MBA 433

MANAGEMENT INFORMATION SYSTEM

GROUP 3

MAJOR PROJECT

WHAT MANAGEMENT CONTROL BENEFITS EMERGED WHEN

IMPLEMENTING AND USING MODERN IT

(BEYOND THE WHAT, WHY AND IN WHICH CIRCUMSTANCES)

MENZIES SAMUEL S/N-S: S86130360

JOHN ALILEE S/N-S: 94001558

ARIVAKISATI BOVORO S/N-S: 76016970

BEN LEESHI S/N-S: 11072274

NEOMAI TUISAWAU S/N-S: 88082520

HANNAH LIUNAKWALAUA S/N-S11042869

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Table of Contents
1. Acknowledgement
2. Introduction
3. Organization Overview
a. History
b. Vision Statement
c. Mission Statement
d. Values
4. Organization Structure

5. Processes Prior to Information Technology System Upgrade

6. Management Control Issues – Old System
7. The Strategy
8. Introduction of the New System (ASYCUDA)
a. General Office User Module
b. Specialist Office User Module
c. System Maintenance and Reporting Modules
d. Implementation and Control
9. Management Control Features in ASYCUDA
10. Direct Trader Input Processes and Benefits
11. Conclusions
12. Acronyms
13. Bibliography Comment [AP1]: √√√√√√√√√

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1. Acknowledgement

Group 3 would like to take this opportunity to thank the Director of Customs and
Inland Revenue and his staffs for all their valuable assistance provided through a
power point presentation and face to face interview to undertake this research and
compiling the information to form the primary data for the group‟s project in
delivering what management control benefit emerged when implementing and using
the ASYCUDA system. The presentation assisted us in making relevant decisions in
order to construct a report on the Direct Trader Input (DTI) at the Department of
Customs & Inland Revenue, outlining the problems faced, the solutions made by
management and the results and management issues raised. We also extend our
appreciation for the facilities graciously provided to be able to complete this project.

In addition, Group 3 acknowledges the presence of Dr Acklesh Prasad, facilitator for

MBA 433, Management for Information Systems, his relevant seminars, presentations
and useful information on Information Technology to support our project and his
continued advice and guidance. Comment [AP2]: √√√√√√√√√

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2. Introduction

The purpose of this paper is to review “What management control benefits emerged
when implementing and using modern IT in the Department of Customs and
Inland Revenue – Beyond the what, why and in which circumstances”. Comment [AP3]: Ok good to have at the outset

In carrying out this review, the linkages amongst the following are examined;

 Mission, goals and objectives of the Customs and Inland Revenue

 An outline of the old management controls used at the Customs and Inland
Revenue
 The introduction of IT to improve monitoring, performance and
comparing to the old manual system and processes
 The recommendations made by management to meet organization
objectives
 The results implemented

This report will conclude with a summary of the management control issues and the
linkages that Information Technology brought about in how the department carried out its
functions by aligning IT strategy with business objectives. Comment [AP4]: √√√√√√√√√

4
3. Organization Overview

A. History
The brief history covers five decades transformation of Department of Customs and
Inland Revenue. In 1960 Customs having a role of revenue collection, was instituted
under the Treasury department of the British National Service. As the demand and
supply of goods and services increased, there was a need to establish a fully
functional Customs organization.

In 1972 the Customs department came into existence under the French National
Service. This department was known as “La Douane Des Nouvelles Hebrides” After
independence in 1980, the department was renamed as the Department of Customs
and Taxes.

As part of the Comprehensive Review Program (CRP), which saw the introduction of
VAT, in 1998, the department was further renamed as the Department of Customs
and Inland Revenue. This restructure exercise saw the department increase its
workforce to 110 to reflect the department‟s new responsibilities. The Customs Act
was enacted in 1999, amended in 2003.

B. Vision Statement
To develop administrative and technical areas on revenue and security so as to
strengthen our national aspiration

C. Mission Statement
The DCIR is responsible for revenue collection in accordance with the government‟s
fiscal policies. Customs also has the role of protecting the nation‟s borders from the
importation of prohibited and restricted items and trade facilitation.

