2024 LC REVIEW CDP DIAGNOSTIC EXAM 1 (PCA/PDP Part 1)L

DIAGNOSTIC 1
71 of 75 points

What does Undervaluation refer to according to the CAO 1-2019?

Declaring a value for imported goods that is lower than the actual price paid or payable.

Overstating the value of imported goods to avoid paying taxes and duties.

Using an incorrect valuation method that results in a discrepancy in duty and tax payment.

Failing to declare the value of imported goods on the customs declaration form

What type of ledger provides detailed information on accounts payable and accounts
receivable?

General ledger.

Cash receipts and disbursements books.

Subsidiary ledgers of accounts payable and accounts receivable.

Sales book.

What is the role of the Post Clearance Audit Group (PCAG)?

To conduct audits of importers, locators, and all parties engaged in customs clearance and
processing.

To process customs clearance for imported goods after they have been cleared by customs
officials.

To assist importers in filing goods declarations with customs authorities.

To monitor the transportation of goods within the Philippines to ensure compliance with
customs regulations.

What are importers required to maintain and keep records of?

Only records related to their books of accounts.

Only records of their importations.

Records of importations, books of accounts, business and computer systems, and all
customs commercial data including payment records.
 Records of their business transactions unrelated to customs.

An agent of the Importer, as described in CAO 1-2019 is:

Any individual involved in the transportation of goods.

Someone who occasionally helps with import-related paperwork.

A person who knowingly causes the importation or transportation or storage of imported

goods.

An employee of the importer who represents them in dealings with customs authorities.

To whom does PCAG-CAO submit the required reports on audit findings and
recommendations for approval?

Assistant Commissioner

Secretary of Finance

Commissioner of Customs

Department of Budget and Management (DBM)

What is the consequence of not keeping records for the required period at the designated
place?

No consequence, as record-keeping requirements are not enforced.

The importer may be eligible for a refund of duties and taxes paid.

The importer may face penalties and fines for non-compliance.

Customs authorities will waive the requirement to keep records

Why is it important to check the adequacy and integrity of manual or electronic record-
keeping systems?

To ensure importers can avoid customs inspections.

To verify the authenticity of customs clearance documents.

To confirm the efficiency of customs clearance processes.

To ensure the accuracy and reliability of record-keeping systems.

Who is required to maintain and keep records of importations, books of accounts, business
and computer systems, and all customs commercial data including payment records?

Only importers mentioned in the definition of Importers.

Only customs brokers and other parties engaged in Customs Clearance and processing.

Only locators operating within Free Zones.

All importers, customs brokers, and other parties engaged in Customs Clearance and
processing.

What types of tax returns are required to be kept for the purpose of post-clearance audit?

Only income tax returns.

Only value-added tax returns.

Income tax, withholding tax, value-added tax, excise taxes, documentary stamp tax, and
capital gains tax returns.

Only excise tax returns.

Which unit within PCAG is responsible for reviewing available trade data to determine
compliance markers and setting benchmarks for developing an audit program?

PCAG-CAO

PCAG-TIRAO

PCAG-PMO

PCAG-MIST

What is the primary purpose of the computer-aided risk-based management system

developed by PCAG-TIRAO?

To increase import duties

To identify potential priority audit candidates

To reduce customs clearance time

To automate trade data collection

Who evaluates the recommendations for changes in the personnel and staffing pattern of
PCAG?

Department of Budget and Management (DBM)

 Bureau of Customs (BOC)

Secretary of Finance

Assistant Commissioner

What principles should the Commissioner adhere to when recommending changes to the
personnel and staffing pattern of PCAG?

Economy, efficiency, and effectiveness

Transparency, accountability, and fairness

Expediency, flexibility, and adaptability

Profitability, sustainability, and growth

Which of the following is NOT a criterion for selecting firms for post clearance audit of
importers?

Relative magnitude of customs revenue to be generated from the firm

Compliance track records of the firm

Rates of duties of the firm's imports

Profitability of the firm

What circumstance may indicate that a person ordering imported goods from a local importer
or supplier is considered the beneficial or true owner of the imported goods?

The person placing the order is the sole buyer of the goods imported by the Importer-of-
record.

The person placing the order lives in the same city as the importer.

The importer and the person placing the order have never met in person.

The person placing the order does not control the material terms and conditions of the
importation.

What are the requirements for maintaining electronic copies of records according to the
regulations?

Electronic copies of records are not permitted.

Electronic copies of records must be stored on physical storage devices only.

Electronic recordkeeping must be compliant with applicable laws, rules, and regulations on
electronic data.
 Electronic copies of records must be submitted to customs authorities upon request.

What is the purpose of determining the level of compliance of importers, customs brokers,
locators, and other parties required to keep records?

To increase government revenue through fines and penalties.

