performance audit report - gac.gac.gov.lr

Customs Cargo Clearance Processes at Liberia

Seaport and Land Borders

June, 2020 Yusador S. Gaye, CPA, CGMA

Auditor General

PERFORMANCE AUDIT REPORT

Performance Audit Report

Customs Cargo Clearance Processes at Liberia Seaport and Land Borders

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Table of Content

1 CHAPTER ONE: INTRODUCTION ...................................................................... 1

Background of the Audit ................................................................................... 1

Motivation of the Audit ..................................................................................... 1

Objective of the Audit....................................................................................... 2

Scope of the Audit ........................................................................................... 2

The audit objective is detailed by the audit questions described below: ................ 2

Audit Methodology ........................................................................................... 3

Methods of Data Collection ............................................................................... 3

Documents Reviewed ....................................................................................... 3

Interviewed and questionnaire .......................................................................... 3

Site Visits ........................................................................................................ 3

Sampling ......................................................................................................... 3

Assessment Criteria .......................................................................................... 4

2 CHAPTER TWO: DESCRIPTION OF THE AUDIT AREA ....................................... 5

2.0 Description of the Audit Area ................................................................................ 5

2.0.1 Introduction .................................................................................................... 5

2.0.2 Development of the Liberia Revenue Authority ................................................... 5

2.0.3 Mandate .......................................................................................................... 5

2.0.4 Policy and Legal Framework .............................................................................. 5

2.0.5 Vision and Mission of the LRA ........................................................................... 5

2.0.6 Stakeholders roles ............................................................................................ 6

2.0.7 APM Terminal .................................................................................................. 6

2.0.8 Bureau Veritas (BIVAC) .................................................................................... 6

2.0.9 National Port Authority ..................................................................................... 6

2.0.10 Custom Broker Union of Liberia ......................................................................... 6

2.0.11 Ministry of Commerce and Industry ................................................................... 6

2.0.12 Source of Funding to the Liberia Revenue Authority (LRA) ................................... 6



For fiscal years 2016/2017 through 2018/2019

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2.0.13 Customs Cargo Clearance Process map .............................................................. 7

3 CHAPTER THREE: FINDINGS............................................................................ 9

3.0 Findings ............................................................................................................. 9

3.1 Overall ............................................................................................................... 9

3.2 Interagency involvement with Customs Cargo Clearance process ............................ 9

3.3 Complex payment procedures for customs duties .................................................. 12

3.4 Unclear Customs Cargo Clearance procedures at land borders ............................... 12

3.5 Lack of automated system at major Land borders ................................................. 15

3.6 Poor security for Cargo at Land borders ............................................................... 16

4 CHARPTER 4: CONCLUSION .................................................................................. 19

4.0 Conclusion ......................................................................................................... 19

5 CHAPTER FIVE: RECOMMENDATIONS ........................................................... 20

5.0 Recommendations .............................................................................................. 20

5.1 Interagency involvement with Customs Cargo Clearance process ........................... 20

5.2 Unclear Customs Cargo Clearance procedures at land borders ............................... 20

5.3 Inadequate training for Customs Broker ............................................................... 21

5.4 Lack of automated system at major Land borders visited ....................................... 21

5.5 Poor security for Cargo at Land borders ............................................................... 21

APPENDIXES ........................................................................................................ 22



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Acronyms Meaning

AG Auditor’s General

ASYCUDA Automated System for Customs Data

BIVAC Bureau VERITAS

CBOs Customs Business Office

DI Destination Inspection

ECOWAS Economic Community of West African States

GAC General Auditing Commission

LRA Liberia Revenue Authority

NPA National Port Authority

PSI Pre – Shipment Inspection

WCO World Customs Organization

WTO World Trade Organization




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Definition of Key Terminologies

APM

Terminal

APM Terminals is the operator of the Freeport of Monrovia: the gateway to the Liberian

economy.

Assessment Determination of the amount of duties and taxes payable

Brokers A person who carries on the business of arranging for the Customs clearance of goods and

who deals directly with the Customs for and on behalf of another person

Cargo Goods or merchandise conveyed in a ship, airplane, or vehicle

Clearance The accomplishment of the Customs formalities necessary to allow goods to enter home use,

to be exported or to be placed under another Customs procedure

Consignee The person or company to whom goods or documents are officially sent or delivered

Cumbersome Difficult to do or manage and taking a lot of time and effort

Customs The Government Service which is responsible for the administration of Customs law and the

collection of duties and taxes and which also has the responsibility for the application of

other laws and regulations relating to the importation, exportation, movement or storage of

goods

Customs

Assessor

A person responsible for taxability and value of properties, using methods such as field

inspection, structural measurement, calculation, sales analysis, market trend studies, and

income and expense analysis.

Customs

Examiner

A Customs officer whose duty it is to examine and estimate the true value of imported

goods subject to customs duties.

Declaration A statement made in the form prescribed by Customs, by which the persons interested

indicate the Customs procedure to be applied to the goods and furnish the particulars which

the Customs require to be declared for the application of that procedure.

Examination Physical inspection of goods by the Customs to satisfy themselves that the nature, origin,

condition, quantity and value of the goods are in accordance with the particulars furnished

in the Goods declaration

Import duties

and taxes

Customs duties and all other duties, taxes or charges which are collected on or in connection

with the importation of goods, but not including any charges which are limited in amount to

the approximate cost of services rendered or collected by the Customs on behalf of another

national authority

Kyoto

Convention

The expression commonly used to refer to the international Convention on the simplification

and harmonization of Customs procedures adopted by the Customs Co-operation Council in

Kyoto in 1973.

Revised

Kyoto

Convention

The expression commonly used to refer to the international Convention on the simplification

and harmonization of Customs procedures (amended), adopted by the Customs Co-operation

Council in Brussels in 1999.

Stakeholders A person such as an employee, customer, or citizen who is involved with

an organization, society, etc. and therefore has responsibilities towards it and

an interest in its success

ECOWAS Economic Community of West African States

https://dictionary.cambridge.org/dictionary/english/person

https://dictionary.cambridge.org/dictionary/english/company

https://dictionary.cambridge.org/dictionary/english/goods

https://dictionary.cambridge.org/dictionary/english/document

https://dictionary.cambridge.org/dictionary/english/officially

https://dictionary.cambridge.org/dictionary/english/sent

https://dictionary.cambridge.org/dictionary/english/deliver

https://dictionary.cambridge.org/dictionary/english/difficult

https://dictionary.cambridge.org/dictionary/english/manage

https://dictionary.cambridge.org/dictionary/english/time

https://dictionary.cambridge.org/dictionary/english/effort

https://dictionary.cambridge.org/dictionary/english/person

https://dictionary.cambridge.org/dictionary/english/employee

https://dictionary.cambridge.org/dictionary/english/customer

https://dictionary.cambridge.org/dictionary/english/citizen

https://dictionary.cambridge.org/dictionary/english/involved

https://dictionary.cambridge.org/dictionary/english/organization

https://dictionary.cambridge.org/dictionary/english/society

https://dictionary.cambridge.org/dictionary/english/therefore

https://dictionary.cambridge.org/dictionary/english/responsibility

https://dictionary.cambridge.org/dictionary/english/interest

https://dictionary.cambridge.org/dictionary/english/its

https://dictionary.cambridge.org/dictionary/english/success




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Republic of Liberia

Transmitter Letter

The Honorable Speaker of the House of Representatives and Honorable President Pro-

Tempore of the House of Senate:

We have undertaken a performance audit on Customs Cargo Clearance at Seaports and Land borders

for fiscal years 2016/2017 through 2018/2019. This audit was conducted in line with the Auditor

General’s statutory mandate as enshrined under Section 2.1.3 of the GAC Act of 2014.

