages prompt enforcement by the BOC

 Ensures fairness and legal certainty

Practical Importance

Without a period of limitation, businesses would face indefinite exposure to audits, discouraging trade

and investment.

Customs Post Clearance Audit Fraud Management CAF 325

18
 BULACAN POLYTECHNIC COLLEGE
Bulihan, Malolos, Bulacan
BS Customs Administration

VIII. REFERENCE

Bureau of Customs. (2016). Customs Modernization and Tariff Act (Republic Act No. 10863).
Government of the Philippines.

Bureau of Customs. (2020). Post Clearance Audit Manual. Bureau of Customs, Department of
Finance.

Bureau of Customs. (2021). Functions of the Post Clearance Audit Group and Trade Regulatory
Audit Office. Bureau of Customs.

Department of Finance. (2016). Implementing rules and regulations of Republic Act No. 10863
(CMTA). Government of the Philippines.

World Customs Organization. (2018). Post-clearance audit guidelines. World Customs

Organization.

World Customs Organization. (2020). Risk management compendium. World Customs Organization.

Customs Post Clearance Audit Fraud Management CAF 325

19