ARCHIVED - Audit of the Payment Process for K84 Account Statements

This page has been archived.

Final Report
July 2010

Table of Contents

• Executive Summary
• 1.0 Introduction
  • 1.1 Background
  • 1.2 Risk Assessment
  • 1.3 Audit Objective and Scope
  • 1.4 Approach and Methodology
  • 1.5 Audit Criteria
  • 1.6 Statement of Assurance
• 2.0 Audit Opinion
• 3.0 Findings, Recommendations and Action Plans
  • 3.1 Policies and Procedures
  • 3.2 Compliance
• Appendix A – Flow Chart of the Payment Process of K84
• Appendix B – Audit Criteria
• Appendix C – Summary of Test Results
• Appendix D – List of Acronyms

---

Executive summary

Background

One of the Canada Border Services Agency's (CBSA) key priorities is to collect taxes and duties from importers. The CBSA collects duties and taxes under the authority of section 32 of the Customs Act, which states that importers are to account for and pay duties and taxes owed before imported goods can be released. The CBSA collected $22.6 billion in 2008–09 in duties and taxes from four main revenue streams: traveller, postal, commercial and Customs Self Assessment program. The commercial stream uses the K84 account statements, which represents about 80% of the total revenues collected. Customs Self Assessment Program uses a different process and account statement.

The Audit Committee approved an audit of the payment process of the K84 Account Statements as part of the Three-year Risk-based Audit Plan for 2009–10 to 2011–12. The audit was conducted from October to December 2009.

Objective and Scope

The objective of the audit was to provide assurance on the effectiveness and reliability of the payment process for K84 Account Statements. The scope of the audit included the K84 payment process from the time goods are imported using account security numbers to the time payment is made or an invoice is sent to collection. It did not include source revenue assessments or accounts receivables, which will be the topic of future audits. The audit covered a random sample of payments over a three-month period. Three regions were visited during the audit: Quebec, Greater Toronto Area and Windsor–St. Clair as they are the regions with the largest volumes of transactions.

Statement of Assurance

The audit engagement was planned and conducted in accordance with the Internal Auditing Standards for the Government of Canada.

Audit Opinion

The audit found that moderate deficiencies exist in the effectiveness and reliability of the payment process for the K84 Account Statement. The auditors noted some control issues and management attention is required to reduce the exposure to financial risks and provide reasonable assurance. These include accountability for the payment process at both the regional and headquarters offices; updating policies and procedures; and ongoing monitoring of the K84 payment process.

Main Observations

The policies and procedures for processing the K84 Account Statements were part of the Comptrollership Manual – Finance Volume. Further procedural detail was available in Memorandum R17-1-5. However, this memorandum was not used in all regions visited. In addition, some gaps in the existing procedures were identified, including the monthly reconciliation of K84 Account Statements of payments received to outstanding amounts; the process to forward invoices and receipts to collections; monitoring; and the daily reconciliation to be performed at each office to account for shortages and payments received on behalf of other offices (overages).

Walk-throughs and testing of the effectiveness of existing policies and procedures had mixed results. In one of the three regions visited, this region was generally compliant with the policies and procedures. In the other two regions, the audit identified some gaps. These include timeliness of issuing month-end invoices (K23 form) and the completeness of file documentation with respect to log books kept to record amounts outstanding.

Recommendations

The audit recommended to management to:

• Update and communicate policies and procedures, including clarifying regional and headquarters accountability;
• Develop and implement a process to monitor compliance; and
• Take action to ensure an October 2009 discrepancy in the amount outstanding was resolved in a particular region and that reconciliations of payments received and amounts outstanding are taking place on an ongoing basis.

Management Response

The findings of the audit are on the whole positive and identify the need to make some adjustments to minimize risk and to ensure that roles and responsibilities are properly defined. The observations, comments and recommendations contained in the audit report are reasonable and fair. The recommendations and the proposed Management Action Plans are detailed within the audit report.