The audit was conducted in line with the International Organization of Supreme Audit Institutions

(INTOSAI) auditing standards and guidelines as enshrined in the Performance Audit Manual. The Act

that created the Liberia Revenue Authority (LRA) and guidelines, were also used as a baseline for the

evaluation of the performance of the LRA Customs Department.

As indicated in the methodology segment of this report, all findings conveyed in the report were

formally communicated to the Management of Liberia Revenue Authority for their responses. Where

responses were provided, they were evaluated and incorporated in this report. We are therefore

thankful to the auditee (LRA) for assisting the audit team in completing this audit.

We ask that you pay particular attention to the following matters that if implemented the customs

cargo clearances at seaports and land borders will significantly improve and reduce the bureaucracy

and thus ease the lives of citizens:

• Significantly review the customs cargo clearance processes and align interagency mandate

to avoid replicated Customs cargo clearance process.

• LRA should consider installing cargo/goods scanning camera system similar to the luggage

scan that are used at international airports. The scan will be analyzed by Customs and other

government agencies to check whether the content match the cargo description and whether

illegal cargo will be found, thus eliminating the several handling stages employed currently.

• Ensure that officials assigned at land borders are following the standards set for monitoring

activities effectively during cargo clearance.

• Accurately disseminate new information and policies on cargo clearance to stakeholders that

are actively involves in the clearing of cargo




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• Ensure that stakeholders have and meet the necessary requirements and equipment to

enhance their functions in the clearing process.

• Ensure bi-annual refresher trainings for Customs Brokers to improve their understanding of

customs cargo clearance procedures.

• Install solar energy power and repair existing solar power system that will effectuate ASYCUDA

at land borders.

• Install ASYCUDA at major ports of entry (land and seaports) to facilitate trade and service

delivery in customs administration that will further improve, trade statistics, accounting

procedures, reduce transaction cost, clearance time and conduct transaction electronically to

mitigate negotiation.

• To protect cargo at the land borders, fence should be constructed and warehouses renovated.

Giving the significance of the matters raised in this report, we urge the Honorable Speaker and the

Members of the House of Representatives and Honorable Pro-Tempore and Members of the Liberian

Senate to consider the implementation of the recommendations conveyed herein with urgency.

Monrovia, Liberia

December, 2020




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Executive Summary

The audit reviews the customs cargo clearance at Liberia land borders and seaport in compliance with

Liberian laws as well as international standards because of Liberia’s membership in World Trade

Organization (WTO) and Economic Community of West African States trade group (ECOWAS). The

clearance of cargo is vital to the growth and development of Liberia’s economy as it is a key revenue

source as an import dependent country.

The Annual Trade Bulletin report for 2017 of the Ministry of Commerce indicates that Liberia continues

to import a significant amount of goods ranging from petroleum products, consumable commodities,

machinery, electronics and transportation equipment as some of the major cargos that are cleared

through customs ports of entry. Liberia has an open economy and is very favorable for trade which

represents 120% of the country’s Domestic Gross Product.1

In addition to the international standards, the audit has also considered the Sustainable Development

Goal (SDGs) which focuses on strengthening the means of implementation and revitalizing global

partnership of sustainable development; and, especially target 17.10 which emphasizes equitable

multilateral trading system under the WTO.

The Customs Department of the Liberia Revenue Authority (LRA) has the statutory mandate to collect

customs duties on imports or exports at all ports of entry. The core taxes collected by Liberia’s Custom

are international goods and service tax (GST) and well as excise tax, a flat-rate tax, which applies to

specific goods services and activities. The Customs Department also serve as the lead border agency

for processing international trade and has absolute responsibility to serve as the repository for

international trade statistics.

The Objective and Scope of the Audit

The audit assessed the extent to which the Customs Department ensures timely clearance of cargo.

It further considered whether customs cargo clearance procedures implemented by the Liberia

Revenue Authority (LRA) Customs Department are simplified, free of delays. After the audit, the

auditors expect to see improvement in customs cargo clearance at land borders and seaports that

will curtail issues such as delays, cumbersome processes and bureaucracy.

The entity audited is the Liberia Revenue Authority Customs Department and the periods under audit

are fiscal years 2016/2017 through 2018/2019 and focuses on customs cargo clearance at seaport

and land borders.

Key findings

The LRA has developed its strategic and business plans and targets to ensure cargos are release

timely and that customs procedures are simplified for importers who use various ports of entry in

Liberia. However, there continues to be underlying issues with customs cargo clearance at seaports

and land borders despite all of the measures the Liberia Revenue Authority has implemented.

1 World Bank Trade Indicator (% of GDP) 2018




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Interagency involvement with Customs Cargo Clearance process

The Liberia Revenue Authority is responsible to facilitate legitimate trade, customs clearance through

borders and social protection through policies and procedures that promote efficiency, simplicity that

enhance taxpayer compliance in Liberia.

The audit revealed that the Freeport of Monrovia uses the Automated System for Customs

Data (ASYCUDA) which is a computerized system designed by the United Nations Conference on

Trade and Development (UNCTAD) to administer a country's customs. ASYCUDA is use for all steps

in the cargo clearing processes. However, there are manual processes that include the stamping and

signing of paper documents that burdens customs procedure.

Cargo/good imported in Liberia passes through long customs bureaucracy before it is clear from sea

and borders ports. Furthermore, it was determined that processes in clearing cargo are repeated by

other agency of government.

Unclear Customs Cargo Clearance procedures at land borders

The Customs Department of LRA is responsible to develop and maintain standards, guidelines and

apply modern techniques and technology to facilitate and ensure simplification and harmonization of

Customs procedures.

Considering the involvement of other agency of government in the inspection of cargo before

clearance at land borders, the auditor noticed deviation from the published Customs procedures at

land borders.

Below listed are some of the procedures that are different from the official procedures published by

the Customs Department as the result of other government agency involvement:

• Separate examination by all of the agencies (Liberia Drug Enforcement Agency (LDEA), Liberia

National Police (LNP), National Security Agency (NSA), Ministry of Commerce and Ministry of

Agriculture) that are assigned at these borders when said examination should be coordinated

by customs at one location.

• The policy of paying 4% on goods, if Cost Insurance and Freight (CIF) is more than US$110.00

and if the consignee does not have business registration- according to the Ministry of

Commerce and Industry Guide on Operating Business in Liberia, a Presumptive Tax of four

percent (4%) is due no later than 15 days after each quarter. This is applicable to Small

business whose gross annual sales are $LD 200,000.00 – LD3, 000,000.002.

• Paying the amount of US$20.00 for ECOWAS brown card when bringing vehicle into the

country. The ECOWAS Brown Card Scheme was established by Protocol A/P1/5/82 signed by

the Head of States and Governments on 29th May 1982 in Cotonou (Benin Republic)

The main objective of the scheme is to guarantee to the victims of road accident a prompt

2Ministry of Commerce http://www.moci.gov.lr/doc/MoCI.BusinessHandbook.013017 page 12 3 ECOWAS Brown Card https://www.ecowas.int/specialized-agencies/ecowas-brown-card/

https://en.wikipedia.org/wiki/Compute

https://en.wikipedia.org/wiki/United_Nations_Conference_on_Trade_and_Development

https://en.wikipedia.org/wiki/United_Nations_Conference_on_Trade_and_Development

http://www.moci.gov.lr/doc/MoCI.BusinessHandbook.013017%20page%2012




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and fair compensation of damages caused by non-resident motorist from ECOWAS member

states visiting their territory3.