To identify opportunities for streamlining customs procedures.

To assess compliance with laws and regulations enforced by the Bureau.

To reduce the number of goods declarations filed by importers

Where should importers keep records pertaining to their ordinary course of business and
customs-related activities?

At any convenient location chosen by the importer.

At their Principal Place of Business.

At the customs office.

At the importer's home address.

Who approves the computer-aided risk-based management system developed by PCAG-

TIRAO?

Secretary of Finance

Commissioner of Customs

Assistant Commissioner

Director of PCAG-TIRAO

What is Misdeclaration as defined in the CAO 1-2019?

Providing inaccurate measurements of imported goods to avoid taxes.

Falsely declaring the weight of goods to reduce duty payments.

Using insufficient descriptions of goods to evade government regulations.

Making false declarations about the quality of imported goods to bypass customs
requirements

Which of the following activities does NOT require the filing of a goods declaration, according
to CAO 1-2019?

Importing goods into the Philippines.

 Withdrawing admitted goods from Free Zones into the customs territory for consumption.

Transferring goods between two warehouses.

Transporting goods from one city to another within the Philippines

What documents are included in the records subject to audit examination by the Bureau?

Only physical documents such as invoices and bills of lading.

Statements and declarations made verbally by the importer.

Documents and electronically generated or machine-readable data related to the goods

declaration.

Documents provided by the Bureau itself

What is the purpose of conducting an audit examination of records by the Bureau?

To delay customs clearance procedures.

To ensure the accuracy of goods declarations and determine the importer's liability for
duties, taxes, and other charges.

To provide assistance to importers in maintaining records.

To increase government revenue by imposing fines and penalties on importers.

Which of the following units is NOT under the direct supervision and control of the Assistant
Commissioner?

Trade Information and Risk Analysis Office (PCAG-TIRAO)

Compliance Assessment Office (PCAG-CAO)

Personnel Management Office (PCAG-PMO)

Both a and b

Which group does PCAG-TIRAO coordinate with to develop the computer-aided risk-based
management system?

Financial Analysis and Risk Evaluation Group (FAREG)

Management Information System and Technology Group (MISTG)

Compliance Assessment Office (CAO)

Trade Information and Risk Analysis Office (TIRAO)

Which of the following is included in documentation on orders and purchases?

Only sales agreements.

Only product descriptions.

Sales and other related agreements, correspondence or communication relating to the

import transaction, and product description or specifications.

Only pro-forma invoices.

Which of the following statements accurately describes "Customs Clearance for Transit
Entries"?

Goods are subjected to final payment of duties and taxes at the port of entry

Goods are allowed to be transported under customs control from one customs office to
another

Goods are transferred from the importing means of transport to the exporting means of
transport within the same customs office

Goods are given permit for withdrawal after securing duties and taxes to be paid at the point
of entry

When may Customs Brokers and Importer's duly authorized agents be audited?

Only if requested by the Commissioner

To fill information gaps revealed during the audit

Annually as per customs regulations

When they refuse to cooperate with PCAG-TIRAO

What is the timeframe within which PCAG is mandated to conduct audit examinations,
inspections, verifications, and investigations of records pertaining to any goods declaration?

Six (6) months

One (1) year

Three (3) years

Five (5) years

Which unit within PCAG is tasked with conducting the actual audit examinations, inspections,
verifications, or investigations of records?

PCAG-TIRAO

PCAG-CAO
 PCAG-PMO

PCAG-MIST

Which unit within PCAG is responsible for establishing and maintaining a customs compliance
program?

PCAG-TIRAO

PCAG-CAO

PCAG-PMO

PCAG-MIST

What types of product descriptions or specifications are required to be kept?

Only brochures.

Only manuals.

Product description or specifications such as brochures, manuals, catalogues, pamphlets,

fliers, literatures.

Only product labels.

What financial documents are required to be kept?

Only cash receipts and disbursements books.

Only bank reconciliation records.

Cash receipts and disbursements books, subsidiary ledgers of accounts payable and
accounts receivable, check records, and bank reconciliation records.

Only financial statements.

What is the primary responsibility of PCAG-CAO regarding audit reports?

Approving audit findings

Preparing audit work plans

Submitting reports to the Commissioner of Customs

Developing audit policies

What does "Customs Clearance" encompass under CAO No. 01-2019?

The process of physically inspecting goods at the port of entry

 Completing formalities to allow goods to enter for consumption or other purposes

The act of securing goods in a customs warehouse for an indefinite period

The procedure of transporting goods from one customs office to another without any
formalities

Which of the following documents are included in documentation on shipping, importation,

exportation, and transport?

Only commercial invoices.

Only bills of lading.

Goods declarations and proofs of payment of duties and taxes, commercial invoices, import
and/or export licenses or permits, bills of lading, and more.

