Auditor-General's overview
The New Zealand Customs Service (Customs) is responsible for collecting about 15% of the Government's total revenue, so it is important that I regularly provide assurance to Parliament about Customs' revenue systems and controls. In 2009/10, Customs collected $8.78 billion in customs revenue.
Customs' revenue collection system relies on traders correctly declaring the amount of customs revenue (goods and services tax, customs duty, and excise) they owe. Each year, Customs' Trade Assurance business unit carries out thousands of audits of traders to check whether they have done so. A major purpose of this revenue assurance work is to ensure that Customs is collecting all the customs revenue due.
This report looks at how effectively Customs plans and supports its revenue assurance work.
Customs has most of the planning and supporting elements it needs to effectively provide revenue assurance. These elements are well designed and cohesive. Customs' framework for planning the work is sound. It has good checks to assess the quality of the work carried out and reports well on its findings. Customs uses the results of the work for many purposes, such as to collect additional customs revenue and to tell traders how to better comply with Customs' and legislative requirements.
Customs collects detailed information about traders. Trade Assurance uses this information to select traders for audit. It does this well. It focuses on trade and traders that present the greatest risks to New Zealand. The information that Trade Assurance has and the way it uses it to select traders to audit help it to provide effective revenue assurance.
Customs needs to improve the quality of written guidance for Trade Assurance staff. In most instances, Customs does not have clear procedural information for staff about how to assure revenue. Many tasks are complex and require detailed knowledge about legislation and commercial and trading environments. Trade Assurance relies on experienced staff to carry out these tasks properly.
The complexity of Trade Assurance's work means that it takes time for new staff to become competent. The time required to become a competent Trade Assurance Officer presents a risk for Customs. This risk is compounded by the retirement or approaching retirement of several experienced Trade Assurance Officers. Customs is aware of this capability risk. It is not clear whether it is managing the risk.
Trade Assurance has efficiency initiatives to reduce the time it spends on certain types of audits. We commend it for this.
I thank Customs staff for their help and co-operation during our audit.
Lyn Provost
Controller and Auditor-General
1 July 2011