1.0 Introduction

1.1 Background

One of the Canada Border Services Agency's (CBSA) key priorities is to collect taxes and duties from importers. The CBSA collects duties and taxes under the authority of section 32 of the Customs Act, which states that importers are to account for and pay duties and taxes owed before imported goods can be released. The CBSA collected $22.6 billion in 2008–09 in duties and taxes from four main revenue streams: traveller, postal, commercial and Customs Self Assessment program. The commercial stream uses the K84 Account Statements, which represents about 80% of the total revenues collected. Customs Self Assessment program uses a different process and account statement.

The objective of the K84 payment process is to accurately report accounting information and financial liability of account security holders (importers) to the CBSA. The K84 payment process comprises four main activities: importation of goods by account security holders, issuing of daily and monthly account statements (K84), payment by account security holders (issuance of a receipt – K21), non-payment by account security holders (issuance of an invoice – K23). Refer to Annex A for a full description of the payment process of the K84 Account Statement.

At the time the audit was conducted, Comptrollership, Programs (formerly Admissibility) and Operations branches had a role in the K84 payment process. Comptrollership was responsible for the policies related to the processing of the K84 Account Statements and payments, and the reporting of revenues. Admissibility was responsible for supporting Comptrollership during the transition and transfer of knowledge related to revenue process, given their knowledge and responsibilities for the Agency's commercial programs. Operations Branch was responsible for implementing the policies and procedures.

While no previous audit of the K84 payment process has taken place, an audit of cash management was conducted in 2006. It found a control framework for the management of cash was in place, however, there was a lack of compliance with policy and procedures, and weaknesses were found regarding supervision, segregation of duties, safeguarding monetary assets and monitoring.

The Audit Committee approved an audit of the payment process of the K84 Account Statement as part of the Three-year Risk-based Audit Plan for 2009–10 to 2011–12. The audit was conducted from October to December 2009.

1.2 Risk Assessment

A preliminary risk assessment, conducted during the planning phase, identified the following key risk areas for the K84 payment process:

Roles and Responsibilities

Roles and responsibilities may not have been understood or communicated to employees for the K84 payment process. Employees may not have the necessary knowledge and abilities to support their responsibilities.

Policies, Guidelines and Procedures

Policies, procedures, directives and guidelines to providing the direction, standards and structure within the K84 activities may not be clear.

Business Processes and Internal Controls

Internal controls for K84 activities may not have been identified and tested for operating effectiveness and K84 payment procedures may not have been executed properly to ensure that the manual K84 process is properly controlled.

Source revenue assessment and collection systems are not integrated and information sent between the two systems may not be controlled properly.

Monitoring

Monitoring procedures for the K84 process and accounting may not have been completed and documented to ensure: compliance, reliability of data, identification of problems and follow-up, and corrective measures.

1.3 Audit Objective and Scope

The objective of this audit was to provide assurance on the effectiveness and reliability of the payment process for K84 Account Statements.

The scope of the audit included the K84 payment process from the time goods are imported using account security numbers to the time payment is made or an invoice is sent to collection. It covered a random sample of payments over a three-month period. The auditors visited three regions during the audit: Quebec, Greater Toronto Area and Windsor–St. Clair. They are the regions with the largest volumes of transactions, with a total of $13.2 billion of all revenues collected.

Duties and taxes from the accounting of K84 forms amount to approximately 80% of all duties and taxes collected by the CBSA.

Accounts receivables and source revenue assessments will be the topic of future audits; therefore, they were excluded from this audit. The deposit of cash is excluded from this audit, given that it was covered during the cash management audit conducted in 2006.

