Physical and Substitution Checks on Export Refund Consignments
European Court of Auditors, 2007
- Officials need to verify entitlements for export subsidies
- ‘Physical checks, carried out by the Customs services, are designed to verify that the goods correspond in description, quality and quantity with the export declaration.’
- ‘In addition, substitution checks comprise a visual check that goods certified as leaving the EU are the same as those originally loaded and declared. They are carried out at the points of exit from the EU.’
- Whilst the Member States had respected the requirement to physically check 5 % of the export declarations, as required, there were weaknesses in the methodologies applied which reduced, significantly in some cases, the effectiveness of these physical checks.
- Physical checks carried out at the place of loading (often the exporters own premises) were systematically carried out at the start of loading and had become predictable to the extent that they no longer fulfilled the requirement to be without tacit prior warning.
- The method of selection of export consignments for checking used in the Member States resulted in a relatively high number of low value and low risk exports being checked.
- The method used to check bulk shipments of goods, which often carry a high value of refund, did not
ensure that the entire shipment was verified through a combination of physical and documentary checks with the attendant risk that refunds are unduly paid.
- A good reminder of some lesser-known disadvantages of export subsidies: their administration costs and fraud.