Lack of automated system at major Land borders visited

The LRA Customs Department objective 4.1 is to deploy and operationalize modern revenue

administration technology to improve compliance and attained effectiveness. Furthermore, Section

4.1.6 states that rural and urban field offices (CBOs) should reliably connect to core business system

(LRA Headquarters) through mobile connection points and other available management information

systems infrastructure.

All the five major rural land borders visited within Liberia lack the automated system (ASYCUDA) to

determine importers bills per the price list for custom payment. As a result, customs cargo clearance

procedures and calculations are done manually which could lead to declaration being

understated or overstated by consignees resulting to inaccurate customs duty to government or

overpayment by consignees.

Poor Security for Cargo at Land borders

The Customs Department is responsible to facilitate legitimate trade and customs clearance through

borders and social protection through policy and procedures that promote efficiency, simplified and

enhance taxpayer’s compliance. Customs authorities also serve as semi security apparatus for borders

protection in carrying out their responsibility. Therefore, the Customs Department is required to

provide security for goods imported into Liberia.

The rural customs borders lack full protection for goods or cargos imported into Liberia. In addition,

warehouses are not in good condition to store goods that could lead to goods or cargo being damage

before the consignee or importers even complete the clearance processes.

Conclusion

The customs operations are regulated by national legislation and international agreement to ensure

easy movement of goods across borders. With the global pressure for effective trade amongst

countries and the need to standardize customs procedures for cargo clearance through customs entry

point, Liberia can make a significant improvement if the Customs Department implements those

International customs agreements to ensure an expedient movement of cargo through seaports and

land borders in Liberia.

Importers and brokers are enduring replication of customs procedures with the involvement of other

agency of government, incurring lot of charges because customs brokers and officials are not fully

acquainted with cargo clearance procedures. Additionally, many securities apparatus are also

interfering with the physical and documentary inspection of cargo that is hampering the convenient

movement of cargo at land borders and seaports in Liberia.




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Recommendations

For the Customs Department of the Liberia Revenue Authority to ensure cargo clearance processes

is streamline to enable importers receive their goods within the minimum time requires, we

recommend that the Customs Department should:

• Significantly review the customs cargo clearance processes and align interagency mandate

to avoid replicated Customs cargo clearance process.

• LRA should consider installing cargo/goods scanning camera system similar to the luggage

scan that are used at international airports. Customs and other government agencies will scan

cargo to check whether the content match the cargo description and whether the cargo is

illegal, thus eliminating the several handling stages employed currently.

• Ensure that officials assigned at land borders are following the standards set for monitoring

activities effectively during cargo clearance.

• Accurately disseminate new information and policies on cargo clearance to stakeholders that

are actively involves in the clearing of cargo

• Ensure that stakeholders have and meet the necessary requirements and equipment to

enhance their functions in the clearing process.

• Ensure bi-annual refresher trainings for Customs Brokers to improve their understanding of

customs cargo clearance procedures.

• Install solar energy power and repair existing solar power system that will effectuate ASYCUDA

at land borders.

• Install ASYCUDA at major ports of entry (land and seaports) to facilitate trade and service

delivery in customs administration that will further improve, trade statistics, accounting

procedures, reduce transaction cost, clearance time and conduct transaction electronically to

mitigate negotiation.

• To protect cargo at the land borders, fence should be constructed and warehouses renovated.



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1 CHAPTER ONE: INTRODUCTION

Background of the Audit

1.1.1 The Liberia Revenue Authority Customs Department is responsible for the collection of all

import duty, goods tax, excise imposed on importation, ECOWAS trade levy, fees on export

and other fees related to international trade. Customs also ensure compliance with all

legislations relating to the movement of goods and the facilitation of legitimate trade and

border management. Therefore, effective customs procedures play a critical role in trading

as well as expedited clearance, control that secures revenue collections.

1.1.2 In addition to domestic customs legislations, Liberia as a member of WTO, ECOWAS and a

UN member that adopted the UN Agenda 2030, to align it cargo clearance policies with

international standards. Further, in achieving goal 17 under the United Nation 2030 Agenda

for Sustainable Development Goals (SDGs), a country has to promote a universal rules-

based, open, non-discriminatory and equitable multilateral trading system under the World

Trade Organization, including complete conclusion of negotiation under its Doha

Development Agenda is a target for trade clearly describe as sub-goal 17.10.

Motivation of the Audit

1.2.1 Customs cargo clearance at ports of entry in Liberia is very significant to the development

of Liberia by means of the contribution of Customs to the national budget. Customs

contributes about 37% to the national budget and also plays critical role in trading and

border security.

1.2.2 Customs cargo clearance process at ports of entry in Liberia is stay plague with procedures

delays. Though the Government of Liberia sought European Union (EU) support through

her Long-Term Technical Assistance to the LRA that provided training to over 300 Customs

staffs to enhance their efficiency and capacity at implementing customs procedures and

established a Modernization Unit.

1.2.3 The LRA has on its website that it takes a minimum 5 hours and the maximum 5 days to

clear cargo at the Freeport of Monrovia provided the importer are in compliance with

Customs. The Liberia Domestic Revenue Mobilization Strategy Plan (FY2018 -2020)3

revealed that importer take more than (5) days and up to fourteen (14) days to clear cargo

at Freeport of Monrovia.

1.2.4 There have been mass media reports4 5 6 of delay with customs cargo clearance at the

Freeport of Monrovia linked to Customs officers. It is against these conditions that the

Auditor General Commissioned this Performance Audit to assess the cause of delays and

any performance problem relating to Customs Cargo Clearance at Seaport and Land

borders.

3 https://revenue.lra.gov.lr/domestic-resources-mobilization/ 4 Frontpageafricaonline.com/business/apm-terminals-new-measures-constraining-liberian-custom-brokers/ 5 allafrica.com/stories/201612160414.html 6 (Liberia Revenue Authority) Domestic Resource Mobilization Strategy in Liberia FY 2018-2022, p24

https://revenue.lra.gov.lr/domestic-resources-mobilization/




2

1.2.5 Liberia is an imports dependent country and livelihood of her citizenry mainly depends on

budgetary contribution from customs to generate more domestic revenue. For example,

during the period audited, Customs Department of the Liberia Revenue Authority

contributed about 37% to Liberia National budget shown below in Table 1. The amount

would be larger if the custom processes improve and more goods are imported and cleared

through customs.

Table 1: FISCAL YEAR IN MILLIONS US$

2016/17 2017/18 2018/19

Customs Department Contribution 184,742 186,227 171,889

Other Tax Revenue 200,744 189,656 222,308

Other Non-Tax Revenue 80,163 46,469 74,159

Total External Grants & Loans 90,130 30,173 12,650

National Budget Actual 555,779 452,525 481,006

Percentages 33.2 41.0 36.7

Average 37

Source: Extracted Liberia National Budget 2016-2019 with percentages and average done by GAC

Objective of the Audit

1.3.1 The audit assesses whether customs cargo clearance procedures implemented by the LRA

Customs Department are simplified and free of delays. After the audit, the auditors expect

to see improvement in customs cargo clearance at land borders and seaports free of delays

and cumbersome processes.