1.4 Approach and Methodology

The auditors used the following approach in conducting the audit:

• Review of Finance Volume on the CBSA intranet, bulletins, memos, directives and other relevant documentation on K84 payment process and accounting;
• Conduct of interviews with Comptrollership, Operations and Admissibility branches on their roles and responsibilities and monitoring of the K84 payment process and accounting;
• Interview of regional management, regional finance officers, responsibility centre managers and staff;
• Selection and review of a random sample of K84 payments from June 2009 to August 2009, taken from a list of account security numbers selected randomly from the Customs Commercial System (CCS);
• Examination of K84 payments from June 2009 to August 2009, on a sample basis, to assess compliance, accuracy and completeness of K84 transactions, K21 Cash Receipts and K23 Invoices. This sample was taken during the on-site visits;
• Examination of the monitoring and reconciliation of K84s not paid at the end of each month, on a sample basis, to verify the completeness of the K84 payment process;
• Assessment of the control activities related to K84 payment process to determine whether they are functioning properly.

1.5 Audit Criteria

The audit criteria used as part of this audit are summarized in Appendix B.

1.6 Statement of Assurance

This audit engagement was planned and conducted in accordance with the Internal Auditing Standards for the Government of Canada.

2.0 Audit Opinion

The audit found that moderate deficiencies exist in the effectiveness and reliability of the payment process for the K84 Account Statement. The auditors noted some control issues and management attention is required to reduce the exposure to financial risks and provide reasonable assurance. These include accountability for the payment process at both the regional and headquarters offices; updating policies and procedures; and ongoing monitoring of the K84 payment process.

3.0 Findings, Recommendations and Action Plans

3.1 Policies and Procedures

The policies and procedures for the K84 process are a key control because they should explain to stakeholders how this process should function. The policies and procedures should be in a reasonable level of detail, available and understood by the different stakeholders involved in the K84 payment process. They should be clear on accountabilities, and roles and responsibilities, and include sufficient procedures for the payment process of K84, so management would have reasonable assurance that the Agency accounts for all taxes and duties that are owed or paid.

The audit conducted interviews of regional and headquarters management and staff, sample testing, and reviewed the applicable policies and procedures to assess if the policies and procedures were complete and understood by the individuals involved in the K84 payment process.

The policies and procedures for the processing and accounting of monthly K84 Account Statements were part of the Comptrollership Manual – Finance Volume, which was available to all staff. The Finance Volume includes, for example, procedures on how to process payments received. It was updated in 2006 to replace the Memorandum R17-1-5. However, Memorandum R17-1-5 was still being used in some regions because it provides a level of clarity and detail not available in the Finance Volume. For example, the Finance Volume does not specify how shortages and overages are accounted for and reconciled on a daily basis. The purpose of the policies and procedures in the Finance Volume were to provide guidance on the cash payment/deposit portion of the K84 process that was contained in the Memorandum R17-1-5.

The audit also identified the following gaps in the existing procedures:

• Monthly reconciliation of the K84 Account Statements of payments received and the confirmation of outstanding taxes and duties owed. Documented procedures would be a control to ensure that all outstanding taxes and duties owed are recorded on the monthly account statement.
• Process to forward invoices and receipts to the Canada Revenue Agency (CRA) collections and what documentation should be retained as evidence for monitoring purposes. Without a proper audit trail of receipts and invoices sent to CRA, there is no assurance that all information is sent to Collections. It is to be noted that CRA contacted regions on a regular basis to match invoices they were receiving with owed K84 payments.
• Daily reconciliation of the overages and shortages for each office. This is used to reconcile daily overages and shortages when a payment is made in a different port than the designated port for the account holder. See section 3.2 for more details on this procedure.
• The monitoring process for both headquarters and regions should be described in the procedures, including who should be doing the monitoring, how it should be conducted and who should receive reports.

In interviews with regional and headquarters management and staff, it was found that overall accountability for the K84 payment process was not clear. This was the situation at both the national and regional levels. This meant that the K84 process was operating without the adequate oversight so management was not receiving reasonable assurance that the process was working effectively. An attempt had been made in 2007 with the drafting of a Memorandum of Understanding (MOU) to clarify the roles and responsibilities of each branch, Comptrollership and Programs (formerly Admissibility); however, it was never finalized. Programs and Comptrollership branches believe that they are only accountable for a portion of the K84 payment process. The regions confirmed that no one was responsible, at the regional level, for the entire K84 payment process. As well, responsibility for the monitoring of the K84 payment process for payments made after due date (the back end of the K84 payment process) was not defined, and as a result neither the regions nor headquarters conducted monitoring. In 2006, monitoring was also identified as an issue during the audit of cash management. The management action plan included the development of a cash management accountability framework for March 2010. The audit reviewed the draft framework; however, it did not include the monitoring of the back end K84 payment process (payments made after the due date).