Only packing lists.

What information should be included in the documentation on the entity organization and
structure?

Only the names of the board of directors.

Information on the parent company, subsidiaries, and affiliates.

Only the capital composition of the company.

Only audited financial statements.

What documents are included in documentation on manufacturing, stock, and resale?

Only inward goods register/receipts journal.

Only production records.

Inward goods register/receipts journal, stock register/inventory record, production record,

costing record, purchases book, and sales book.

Only financial statements.

How many Directors head the PCAG?

One

Two

Three

None
What role do records serve in relation to non-compliance with recordkeeping and regulatory
obligations?

Records serve as evidence for prosecuting non-compliant entities.

Records are used to reward importers for compliance.

Records are irrelevant to assessing regulatory compliance.

Records are only required for tax purposes.

Which document provides a record of goods received by the importer?

Stock register/inventory record.

Sales book.

Inward goods register/receipts journal.

Costing record.

What document provides evidence of arrangements made for the transfer of goods from one
customs territory to another or from one vessel to another?

Import and/or export licenses or permits.

Bills of lading.

Transshipment permits, boat notes, and/or special permits.

Freight and insurance contracts.

Who is considered an importer according to CAO 1-2019?

Any person who imports goods into the Philippines for personal use.

The owner of a business that occasionally imports goods.

A party who imports goods into the Philippines or withdraws admitted goods from Free
Zones into the customs territory for consumption or warehousing, files a claim for refund or
drawback, or transports or stores such goods carried or held under security.

Any person involved in the transportation of goods within the Philippines

What is the period within which the Bureau may conduct an audit examination of records
pertaining to any goods declaration?

One year from the date of final payment of duties and taxes.

Within six months from the date of Customs Clearance.

Within three years from the date of final payment of duties and taxes or Customs Clearance.
 After five years from the date of final payment of duties and taxes

What does Misclassification refer to?

Using incorrect tariff headings intentionally to avoid paying duties.

Unintentionally using incorrect descriptions of goods due to clerical errors.

Providing false declarations regarding the quantity of goods imported.

Bringing Regulated, Prohibited, or Restricted goods into Philippine customs territory without
proper authorization.

What is one of the purposes of keeping records as specified in the regulations?

To reduce paperwork for importers and customs brokers.

To confirm the truthfulness and accuracy of the goods declaration and the transaction value
of the imported goods.

To increase the workload of importers and customs brokers.

To store unnecessary data related to import transactions.

How does CAO No. 01-2019 define "Fraud"?

1/1

Any error in customs documentation, regardless of intention

The commission of any act resulting in material false statements, knowingly and
intentionally done to reduce taxes and duties paid

Any deviation from customs regulations, even if unintentional

The submission of documents with minor discrepancies in importation processes

Who approves the parameters of the computer-aided risk-based management system

developed by the Bureau?

Commissioner of Customs

Secretary of Finance
 Assistant Commissioner

Department of Budget and Management (DBM)

When does the assessment become conclusive upon all parties?

One year from the date of final payment of duties and taxes.

Three years from the date of Customs Clearance.

Upon completion of the post-clearance audit.

Three years from the date of final payment of duties and taxes or upon completion of the
post-clearance audit, in the absence of fraud.

Who is responsible for preparing the audit work plan, scope, and approach for the approved
priority audit candidates within PCAG?

PCAG-TIRAO

PCAG-CAO

PCAG-PMO

Commissioner of Customs

What does Negligence refer to according to the CAO 1-2019?

Intentional failure to exercise reasonable care and competence in customs declarations.

Failure to pay taxes and duties on imported goods.

Accurate reporting of goods declarations resulting in deficiency in duties and taxes.

Failure to exercise reasonable care and competence, resulting in deficiency in taxes and
duties paid

Who is authorized to determine the number of personnel requirements of PCAG?

Assistant Commissioner

Director

Commissioner

Secretary of Finance

What is the consequence of Undervaluation in customs procedures?

The importer may be eligible for a refund of excess duties and taxes paid.

The importer may face penalties and fines for customs fraud.
 The imported goods may be seized and confiscated by customs authorities.

The importer may receive a discount on customs duties and taxes owed.

What types of agreements are required to be kept for documentation on orders and
purchases?

Only sales agreements.

Only warranty agreements.

Sales and other related agreements covering distribution, royalty, agency, warranty, terms
of payment, and the like.

Only purchase orders.

What is the required period for keeping records related to Customs Clearance and processing
for parties engaged in such activities?

One year from the date of filing of the goods declaration.

Five years from the date of Customs Clearance.

Three years from the date of final payment of duties and taxes.

Three years from the date of filing of the goods declaration.

What is the purpose of the Prior Disclosure Program?