Scope of the Audit

1.4.1 The audit focused on LRA Customs Department particularly on customs cargo clearance at

land borders and sea borders. The relevant structures, procedures and practices involved

with customs cargo clearance. The audit covers July 1, 2016 to June 30, 2019, and is

complemented by facts relating to international and regional customs cargo clearance

processes.

Limitation of the Audit

1.5.1 The audit was limited to five major land borders (Bo-Water side, Buutuo, Ganta, Luoguotuo

and Jorweh) and one seaport (Freeport of Monrovia).

The audit objective is detailed by the audit questions described below:

1. Does the CBOs ensure cargo clearance processes at land borders and seaports are

simplified for customs Brokers?

2. To what extent Customs Department ensure staffs and necessary stakeholders are

trained to handle cargo clearance

3. To what extent monitoring of CBOs is done to ensure a free movement of cargos.




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4. To what extend are recommendations from monitoring of CBOs been followed

Audit Methodology

1.7.1 The audit was conducted in accordance with the requirements of the General Auditing

Commission’s (GAC) Performance Audit Manual, which is based on the International

Standards of Supreme Audit Institutions (ISSAI) 3000. The use of these methodologies

listed below to understand the audit area, obtain sufficient, relevant and reliable audit

evidence that support the conclusions and recommendations.

Methods of Data Collection

1.8.1 In order to carry out the audit, data were collected from documents reviewed, interviews

conducted with key players and sites visited to gather information about the audit.

Documents Reviewed

1.9.1 Laws, policies, regulations, structures, processes, systems, practices and related

documents and databases.

Interviewed and questionnaire

1.10.1 Interviews were carried out with key personnel at operational, middle and senior

management levels of the:

• Liberia Revenue Authority, Customs Department

• Customs Brokers association of Liberia

• Consignees

• APM Terminal management

• Shipping lines

1.10.2 The interviews and questionnaires were used to confirm the information obtained from the

documents reviewed and for providing more explanation where information was not

available in the reviewed documents.

Site Visits

1.11.1 The audit team visited five of the seventeen land borders, (Ganta, Louguotuo, Buutuo, Bo-

waterside and Jorwah) that represent 29% and one Seaport (Freeport of Monrovia) to

ascertain understanding delays in the Clarence of cargo, causes and if the activities carryout

are monitored.

Sampling

1.12.1 The annual revenue reports activities of all land borders and seaports vested over the

period July 1, 2016 to June 30, 2019 were examined to have an appreciable understanding

on the performance of each CBO. Non-statistical sampling was used in the choice of visits

to Customs Business Offices across four out of the fifteen counties (Montserrado, Grand

Cape-Mount, Nimba, and Bong). These four counties were selected based on accessibility

and performance over the years audited. We visited these entry points to find out if there

are delays, causes, level of monitoring and to understand customs cargo clearance

procedures at Land borders and Seaports




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Assessment Criteria

1.13.1 Criteria used as a basis for evaluating the evidence collected, developing audit findings and

reaching conclusions on the audit objectives were extracted from the following sources:

• The Liberia Revenue Authority Act 2013

• Liberia Revenue Code (Custom laws) as amended 2011

• Liberia National Trade Policy of 2014-2019

• LRA Annual Strategy plans. Details of the audit assessment are found in

subsequent chapters and the appendix.

• UN Agenda 2030, Goal 17 and targets 17.10

• World Trade Organization Agreement




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2 CHAPTER TWO: DESCRIPTION OF THE AUDIT AREA

2.0 Description of the Audit Area

2.0.1 Introduction

2.0.1.1 In this Chapter, the regulatory framework and related strategic plans governing customs

cargo clearance at seaports and land borders are defined and or reviewed. The objectives,

roles, responsibilities and obligations of the Liberia Revenue Authority Customs Department

and other entities functioning under its guidance are reviewed.

2.0.2 Development of the Liberia Revenue Authority

In September 2013, the Government of Liberia approved the Liberia Revenue Authority

(LRA) Act, which established the Liberia Revenue Authority (LRA) that comprises of the

Department of Customs, Internal Revenue, etc. The LRA Act replaced the Department of

Revenue under the Ministry of Finance and Development Planning, which included both the

Bureau of Internal Revenue and the Bureau of Customs and Excise.

2.0.2.1 The LRA Customs Department was established to administer Customs within the territorial

limit of Liberia especially where ports of entries are located. These entries are international

airport, ship docks and national land borders. These ports of entries are used by customs

administrative units for the performance of Customs operations. Predominantly, there are

six urban and eleven rural ports of entry in Liberia. Although there are other porous land

borders that are not mentioned officially.7

2.0.3 Mandate

2.0.3.1 The core mandate of the LRA is to administer and enforce Liberia’s revenue laws, including

the Liberia Revenue Code of 2000 as amended in 2011, and other related laws. The LRA

also has the mandate to assess, collects, audit, and account for all national revenues and

facilitates legitimate international trade through customs border management and

enforcement.

2.0.4 Policy and Legal Framework

2.0.4.1 The LRA replaced the Department of Revenue under the one-time Ministry of Finance,

which included both the Bureau of Internal Revenue and the Bureau of Customs and Excise,

as defined in Chapter 21 of the Executive Law of 1972. The LRA was established as a semi-

autonomous organ of the Executive Branch of the Government of Liberia in September

2013.

2.0.5 Vision and Mission of the LRA

2.0.5.1 The LRA vision aligns to that of the Government’s “To be a professional revenue

administrator adhering to international Standards and to serve as a model for revenue

collection and service delivery”. The LRA mission is “to professionally, fairly, transparently

7 LRA Revenue Performance report 2017-2018




6

and effectively collect lawful revenues and to facilitate legitimate trade and social protection

for the people of Liberia”.

2.0.6 Stakeholders roles

2.0.6.1 The Customs department of the Liberia Revenue Authority has five major stakeholders as

listed. Each of these has coordinating roles that are explained below.

2.0.7 APM Terminal

2.0.7.1 APM Terminal is responsible for providing all marine services, including but not limited to

pilotage, towage, mooring and unmooring and any other marine services required by

vessels calling within a thirty (30) mile radius and performing all commercial container and

general cargo storage on behalf of third parties within the Freeport of Monrovia.

2.0.8 Bureau Veritas (BIVAC)

2.0.8.1 BIVAC is responsible for pre-shipment inspection/documentary destination inspection of

imports on behalf of customs and issues certificate to the importer.

2.0.9 National Port Authority

2.0.9.1 The National Port Authority (NPA) is responsible to manage, plan, and build all public ports

in Liberia and carry out the following services; Marine Services, Cargo & Handling,

Warehouses & Property, Shipping & Inspection. Additionally, it manages other seaports

(Buchanan, Greenville and Harper). However, the Government of Liberia and APM Terminal

has an agreement whereby APM Terminal manages marine service and cargo handling at

Freeport of Monrovia.

2.0.10 Custom Broker Union of Liberia

2.0.10.1 Responsible for declaration of shipment, they assist importers and exporters in meeting

requirements governing imports and exports. They act as professional agents for an

importer or exporter, prepare and submit all documents for clearing goods through the

Customs Department of the LRA.

2.0.11 Ministry of Commerce and Industry

2.0.11.1 The Ministry of Commerce is responsible for the promotion, development, regulation;

control, operation and expansion of commercial, industrial enterprises and activities in the

Republic of Liberia. The Ministry of Commerce and Industry exercises broad powers with

respect to protection of the public interest and the achievement of national goals through

the establishment and enforcement of standards for commodities and for trade. Also, the

Ministry of Commerce provides and administered under its purview services such as are

required by the public and government agencies.