After the conduct of the audit, the auditors were informed that Comptrollership Branch was determined to be the Office of Primary Interest for the K84 control and reconciliation process.

Policies and procedures can be effective in providing management's expectations to staff. Without well-defined policies and procedures for the K84 payment process, staff may miss critical steps in the process and begin to adapt processes that may not necessarily be effective. In the case of the K84 payment process, the Agency could expose itself to financial risk.

Recommendation

1. The Vice-President of Comptrollership Branch, in collaboration with Programs and Operations branches, should update and communicate the policy and procedures to address the gaps identified, and clarify accountability and roles and responsibilities for the payment process for the K84 Account Statements.

Management Action Plan One	Completion Date
The Revenue Management Division (RMD) of Comptrollership Branch is in the process of reviewing and revising Chapter 1 and Chapter 10 of the Finance Volume of the Comptrollership Manual. These chapters contain the relevant policy and procedures for the receipt, processing and deposit of customs duties and taxes. The gaps identified in the existing procedures, including a clear definition of roles and responsibilities, will be considered and corrected in the revised version. Revenue Management Division anticipates having the chapters of the Comptrollership Manual revised by the end of September 2010.	September 2010
In addition, RMD is developing a Cashiers Tool document to detail the procedures for the receipt and recording of funds in the Port of Entry (POE). This document is intended to be a definitive source of procedures for the cashiers. Comptrollership Branch will be collaborating with Programs Branch and Operations Branch on these procedures. We will require their input as well as their cooperation in distributing this to the field. The planned date to publish the Cashiers Tool is the end of September 2010. Comptrollership Branch will be coordinating the procedure changes with Programs Branch to ensure the corresponding R-Memo's (R17-1-5) relevant sections are updated and distributed to all the regions and ports. This will be done to ensure consistency among all the procedure documents. Some ports rely on the R-Memo rather than the Finance Volume of the Comptrollership Manual. The update of the R-Memo should coincide with the update of the Comptrollership Manual.	September 2010
Comptrollership Branch will discuss with Programs & Operations branches the best method to provide training on these new procedures. A training and communication plan will be developed in the next three months (end of December 2010). Comptrollership Branch has clarified the responsibility for the K84 payment process with both Programs and Operations branches. Revenue Management Division is the central point of contact for the payment process. Currently, regional finance staffs conduct cash management review to ensure proper handling of deposits. The compliance to policies and procedures is an element of this review. The regional finance staffs provide copies of these reports to management of the Port, the regional director general, as well as to Revenue Management Division, Comptrollership Branch and Operational Performance Division in Operations Branch at headquarters.	December 2010

3.2 Compliance

It is the role of management at headquarters to establish policies and procedures for implementation by the regions. It is the responsibility of regional staff and management to be compliant with existing policies and procedures for the K84 payment process. Although some gaps were identified in policies and procedures (see previous section 3.1), compliance with the policies and procedures described in the Comptrollership Manual would ensure that most controls are applied consistently during the K84 payment process.

In terms of compliance, three control areas were tested: K84 Account Statements; the process to account for daily overages and shortages; and the month-end reconciliation process of payments received to cash deposits.

For the K84 Account Statements, they are produced at the end of each month for an account security holder. If a holder makes a payment, a receipt (K21) is issued. If a payment is not made or is only partially paid on due date, an invoice (K23) is issued to the holder, a shortage is recorded in the log book, and a copy is sent to CRA for collection six days after due date.