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 D. Values
DCIR had adopted the following attributes as its values:

 Respect
 Teamwork
 Fairness
 Responsible
 Quality
 Honesty
 Professionalism

4. Organization Structure
The following diagram outlines the DCIR organization, which illustrates a hierarchical
structure that tends to be formal and highly specialized in its functions. Comment [AP5]: √√√√√√√√√

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 Comment [AP6]: source

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5. PROCESSES PRIOR TO INFORMATION TECHNOLOGY
SYSTEM UPGRADE Comment [AP7]: You could have noted a few
things on IT, IS, Management Accounting and
Control Systems before this section.
Vanuatu Customs services are part of every single international transport operation and
trade transaction entering or departing Vanuatu. They are in daily contact with traders
and they enforce not only financial and trade-related regulations, but also many other
laws, restrictions and prohibitions on behalf of other governmental agencies. A simple
standard Customs clearance procedure that was used during the earlier days of customs
can be shown with the flow diagram given below.

Submissio Deposit and Selection

n of the registration process for Payment of Release
cargo of the goods the Verification customs authorization
manifest. declaration verification debts

Before the reform in 1998, the processes in the Department of Customs and Inland
Revenue were basically manual. Systems that were in place were not inter-connected and
were generally statistical systems or systems that provide support information for use of
authorized groups (e.g. the Valuation Division system, and the statistical data system).
That is, they collected data and little else. The process of importing goods into Vanuatu
followed a traditional manual system of cargo reporting by means of the cargo manifest,
registration of declaration of goods, goods verification, payment of customs debt, and
release authorization.

Deposit and registration of the goods declaration

Importers and Exporters would manually complete their goods declaration and call at an
appropriate Customs Office to deposit their declaration forms at a customs Long Room.
A Customs Officer would physically check the declaration form to verify that the
declaration has been properly completed by the importer or the importer‟s agent. The
declaration had to be in various applicable forms and completed in a manner approved by
the Director of Customs and would include the following:

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 a) the name and address of the importer;
b) the name of the overseas supplier;
c) the country of origin of the goods,
d) the quantity of goods in the units of quantity Customs may specify;
e) a description of the goods, including the classification of the goods according to
the Vanuatu Tariff or other coding system and may be used for the purpose of
customs laws;
f) the duty of tax payable
g) a certificate by the person making the declaration certifying that the information
supplied was true and correct.

The Customs Officer would reject the declaration if it did not contain all required
information, including any other document(s) related to the importation of the goods. If
the declaration was rejected, the goods were considered as „undeclared‟ until a new
declaration was lodged and accepted by Customs.

If the declaration was accepted, it was forwarded to a verification officer who verifies by
manually calculating the amount of duty and taxes declared to determine its correctness.
The officer upon accepting the declaration would register the declaration and issue a
registration number to the person who made the declaration.

Goods selection for verification/examination

A customs officer had the jurisdiction to decide whether or not customs intervention by
way of a physical examination was required on the imported goods. The examination
would involve:

a) opening the packages; and

b) weighing and measuring of goods; and
c) the taking of samples as necessary to confirm the details of a declaration.
d) the importer met all the costs involved in an examination by customs and had to
supply the labor or equipment required to enable the examination to be carried
out.

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 e) customs would not incur any liability for damage in any examination
f) if an importer requested examination to take place at any other place or any other
day or time the customs officer would examine the goods and charge the importer
a prescribed charge.

Payment of customs debt and taxes

Where duty and tax was payable on imported goods, payment would be made directly to
a customs cashier who would receive the payments, register the payments and issue a
receipt printed from a standalone cash register machine.

The payment process was simply to keep an accounting record of the amount of duties
and taxes received and receipted against the registration of the declaration of the goods.

Data processing

After going through the declaration processing path in the Customs Long Room the
declaration forms were compiled each day and forwarded to the data processing section.
Designated officers who had some basic computer skills sat alongside a computer and
entered the relevant international trade data from the goods declaration into a statistical
system.