2.0.12 Source of Funding to the Liberia Revenue Authority (LRA)

2.0.12.1 Section 27 of the LRA’s Act of 2013 states that the Liberia Revenue Authority shall be

funded by the amount appropriated by the National Legislature, Performance incentives

set by the Minister of Finance and appropriated by the legislature based on revenue actually




7

collected each year in excess of the estimated revenue in the National Budget for the year

ended, grants, donations or subsidies which may lawfully accrue to the Authority. See

Table 2.

Table 2: Funding -LRA

US$ In millions EXTERNAL ASSISTANT TOTAL

FISCAL YEAR GOL GRANTS OTHER RECEIPTS

2016/17 18,558 161,6 512,8 19,232,504

2017/18 16,919 0.0 850,0 17,769,315

2018/19 16,814 17,5 324,5 17,156,758

TOTAL 52,291 179,1 1,687,5 54,158,577

Source: Approved National Budget of Liberia of each fiscal year

2.0.13 Customs Cargo Clearance Process map

2.0.13.1 The Revenue Code of Liberia 2000 as amended in 2011 and several international

instruments to which Liberia (LRA) has ascribed requires LRA to establish a framework for

Customs Cargo Clearance in compliance with national, regional and international

consultative engagement with the private sector and stakeholders in dealing with matters

of border procedures, regulations and customs requirements.

2.0.13.2 Below are required processes for customs cargo clearance at Seaports and Land borders in

Liberia. See Table 3.

Table 3- Steps for Caro Clearance

STEP SEA PORTS LAND BORDERS

1. Importer prints hard copy of the goods declarations, attaches

supporting documents and submits same for processing

Self-Declaration

2. Registration of declaration by declaration- is an official presentation

of document that lists and gives details of goods that are being

imported or exported. Example is invoices, bill of lading and

manifest. This is done via ASYCUDA through a registered

Brokerage firm, individual broker, importer/exporter or consignee.

Assessment is done on

declared cargo

3. Customs compliance officer’s complete verification of goods

declarations and prints assessment notice that is signed the Chief

Assessor. With the use of the ASYCUDA, no more printing and

signing of assessment notice. Importers will receive automatic

notice for payment.

Payment to cashier

4. Payment is made at the bank

Examination of cargo by

Custom and Borders agencies

5. Goods release order is signed and transmitted to the terminal

operator for the release of goods. Now that ASYCUDA is in place,

release orders are automatically sent to the terminal operator

after declarant completes payment of duties & taxes

Release of cargo with no

infraction (if there is

infractions additional payment

on goods that wasn’t declared

6. Exit is signed and goods are exited from the port. Exits of released

goods are automatically completed by the gate.

Security inspect document

before exit.




8

STEP SEA PORTS LAND BORDERS

7. Goods are exited from the port – END OF PROCESS. Where the

importer is selected for inspection, Step 7 is skipped Not applicable

Source: LRA customs facts sheet




9

3 CHAPTER THREE: FINDINGS

3.0 Findings

3.0.1 This chapter presents the audit findings as to whether customs cargo clearance is void of

delays; and, whether customs officials are monitoring procedures when importers clear

cargos to ensure that the procedure are carried out in a manner that support the

Sustainable Development Goal (SDGs) 17.10 on trade.

3.1 Overall

3.1.1 During the audit, the auditors asked whether there were delays; and, if Customs cargo

clearance processes were being monitored at seaports and land borders.

3.1.2 The audit revealed that while it is true that the LRA has developed its strategic and business

plans that require cargos to be released timely and for customs procedures to also be

simplified for importers at various ports of entries in Liberia, there are stay underlying issues

with customs cargo clearance at seaports and land borders despite measures taken by the

LRA as shown in the audit findings below.

3.2 Interagency involvement with Customs Cargo Clearance process

3.2.1 The Liberia revenue Authority is responsible to facilitate legitimate trade, customs clearance

through borders and social protection through policies and procedures that promote

efficiency, simplicity and should encourage taxpayer compliance in Liberia8.

3.2.2 The Customs Department of Liberia has not considered the provision in the WTO Trade

Facilitation Agreement (TFA)9 for expediting the movement, release and clearance of goods

in transit, time facilitation trade where it is possible. This provision is an important aspect

of customs; because, efficient and effective procedures in customs have a direct impact on

supply of goods on the Liberia markets and the economy generally.

3.2.3 The World Trade Organization also requires each member to align its processes in a manner

consistent with domestic law and legal system as well as international standards. Also, it is

required to publish information on the application of the movement, release, and clearance

of goods in order to enable trader and other interested parties to become acquainted with

them.10

3.2.4 We found that LRA’s Customs Department publishes on its website requirements as a

means for traders to be complaint with customs cargo clearance procedures - the

movement, release and clearance of goods. This website allows traders and other

interested parties to become acquainted with customs cargo clearance as stated below:

• Obtain the CRF (whether DI or PSI) from BIVAC at least 5 days prior to the arrival

of the goods.

8 LRA Act, 2013 Section 7.2.h p8 9 http://tfig.unece.org/contents/WTO_Agreement.htm 10 World Trade Organization Agreement Article 2.1.2

http://tfig.unece.org/contents/WTO_Agreement.htm




10

• Make goods declaration immediately after the cargo manifest is registered with

Customs by the shipping agency.

• Pay your taxes and terminal handling charges immediately after receiving a duty

and tax assessment notice from Customs.

• Obtain a delivery order from the shipping agency immediately after the cargo is

discharged at the cargo terminal.

• Make sure to have a delivery truck available in time for immediate loading of cargo

by the terminal operator

3.2.5 The audit team reviewed the above procedures; yet, importers are stall encountering

challenges with customs procedures. At the seaport delay is the major challenge and at

land border challenges range from gate fees, clearing desk or facilitation fees.

For the land borders, we found out at Louguotou, Ganta, and Bo- Waterside borders that

importers are obligated to also visit the offices of Liberia Drugs Enforcement Agency,

Liberia Immigration Services, Major Crime Investigation Division and Ministry of Commerce

respectively for examination at the lands borders before taking hold of their goods; and,

client/importer that is bringing agriculture product, the importer has to go to the agriculture

office stationed at the borders for examination.

3.2.6 The Customs Department has deployed ASYCUDA World in major customs centers covering

85% of trade in Liberia.11 The United Nations Conference created ASYCUDA for Trade and

Development (UNCTAD) to reduce the cost of clearance, queuing time and clearance time

for clearing of cargos. It was also found that more than thirty percent (30%) of cargos

coming through the port have to still go through physical examination even if BIVAC

compliant; when the percentage should be twenty percent (20%) as the annual target for

cargos to be physically examined as indicated in the 2016 annual report of LRA for customs.

3.2.7 The graphs demonstrate that for the period audited, the average physical inspection is at

34% as compared to the targeted 20% see figure 1. In addition, the combined

documentary examination and physical inspections when totaled is more than seventy-five

(75%) of cargos shipped through the Freeport of Monrovia. The estimated calculated hours

for borders compliance inclusive of documentary and physical inspections at Liberia ports

of entry is 217 hours which equals to (217hrs divided by 24hrs = 9.0) 9 days published by

World Bank group, Doing Business 2019 Report. Below are the factors that made up the 9

days See Figure 2:

11 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Liberia




11

Figure 1: SELECTIVITY LANES FOR CARGOS CLEARING THROUGH CUSTOMS FOR AUDIT PERIOD

Source: LRA Annual Report 2016-2019

Figure 2: Steps in calculating the 9 days

DOCUMENTARY COMPLIANCE BORDERS COMPLIANCE

Obtaining, preparing and submitting documents during transport,

clearance, inspections and port or border handling in origin

economy.