Regarding the process to account for daily overages and shortages, if the holder makes a payment to another port, the receiving port is to prepare an overage report (F88); record the payment as an overage on its overage/shortage log book; and fax the receipt (K21) to the port that issued the monthly statement. The port that issued the monthly statement will then record the payment to offset the previous shortage in the overage/shortage log book to ensure all payments have been recorded. A daily reconciliation of the log books should be sent to headquarters as part of the cash management framework where they use the results to reconcile bank deposits.

At the end of each month, offices should reconcile payments received with cash deposits as part of the cash management framework. This is a control that provides assurance that all monies received are deposited.

To test compliance, the audit conducted a walk-through in all three regions visited and examined a sample of 240 K84 transactions (80 transactions from each region) valued at $1.7 billion, and a national sample of 50 transactions from account security numbers valued at $886 million were drawn to confirm the K84 Account Statement was generated. The results of these tests are included in Appendix C.

With respect to the process for the K84 Account Statements, one region was fully compliant with the existing procedures and in all regions, the audit found that the K84 Account Statements were complete and that payments made on or before due date were supported by proof of payment. In the other two regions, the following issues were noted: accepting broker's proof of payment rather than proof from the receiving port (test #4); not completing an overage report for payments received for other ports (test #9); confirmation of sending invoices (K23) to collections (test #7); and invoices (K23) were not prepared in a timely manner (test #11). In addition, one region was not processing K84 Account Statements in a timely manner, as the statements should be produced and issued by the end of the month.

For the process to account for daily overages and shortages, the same region as above was fully compliant with the existing procedures. In the other regions, the log books to record overages and shortages were not completed properly nor reconciled (tests #24, 25 and 26) and there was no confirmation on file of sending invoices and receipts related to overages and shortages to CRA collections (tests 20 and 23).

The audit found that all three regions were compliant with the month-end reconciliation process. There was a reconciliation of monies received to bank deposits and to the system. The Comptrollership Branch has instituted a Cash Management Review (CMR) of the receipt and deposit of public money, which delegates the regions the responsibility to perform cash management reviews, in accordance with the checklists in the Comptrollership Manual – Finance Volume.

Interviews indicated that non-compliance to policy and procedures was due to the fact that regional staff did not always understand them or that they were not available. Furthermore, no monitoring or follow-up was conducted at a regional or headquarter level to check the K84 payment process. Monitoring is a core fundamental control and program processes should be monitored on a regular basis and results reported to the required management level to ensure compliance with the policies and procedures.

As well, the audit testing included a reconciliation of invoices (K23) and receipts (K21) against K84 Account Statements for the months of September and October 2009 for the three regions. There were no issues found in two regions. In the third region, the first month was reconciled and the audit found a discrepancy of $1.2 million in October.

At month end, the cash superintendent should have forwarded the partially paid or unpaid K84 Account Statements, with the broker's reconciliation, to the cashier, who in turn should have contacted the clients and processed any outstanding invoices (K23). The supervisors in the region did not keep a record of what information was given to the cashiers, and no reconciliation was conducted of the total invoices (K23) and receipts (K21) by either the supervisor or the cashier against total duties owed (K84). Therefore, the region was not reporting all amounts invoiced or paid after due date and monies owed could not be assured. After the conduct of the audit, the region stated that they amended their process and that the reconciliation was taking place.

Best practices were found in one region, whereby the region produces two monthly reconciliations for the headquarters Account Security Unit, including a spreadsheet of outstanding liability of duties, taxes and penalties owed by importers, as well as a spreadsheet of non-sufficient funds cheques received from importers. These spreadsheets allowed the region to keep track of all K84 Account Statements payments, including those made after due date.

Recommendations

2. The Vice-President of Comptrollership Branch, in collaboration with Programs and Operations branches, should develop and implement a process to monitor compliance of policy and procedures at both the regional and headquarters levels.

