Research has shown that several organizations in Nigeria are vulnerable to post-audit penalties due to greater emphasis on lower logistics costs than compliance and technical expertise.

A post-clearance audit is used to determine whether an importer or exporter complied with the established requirements for processing cargo clearance or release.

This exercise is usually carried out by the Nigerian Customs Service to examine if the right duties were paid, or whether the correct documents were presented during the clearance process.

Typically, a post-audit process interrogates the accuracy and authenticity of specific cargo clearance transactions, even up to seven years after cargo release once such transaction is flagged for a possible breach of customs requirements. And since global best practice requires 100% compliance with requirements, 99.9%compliance is a red flag and can attract post-audit sanctions.

That is why shippers are expected to be aware of possible regulatory breaches that could become a serious subject for post-audit:

Possible Breaches That Can Attract Post Audit Penalties

- Undervaluation
- Wrong Classification
- Wrong description of Goods
- Concealment/Under declaration of Goods
- Use of falsified documents (forgery)

The question then is, how can one avoid the trap of audit penalties? The answer is simple. Hire a competent third-party logistics agent/company for the following reasons:

Pre-Shipment Advice: A competent third-party logistics agent or company demonstrates an excellent understanding of the applicable requirements for the importation and exportation of cargo, then provides professional advice to the shipper well ahead of time.

A comprehensive knowledge of end-to-end documentation, the required modes of transportation, and how to process them is key. Importantly, a good Knowledge of cost requirements and the ability to make a well-informed decision on end-to-end transaction cost with very thin or no margin for error is one the most important pre-shipment advice an importer should obtain prior to the importation of the said items. This helps importers to stay compliant and rarely exposed costly post-audit penalties.

Accurate Documentation: Competent agent would always save shippers from costly post cargo clearance audit penalties because understands that the import and export documentation processes, as well as specific documents required for the clearance of diverse cargo.

Excellent Understanding of HS Code Classifications: Harmonization Systems (HS) Codes contain numbers or codes that provide accurate description and classification of it being imported, so that the appropriate duty can be paid, based on the designated percentage associated with such items – whether it is 0%, 5%, 10%, 20% or even 50% levy.

In conclusion, shippers should pay attention to the potential pitfalls that could lead to post-clearance audit penalties and not prioritize spending less on the cargo clearance process over compliance. While it is important to be cost-conscious, it costs much less to be compliant with standard requirements than to be non-compliant because, beyond penalties, post-audit clearance can lead to a more damning consequence for either the shipper, the agent(s), or companies involved in it. That is why Fortune Global continually maintains a strong commitment to compliance and is a leading advocate of Global best practices in Nigeria and beyond.


Source: https://blog.fglobalshipping.com/post-cargo-clearance-audit-do-you-know-you-can-be-liable-to-costly-penalties-many-years-after-clearing-your-cargo/