Customs clearance and inspections

Obtaining, preparing and submitting documents required by

destination economy and any transit economies

Inspections by other agencies (if

applied to more than 20% of

shipments)

Covers all documents required by law and in practice, including

electronic submissions of information

Handling and inspections that take

place at the economy’s port or border

Table prepared by: GAC

3.2.8 We reviewed the customs procedures at Bo-waterside, Ganta, Lougatuo, Butuo, Jowah

rural land borders and the Freeport of Monrovia. At these borders we found that importers

are going through an inefficient clearance procedure at those ports of entry. At all the ports

of entry, customs brokers and importers have to go through documentary the physical

examination processes.

Management’s (LRA) Response 3.2.9 We are not sure if this is a finding or a recommendation. However, we are happy to add

that a FACT Sheet, FAQ, all customs procedures, laws and regulations have been published

on LRA website for ease of public reference. The FACT Sheet specifically informs importers

of all the necessary pre-requisites, prior to arrival of cargo at customs ports, which enable

clearance in time without incurring additional cost. This includes the legal requirement for

shipping lines manifests to be lodged to the system (ASYCUDA) at least 72 hours prior to

the arrival of vessels, submission of customs declaration and payment by the importer in

advance of arrival of cargo.

Comments

3.2.10 Government Institutions involved with Custom Cargo Clearance, such as LDEA, MOA, etc.

should coordinate the examination process to reduce the bureaucracy in clearance cargos

from ports and land boarders for efficiency.




12

3.3 Complex payment procedures for customs duties

3.3.1 Payment for goods imported through the Freeport of Monrovia can only be done at the

Central Bank (CBL) collection window in the Customs Business Office at the Freeport of

Monrovia. The importer must procure a manager’s check from a commercial bank for five

united stated dollars (USD$5), makes payment to Central Bank window, received a treasury

receipt and then returns to the CBOs with the treasury receipt to continue the process. If,

it is determined that additional payment is due (for example, correction of the earlier

estimates duty), the importer must begin the whole payment process for the difference.

Payment for all other port costs is made at other Central Bank collection windows or through

Government of Liberia transitory accounts at commercial banks. Importers has to go

through the described processes for customs payment before beginning APM Terminals

and NPA handling charges payment processes.

3.3.2 Payment of duties and taxes less than or up to US$250 do not require manager’s check

and may be paid in cash to the Customs cashier, a transitory account with a commercial

bank or a Central Bank collection window.

3.3.3 During our site visit at the Freeport of Liberia, we noticed that traders and importers who

trade in Liberian dollars which is the legal tender in Liberia were experiencing difficulties in

exchanging the Liberian dollars to United States Dollars at a very high rate to clear their

cargo.

Management’s (LRA) Response

3.3.4 In the absence of electronic payments, payment through a manager’s check remains the

most secured way of protecting Government revenue. Shortages that may require re-doing

a manager’s check are abnormal because final bills are obtained before payment. Hence,

the amount on the manager’s check should always equal the billed amount. Anything on

the contrary is in effect negligence on the part of the importer or his/her bank.

Notwithstanding, there is an on-going process at the LRA to incorporate electronic

payments which will eliminate the need for the physical presence of a commercial or Central

Bank. This may require funding and time for automation and integration of systems.

Audit Comments

3.3.5 The use of electronic payments will be efficient; however, LRA’s Customs Department

should coordinate payments so that LRA, APM Terminal and NPA processed in one location

for effectiveness.

3.3.6 Additionally, introduce electronic payment process for imports to have smooth payment

process.

3.4 Unclear Customs Cargo Clearance procedures at land borders

3.4.1 Chapter 9.1 of the Kyoto Convention states that customs shall ensure that all relevant

information of general application pertaining to customs is readily available to any

interested person.




13

3.4.2 Chapter 9.2 of the Kyoto Convention states that information that has been made available

must be amended due to changes in customs law, administrative arrangements or

requirements, the customs shall make the revised information readily available sufficiently

in advance of the entry into force of the changes to enable persons to take account of

them, unless advance notice is precluded.

3.4.3 LRA customs department prescribed the following below procedures for clearance of cargo

at land borders:

• Self-Declaration of cargo to customs office

• Assessment is done by the Assessor

• Consignee proceed to the cashier to make payment

• Examination of cargo for verification (Done with customs and all borders agencies

assigned to the borders)

• Exit of cargo form port if there is no infraction as to what was declared

3.4.4 Moreover, LRA’s Customs Department is also responsible to develop and maintain

standards, guidelines and apply modern techniques and technology to facilitate and ensure

simplification and harmonization of procedures.12 Customs is referred to as a gatekeeper of

a nation, procedures that outsider (importers/traders) goes through before bringing cargo

into Liberia is crucial for international and economic development.

3.4.5 From questionnaire presented to consignees Customs Brokers at land borders visited,

customs procedures are different from the above-mentioned procedures published by the

Customs Department for cargo clearance. Some of the customs procedures that are

different from the official document published are noted below and were all common to

Bo-waterside, Lougatou and Ganta which are major borders entry point to Liberia:

• Separate examination by all of the agencies (Liberia Drugs Enforcement Agency,

Liberia National Police, Ministry of Commerce and Ministry of Agriculture) that are

assigned at these borders.

• Payment of 4% on goods, if Cost Insurance and Freight (CIF) is more than

US$110.00 and if the consignee does not have business registration. Whereas

according to the Ministry of Commerce & Industry Guide on Operating Business in

Liberia a Presumptive Tax of four percent (4%) is due no later than 15 days after

each quarter. This is applicable to Small business whose gross annual sales are

$LD 200,000.00 – LD3,000,000.0013

• Paying the amount of US$20.00 for ECOWAS brown card when bringing vehicle

into the country. The main objective of the ECOWAS Brown Card scheme is to

guarantee to the victims of road accident a prompt and fair compensation of

damages caused by nonresident motorist from ECOWAS member states visiting

their territory14

12 Corporate business plan 2018/19 LRA management framework 1.3 13 http://www.moci.gov.lr/doc/MoCI.BusinessHandbook.013017 page 12 14 https://www.ecowas.int/specialized-agencies/ecowas-brown-card/

http://www.moci.gov.lr/doc/MoCI.BusinessHandbook.013017

https://www.ecowas.int/specialized-agencies/ecowas-brown-card/




14

3.4.6 Custom officials’ failure to coordinate the activities of other agency of government at one

location in adherence to the policy and standard of clearance of goods at land borders

makes it difficult to calculate and pre-determined customs duties and other charges that

might be levied on a particular import based on the procedures that an importer/trader

have seen published which might leads to delay in clearing his/her goods.

Questionnaires with answers by Consignees and Customs Brokers

No Questions Position Answers

1.

What are the processes involved to

cleared cargo as a broker at the CBO?

Consignee

I first go to Appraisal which is the

Assessor for assessment, later the

Cashier and pay in cash. Later Internal

Revenue and pay 4% if your goods is

worth more than 110USD and not

register with the Liberia Business

Registry, you go to Commerce Ministry.

Consignee I go to the Examiner to check my goods

and from there I go to the Assessor who

raise my bill and payment. I later go to

Commerce Office and Liberia National

Police (Major Crime Investigation Unit)

before I can take my goods.