Management Action Plan Two	Completion Date
As a result of the Cash Management Audit, Revenue Management Division implemented a Cash Management Review process in the fall of 2009. This process reviews the management and deposit of revenue in each Port on a quarterly, annual or tri-annual basis. The frequency is determined based on the amount of revenue collected at each Port. The regions complete these reviews and forward the results and remediation plans to RMD in Comptrollership Branch and the Operational Performance Division in Operations Branch. To ensure that the above recommendation of this audit and the changes in procedures are being complied with, the Cash Management Review checklists will include an additional check to ensure the total of the Client Monthly Statements (K84s) equal the Client Receipts (K21s), plus the invoice of outstanding or partially paid monthly statements (K23 Accounts receivable invoices), plus the overage/shortage report (F88). The Cash Management Review checklists will be modified in the next three months (end of December 2010).	December 2010
The ability to monitor the receipt and recording of revenue will be improved with the implementation in fiscal year 2012/2013 of the Accounts Receivable Sub-ledger (ARL). The ARL project will allow better access to revenue and receivable data. As a result increased statistical sampling and monitoring will be available to regional and headquarters staff. The gaps identified in the current process and their remedies will be identified and implemented into the ARL processes.	2012–2013
Comptrollership Branch will develop and implement a procedures review audit plan to ensure compliance with the policies and procedures. To accomplish this, RMD is considering sporadic visits to random Ports in each region every year to evaluate the compliance with policies and procedures. This plan will be developed in conjunction with the revision of Chapters 1 and 10 of the Finance Volume (completion date end of September 2010).	September 2010

3. The Vice-President of Comptrollership Branch, in collaboration with Programs and Operations branches, should follow up with the responsible region to ensure that the October 2009 discrepancy of payments received and amounts outstanding was resolved and that the reconciliation is taking place on an ongoing basis in all regions.

Management Action Plan Three	Completion Date
Revenue Management Division has been working with the responsible region and port since December 2009 to resolve the discrepancy of payments received to amounts outstanding that was identified by the audit. The region and port have been sharing information and ideas with RMD to resolve this issue. As stated in Management Action Plan 2 above, RMD will add this requirement to match the Monthly Account Statement (K84s) with the client receipt (K21s) and client overdue invoices (K23s) in the Cash Management Review checklist. RMD is providing training, guidance and advice. RMD is currently working to assist the port to match the client receipt (K21s) and client overdue invoices (K23s) to the Monthly Account Statements (K84s) sampled. We have requested from the Port, the K10 information for the selected day, all the information provided to the auditors. Reports from the Revenue Ledger and the Customs Commercial System have been created and are being analyzed in conjunction with the K84, K23 and K21 data. RMD is awaiting the copies of the Brokers Recap Sheet (summary of shipments that were partially paid or not paid from the K84 statement). This information will be used to aid the Port in determining the cause of the discrepancy. RMD anticipates resolving this issue by the end of September.	September 2010
As stated in Management Action Plan 2 above, RMD will add this requirement to match the Monthly Account Statement (K84s) with the client receipt (K21s) and client overdue invoices (K23s) in the Cash Management Review checklist.	December 2010

Appendix A – Flow Chart of the Payment Process of K84

1. Importation of goods by account security holders: Importers and brokers can obtain release of commercial goods from the CBSA by presenting properly completed documents (Form B3) or by electronically transmitting release information to the Agency through the Accelerated Commercial Release Operations Support System and accounting information to the Customs Commercial System (CCS).
2. Issuing of Daily and Monthly Account Statements (K84): Most commercial clients have "end-of-month" payment privileges either by posting security themselves or through use of the broker's account security. To assist clients, daily and monthly K84 statements, which list duties and taxes and other amounts owing, are issued to each account security number. The monthly K84 statement is issued on the second last business day of each month and summarizes the daily K84s. Payment is due on the last business day of the month.
3. Payment by account security holders: There are four scenarios that can occur for account holders to make payments: full payment of either a daily or monthly K84, payment for specific transactions, lump sum payments, and partial payment of a monthly K84. For each payment scenario, different procedures are applied by the CBSA cashier.
4. Non-payment by account security holders: If payment is not received by the CBSA by the end of the month, an invoice (K23) is issued to the importer of record, a copy is sent to Canada Revenue Agency (CRA) for collection purposes, and the amount is booked into the Temporary Accounts Receivable System. Note: These invoices are held at the CBSA office for five days plus current, before being sent to Collections to allow time for payments made at other offices across Canada.