To penalize importers for errors and omissions in goods declaration.

To encourage importers to disclose errors and omissions in goods declaration voluntarily.

To audit importers and ensure compliance with customs regulations.

To facilitate the resale or disposal of imported goods by importers

According to CAO No. 01-2019, what is the definition of a Customs Broker?

Any person involved in the transportation of goods across borders

A person who holds a valid Certificate of Registration issued by the Bureau of Customs

Any individual who assists with customs formalities and holds a valid Professional
Identification Card

A person who is authorized to collect customs duties and taxes on behalf of the government
What is one of the functions of PCAG-CAO in relation to customs compliance?

Develop trade data benchmarks

Conduct physical inspections of goods

Establish and maintain a customs compliance program

Review available trade data

How is the Principal Place of Business defined in the CAO 1-2019?

The location where a corporation's goods are stored before customs clearance.

The branch office where most sales transactions occur.

The headquarters where senior executives direct and control the corporation's activities.

The place where imported goods are initially inspected by customs officials.

In which situation would Undervaluation occur?

When the declared value accurately reflects the price actually paid or payable for imported
goods.

When an importer uses the correct valuation method as prescribed by customs regulations.

When the declared value fails to disclose the full price actually paid or payable for imported
goods.

When an importer intentionally provides false information about the quantity of imported
goods.

Which document provides information about the quantity and nature of goods being
transported?

Freight and insurance contracts.

Import and/or export licenses or permits.

Bills of lading.

Shipping instructions.

What is an Inadvertent Error according CAO 1-2019?

A deliberate mistake made by the Importer to avoid paying taxes.

An error committed unintentionally by the Importer, despite maintaining internal controls to

prevent such mistakes.
 A mistake made by customs officials during the inspection process.

An error that occurs only in electronic documentation.

What type of records are customs brokers and other parties engaged in Customs Clearance
and processing required to keep?

Only manual copies of records.

Only electronic copies of records.

Manual and/or electronic copies of records covering transactions they handle.

Records of their personal financial transactions

How long are importers required to keep records at their Principal Place of Business?

One year from the date of final payment of duties and taxes.

Five years from the date of Customs Clearance.

Three years from the date of final payment of duties and taxes or Customs Clearance,
whichever is later.

Indefinitely.

Which document should include a list of exporters/suppliers and the nature of the relationship
with the importer?

General contracts and agreements.

Company profile/history and description of operations.

Audited financial statements.

List of incorporators.

What is the distinction between Reconsideration of Audit Findings and Reinvestigation of

Audit Findings?

Reconsideration involves presenting additional evidence, while reinvestigation does not

require additional evidence.

Reconsideration is based on newly discovered evidence, while reinvestigation is based on

existing records.

Reconsideration does not involve a question of fact or law, while reinvestigation may involve
both.

Reconsideration does not involve a re-evaluation of audit findings, while reinvestigation

does
What distinguishes "Customs Clearance for Transshipment Entries" from other customs
procedures?

Goods are released for consumption upon completion of formalities

Goods are transported under customs control from one customs office to another

Goods are subjected to additional taxes and charges at the port of entry

Goods are transferred within the area of one customs office from importing to exporting
means of transport

Which of the following documents related to entity organization and structure are required to
be kept for the purpose of post-clearance audit?

Only audited financial statements.

Only the company profile/history and description of operations.

Articles of incorporation, list of incorporators, organizational structure, and management and

key personnel involved in import processing, among others.

Only permits and licenses.

What documents provide evidence of the payment of duties and taxes?

Only bills of lading.

Only certificates of origin.

Goods declarations and proofs of payment of duties and taxes.

Only freight and insurance contracts

Who heads the PCAG?

Commissioner

Assistant Commissioner

Director

Secretary of Finance

Which of the following is NOT a function of PCAG-TIRAO?

Recommending potential priority audit candidates

 Developing policies and guidelines for the audit process

Conducting physical inspections of goods

Reviewing available trade data

What correspondence or communication relating to the import transaction should be kept?

Only letters of acknowledgment.

Only notices and advisories.

Correspondence or communication including purchase orders, vouchers, confirmations,

pro-forma invoices, acknowledgement receipts, notices, advisories, and the like.

Only emails.

According to CAO No. 01-2019, what are Free Zones?

Economic zones with reduced customs duties and taxes

Areas where goods are allowed to enter without any customs formalities

Special economic zones registered with the Philippine Economic Zone Authority (PEZA)
and other legislated freeports

Regions where customs regulations are not enforced

Who are Locators according to the CAO 1-2019?

Individuals who assist importers in navigating customs regulations.

Persons authorized to bring imported goods into special economic zones and free ports.

Government officials responsible for customs enforcement.

Importers who specialize in bringing goods into Free Zones.