Consignee The first person I have to see is the

Examiner, from there the Assessor. After

that cashier. I also go to the Commerce

Ministry staff for 4% and from there the

Major Crime Investigation Unit and the

Liberia Drug Enforcement Officer before

taking my goods.

Broker Bill of lading, Will bill and parking list

Broker Bill of Lading, waybill and parking list

Customs Broker

The consignee presents parking list or

invoice to Assessor than you pay and

finally go to examiner for examination

you pay 20USD to ECOWAS for one used

car.


3.4.7 All customs procedures, laws, regulations, executive orders, FAQs and FACT Sheet have

been published on LRA website for public access. Considering the poor internet

infrastructure at rural land borders and the limitation of rural land border importers to

access internet publications, the LRA will endeavor to publish clearance procedures at major

land borders on bill boards once funding is available.

3.4.8 Interference by other agencies in customs examination is a problem we do recognize and

fully note the auditor’s observation. Notwithstanding, in the framework of coordinated

border management, the conduct of joint examination has been instructed to border offices

where other border agencies do have a particular interest in targeted consignments.




15

3.4.9 The payment of 4% CIF on imported goods is a domestic tax paid only by non-registered

importers engaged in business activity through importation and sales. This is an alternative

means of capturing tax evaders through their cross-border transactions.

3.4.10 On the issue of US$20 ECOWAS Brown Card (EBC), Customs will require a Government

regulation or instrument of national authorization for the enforcement of such collection.

Audit Comment

3.4.11 The Liberia Revenue Authority should formulate standard procedures for customs cargo

clearance at Land borders and seaports; and, customs officials and Brokers assigned at

land borders and seaports should follow the standards customs cargo clearance procedures

set forth. In addition, the LRA should monitor every activity on cargo clearance to ensure

each port of entry is implementing the procedures as designed.

3.5 Lack of automated system at major Land borders

3.5.1 The LRA Customs Department objective 4.1 is to deploy and operationalize modern revenue

administration technology to improve compliance and effectiveness. Furthermore, section

4.1.6 states that rural and urban field offices will be reliably connected to core business

system through mobile connection points and other available management information

systems infrastructure.

3.5.2 Additionally, objective 6.4 of the Customs Department (LRA) business plan of 2018/19 is

to automate CBOs15. World Customs Organization version III (June 2018) on the guidelines

for the speedy Release of consignments by Customs encourages that all necessary

information relating to cargos to be submitted electronically to customs administrations and

all consignments assessed as low risk should be released either immediately upon arrival

or after a specified time after arrival of the goods.

3.5.3 The Audit team observed during the field visit to 5 of the 17 land borders (Bo-water side,

Ganta, Lougatuo, Jorwah and Butuo) there is no automated system (ASYCUDA) to

determine bill or a price list for custom payment. As a result, customs cargo clearance

procedures are done manually which could lead to declaration been understated by

consignees to not paid the accurate revenue to government and further delay in the cargo

clearance process.


3.5.4 The LRA takes note of the auditor’s observation and do acknowledge that customs

procedures at land borders are still manual due to funding constraint to automate land

border offices and sustain the system (ASYCUDA). While efforts are underway for donor

funding to roll the system out to land borders, there are still manual controls in place to

mitigate revenue fraud at land borders.

15 LRA corporate strategy plan of 2016-20121




16

Audit Comment

3.5.5 The employment of automated system and in particular ASYCUDA at major ports of entry

will provide uniformity in determining cargo clearance billing, reduce transaction cost,

clearance time, and mitigate manual negotiation which could lead to bribery.

3.5.6 Further, the installation of solar energy power system at Customs Business Office and/or

the repair of the existing solar power system could support ASYCUDA.

3.6 Poor security for Cargo at Land borders

3.6.1 Section 6.1 of LRA Act states that the LRA is established to administered enforce, the

revenue laws in accordance with the Code and other related laws. Further the LRA has

responsibility to account for all national revenues and to facilitate legitimate international

trade and customs border management – enforcement. According to the LRA website

(revenue.lra.gov.lr), border security is one of the Customs Department core functions.

3.6.2 The LRA’s responsibility per Section 7. (h) of the LRA Act is to, “facilitate legitimate trade,

customs clearance through borders and social protection through policy and procedures

that promote efficiency, simplified and enhance taxpayer’s compliance”.

3.6.3 According to Sections 14187 (1) and 14187(d) of the Revenue code of Liberia Act of 2000

Storage of Goods in Warehouses. The warehouse proprietor shall stow every container or

lot of warehoused goods so as to facilitate easy access thereto and identification thereof.

During field verifications at all the five land borders visited, it was observed that Customs

warehouses which should be a secured place and approved by the Minister of Finance with

the provision outlined in the Revenue Code, were seen opened and not fully secured.

Additionally, at Bo-waterside CBO where used vehicles are parked, there is no fence to

protect vehicles from potential theft. Even at Lougatuo CBO you can see from pictorial

evidence that cargo is spread out on the ground without consideration for potential rain d

damage of the cargo. See below for detail pictorials.

GAC PHOTO: 1: Bo-waterside Customs Business Office.




17

GAC PHOTO: 2: Lougutuo Customs Business Office and crossing point

GAC PHOTO: 3: Buutuo Customs Business Office and crossing point

GAC PHOTO: 4




18

GAC PHOTO: 5: Jorwah Customs Business Office warehouse


3.6.4 In terms of border security and in light of its statutory mandate, customs is fully engaged

in border security in coordination with other border security agencies; and takes full

responsibility to lead on supply chain security. On the other hand, funding is required to

construct border infrastructure for the security of goods and safety of officers.

Audit Comments

3.6.5 Securing cargo is a provision in both the LRA Act and Revenue code; and, the verification

exercise shows that the LRA is not in compliance when it comes to the protection of cargos

in its possession at land borders.




19

4 CHARPTER 4: CONCLUSION

4.0 Conclusion

4.0.1 This Chapter presents the conclusion of the findings against the key audit objectives as to

whether cargo clearance at Liberia seaports and land borders are timely, void of delays and

if the Clarence processes are monitored.

4.0.2 The audit concludes that measures put in place by the Liberia Revenue Authority is not

effective to curtail the difficulties involved in the procedure of cargo clearance at land

borders and ports.

4.0.3 Customs brokers at Land borders are not fully knowledgeable about the procedures of

cargo clearance. This is evidenced by the overall results of questionnaire completed by

brokers.

4.0.4 The Customs department at the Liberia Revenue Authority has not fully ensured that cargo

clearance procedures at land borders are clear and harmonized across every land border

in Liberia.

4.0.5 Customs cargo clearance formalities are not coordinated between stakeholders of the LRA.

This is evidenced by customs authorities’ reliance on cargo selectivity module in ASYCUDA,

while other government agencies deployed at Freeport do not have equivalent systems. On

the other hand, customs brokers and consignees indicated in their questionnaire that they

have to pass through other separate offices to process the clearance of cargo at land

borders.

4.0.6 Liberia Revenue Authority Custom Department at major land borders lacks the automated

system (ASYCUDA) for customs Clarence. As a result, there are human interventions,

manual determination of the duty which could lead to understating custom duties, fraud;

under-reporting of taxes and delay in clearing of goods and increase in transaction cost.

4.0.7 Custom officials assigned at land borders do not protect Cargo, henceforth, cargos are

placed in an open environment without fence for protection and warehouses are not in

good condition to store cargos.