Note: Shaded boxes in the diagram below identify key controls in the process.

Appendix B – Audit Criteria

The audit criteria used for the Engagement Phase were:

Line of Enquiry	Audit Criteria
Compliance with policies and procedures	Regional procedures are in compliance with CBSA policies and procedures for K84 payments. Roles and responsibilities are clearly understood by management, financial officers and staff involved in the K84 payment process. K84 payment process is monitored regularly and results are documented.
Payment process for K84 Account Statements	Payments for K84 Account Statements are processed and recorded accurately. Control activities for K84 payments are performed and documented. Form K21, Cash Receipts, are prepared, controlled and processed properly for K84 payments made to each account. Form K23, Invoices, are prepared, controlled and processed properly for each K84 amount not paid or owing.

Appendix C – Summary of Test Results

Key Control Areas	Compliance (number of applicable files)		Percentage Compliance
REGIONAL SAMPLE TESTING:	Yes	No
K84 Monthly Statements
1. K84 statements stamped as "fully paid" for full payment	168	3	98%
2. K84 statements stamped as "partially paid" for partial payment	24	13	65%
3. Proof of payment for payments made in other ports	31	0	100%
4. Non-acceptance of a copy of broker's for proof of payment	12	19	39%
5. K23 reference noted on K21 for K23 payment	20	0	100%
6. Shortage report prepared for partial payment/non-payment	37	0	100%
7. Confirmation of K23 sent to Collections	9	13	41%
8. K21 completed for K23 payment including payment made before K23 issued	33	0	100%
9. Overage report for K23 payment and payments for other ports	11	21	34%
10. Shortage traced to log book	37	0	100%
11. K23 completed in timely manner	18	7	72%
Month-End Reconciliation – Payments Received/Cash Deposits
12. Updating system to "Paid" status	90	0	100%
13. Contacting the clients for payment or proof of payment	24	0	100%
14. F88 shortage report for non-paid K84	25	0	100%
15. Month-end reconciliation of payment received and balance owing	6	0	100%
16. Reconciliation of K84 revenue per system report to bank deposit	6	0	100%
17. Verification of K10 worksheets by the cash supervisor	6	0	100%
Log for Daily Overages/Shortages
18. K21 completed for payment of shortage	40	0	100%
19. K23 completed for shortage not paid	30	1	97%
20. Confirmation of K23 sent to Collections for daily overages/shortages only	10	21	32%
21. Overage matched to an outstanding K84	54	0	100%
22. K21 completed for overage	60	0	100%
23. Confirmation of completed K21 for K23 sent to Collections	10	9	53%
24. Log completed properly	2	4	33%
25. Log reconciled to zero	2	4	33%
26. Log sent to headquarters	4	2	67%
NATIONAL SAMPLE TESTING:
1. Monthly K84 Account Statement generated	50	0	100%
2. Proof of payment for partially paid K84 at month end	24	0	100%
3. Proof of payment for fully paid K84 at month end	25	0	100%
4. Proof of payment for interim payment of K84	6	0	100%
5. Proof of payment for payments made in other ports	23	0	100%
6. K23 completed for outstanding K84 balance	23	0	100%
7. Reconcile with K84 monthly total (K84=K21+K23)	50	0	100%
8. K84 paid at month end reported on a K10	50	0	100%

Appendix D – List of Acronyms

Acronym	Description
CBSA	Canada Border Services Agency
CCS	Customs Commercial System
F88	Overage/Shortage Report
CRA	Canada Revenue Agency
K21	Cash receipt
K23	Invoice
K84	Statement of account used for the payment of duties and taxes on imports
MOU	Memorandum of Understanding
POE	Port of Entry
RMD	Revenue Management Division