20

5 CHAPTER FIVE: RECOMMENDATIONS

5.0 Recommendations

The Customs Department of LRA has the legal backing and mechanism to be a robust

customs administration in Liberia. The audit findings as described in Chapter 3 are areas

that should be addressed to realize effectiveness and efficiency in customs cargo clearance

at seaports and land borders. Overall, the LRA Customs Department should review findings

herein that relates delays, training, timeliness, cargo security, proper coordination between

stakeholders, and look at ways to harmonizing customs cargo clearance procedures at the

various ports of entry in Liberia. Further, they should establish quarterly reviews and

motoring of the various customs points of entry to ensure that various procedures and

processes are uniformly implemented.

5.1 Interagency involvement with Customs Cargo Clearance process

5.1.1 The Management of the Liberia Revenue Authority should ensure that the customs cargo

clearance procedures are simplified to enable consignees to clear their goods timely and

efficiently. The LRA’s Customs Department should ensure that the payment process of

customs duties is done in one location.

5.1.2 We recommend that various Government agencies who have related functions in cargo

clearance should coordinate and participate in the examination process, if necessary when

cargo arrives at a port or borders. Further as customs officials are the lead in cargo

Clarence, a memorandum of understanding can be entered to place reliance on the

Customs.

5.1.3 Documents requires by various agency should be reviewed and synchronized so that

brokers and importers are filling out a comprehensive document that can be shared for

cargo clearance processes.

5.1.4 Furthermore, custom official should be trained and to play a lead role in the inspection and

examination of cargo.

5.1.5 Liberia Revenue Authority should consider installing cargo/goods scanning camera system

similar to the luggage scan at international airports. The scan will be analyzed by Customs

and other government agencies to check whether the content match the cargo description

and whether illegal cargo can will be found. This will reduce physical inspection and

clearance time.

5.2 Unclear Customs Cargo Clearance procedures at land borders

5.2.1 LRA should ensure that customs officials assigned at land borders follow the standard

customs cargo clearance procedures set forth; and, every cargo clearance activity should

be monitored for compliance with the standard set.




21

5.3 Inadequate training for Customs Broker

5.3.1 LRA Customs Department should ensure that every Custom Business office undertakes

quarterly or bi-annual refreshment training on custom clearance procedures.

5.4 Lack of automated system at major Land borders visited

5.4.1 LRA Customs Department should ensure that automated system (ASYCUDA) is installed at

major ports for uniformity and in determining cargo clearance billing, reduce transaction

cost, clearance time, and mitigate manual negotiation which could lead to bribery.

5.4.2 Install solar energy power system at Customs Business Office and repair existing solar

power system to support the ASYCUDA.

5.5 Poor security for Cargo at Land borders

5.5.1 LRA Customs Department should construct fence and build warehouses to protect cargo at

land ports.




22

APPENDIXES

Appendix 1: Audit Criteria

NO. Audit questions Audit Criteria Source of Criteria

1. To what extent cargos/goods at land

borders and seaports are cleared within

the required time stipulated by Customs?

Strategy 1.2 of LRA Corporate

Strategic Plan 2016/2017 -

2020/2021 require LRA to increase

effectiveness in the administration

of tax and customs operations.

LRA Corporate Strategic

Plan 2016/2017 -

2020/2021

2. Does the Customs Business Office (CBOs)

ensures cargo clearance processes at land

borders and seaports are simplified for

customs Brokers?

LRA acts 2013 section 7.2 (h)

requires LRA to facilitate legitimate

trade, custom clearance through

borders that promotes efficiency,

simplify and enhance taxpayer

compliance

LRA Act of 2013

3. Does the ASYCUDA system influence

timely clearing of cargo at seaports?

LRA strategy plan of 2016/2017 -

2020/2021 strategy 4.1.1 requires

LRA to deploy and operationalize

modern revenue administration

technology to improve compliance

and effectiveness


Plan 2016/2017 -

2020/2021

4.

Does Customs Department ensure staffs

and necessary stakeholders are trained to

handle cargo clearance?

Strategy 3.2.4 requires LRA to

implement training plan with

emphasis on technical training and

certification


Plan 2016/2017 -

2020/2021

Article 12.1.2 of WTO requires LRA

to cooperate in technical guidance

or assistant and support for

capacity building of staff for the

purpose of administering

compliance and enhancing

effectiveness

WTO Agreement

LRA acts of 2013 section 1 require

LRA to educate taxpayer in order to

facilitate tax and custom

compliance.

LRA 2013 Act

5. To what extent Customs Department

monitors to ensure customs operations are

in line with cargo clearance procedures?

LRA 2013 Acts Section 21.1(e). LRA

should ensure the effective

deployment and utilization of staff

to achieve maximum operational

results

LRA Act 2013

LRA strategy plan of 2016/2017 -

2020/2021 strategy 3.3 requires

LRA to adhere satisfactorily to local

and international performance

benchmarks

LRA strategy plan of

2016/2017 -2020/2021

6. To what extent monitoring of Customs

Business Office (CBOs) is done to ensure a

free movement of cargos?

Revenue Code of 2011 section

1701 (2) require commissioner

(Deputy Minister) to monitor the

movement of goods, and is

empowered in consultation with the

Ministry of Commerce and Industry,

to take appropriate measures to

ensure the free

Liberia Revenue code 2011




23

Appendix 2: List of Interviewee

Position of Interviewee Institution Purpose of Interview

Chief Accountant APM Terminal To know the responsibility of APM

Terminal in the cargo clearance

process.

General Manager CMA-CGM Shipping line To understand the role of shipping

lines in the cargo clearance process

at seaports.

President Broker Union To know the responsibility of the

Brokers Union in cargo clearance.

Broker Ganta Border Broker To have a clear understanding of the

role brokers play in cargo clearance

at the Ganta border.

Consignee Lougatuo Border To have an understanding about

how the cargo clearance process at

the Lougatou border are carryout.

Asst. Commissioner for

Ports Operation

Customs Department (LRA) To have an overview of port

operations and what are the factors

that affect cargo clearance

processes in Liberia.

Manager Centralized Assessment Unit (CAU) To have a clear understanding about

the automated system at the various

ports and borders in Liberia.

Chief Collector Ganta CBOs To have an understanding about

how cargo clearance process at the

Ganta border are carryout.

Chief Collector Jorwah CBOs To have an understanding about

how cargo clearance process at

Jorwah border are carryout.

Chief Examiner Lougatuo CBOs To have an understanding about

how cargo clearance process at

Lougatou border are carryout.

Chief Collector Bo-waterside CBOs To have an understanding about

how cargo clearance process at the

Bo-waterside border are carryout.

Chief Examiner Butuo CBOs To have an understanding about

how cargo clearance processes at

Butuo border are carryout.




24

Appendix 3: List of documents Reviewed

NO. Institution Documents Information needed from the

document

1. Liberia Revenue

Authority Act

Liberia Revenue Authority Act 2013 Roles and responsibility of the

Customs department.

Annual strategy plan

Liberia Revenue Code (Custom laws)

as amended 2011

Liberia National Trade Policy of 2014-

2019

National Budget Funding to the LRA and LRA

contribution to the national budget

2. World Trade

Organization

WTO agreement Roles and responsibility of the

Customs department.

Appendix 4: Site visited

Location Purpose

Bo-Water side To verify written customs procedures against practice at carry out at land borders

Ganta To verify written customs procedures against practice at carry out at land borders

Lougatuo To verify written customs procedures against practice at carry out at land borders

Butuo To verify written customs procedures against practice at carry out at land borders

Jorwah To verify written customs procedure against practice at carry out at land borders