Whilst the old system worked well, given the level of technology at the time, it was open
to abuse by declarants and from within, as well. Comment [AP8]: Description of the old system -
OK

6. MANAGEMENT CONTROL ISSUES WITH THE OLD SYSTEM

The former work environment provided very limited or no control over corrupt practices
of bribery, extortion and blackmailing. Vanuatu importers and formal sector operators
regularly complained of being victims of dishonest competition from smugglers who did
not pay customs duties.

Corruption was highly established and there was no suitable system of trailing and
identifying customs officers who were involved in corrupt cases. The lack of supervision
and control was considered an element of opportunity for corruption.
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Customs officers receiving the goods declarations had the autonomy and power to make
decisions on of actions to be taken during the declaration processing circle. The decisions
made by officers were largely influenced by importers who had a face to face interaction
with officers at the time the declaration was being processed. The situation invited the
element for opportunity to bribe customs officers to allow goods to be released without
customs examination or even worse without the payment of duties and taxes. Comment [AP9]: √√√√√√√√√

There was very little control mechanism in place to audit the decisions the officers were
making and for that matter it was also impossible to determine the reasons behind those
decisions.

The decisions taken were not consistent and at times were very personalized. Officers
kept their own black lists of importers and had them targeted for customs interventions.

The declaration of goods processes took as long as a week before the goods got cleared
from customs control. A process that rose complains as it was slowing down business and
costing the importers time and money. Comment [AP10]: √√√√√√√√√

In a manual environment the use of paper was compulsory and it was an obligation under
the laws of Vanuatu for importers and exporters to produce written declarations when
clearing their goods from customs.

The Customs Long Room was often jam-packed by customs clients who had to
physically attend to a customs office to lodge their import of goods declaration. The
whole process was time consuming and very tiring and sometimes took a week before
goods got cleared.

In summary there was a definite gap in the laudable aims and objectives of the
department and what was happening. What was needed was an enabler that assisted the
achievement of the department‟s strategic objectives. Comment [AP11]: √√√√√√√√√

11
7. THE STRATEGY

In 1998 as part of a Comprehensive Reform Program the Government of Vanuatu

decided that the Department Customs should embark on a major reform program to
modernize and automate its systems and procedures, adopt best customs practices.

A National Team consisting of a project manager and five local customs experts were
appointed to study and identify areas within customs that potentially needed some
changes. The National Teams report highlighted the following:

1. Vanuatu Customs procedures should be made simple and consistent and easily
accessible. The procedures should be based on simplified and standardized
international Customs procedures and should be framed as to reduce to a
minimum the inappropriate exercise of discretion.
2. Implement a system for customs data collection to assist executive and managers
to carry out constructive decisions.
3. Procedures and processes should be automated (including EDI or DDI) and seen
as a powerful tool for:
a) collecting international trade data;
b) proper accounting on revenue collection;
c) direct data input (DDI) by declarants to process their goods declaration at the
comfort of their office, home, abroad internationally or anywhere globally;
d) paperless and queue less environment;
e) reducing the opportunities for malpractice and protect officer‟s integrity;
f) Utilizing such measures as the strategic isolation of functions, rotation of
assignments and random allocation of examinations among Customs officers.

An outcome of this report was the decision to acquire the automated system for Customs
data (ASYCUDA). Comment [AP12]: √√√√√√√√√

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8. Introduction of the new Customs System (ASYCUDA)1

ASYCUDA is a computer software package developed by UNCTAD. It is a management

tool that can assist with the modernization and reform of customs processes, improve
trade facilitation and reduce cost of imports, allow for better management of revenue
collection and accounting and will ensure the accuracy and availability of external trade
statistics. For Vanuatu it promised to meet all the strategic objectives of DCIR.

The promised benefits for Vanuatu were:

(1) To assist modernization and reforms, by supporting both facilitation of legitimate
trade and efficiency of Customs clearance controls.
(2) To implement harmonized codes, international standards, simplified procedures
etc. The expected basic outputs are a uniform application of the Customs law and
regulations, a better command on the collection of duties and taxes, and the
availability of timely and accurate statistics.
(3) To meet the requirements of all Customs operations worldwide: A unique,
parameterized system, which brings a vast economy of scale, allowing UNCTAD
to propose very cost-effective solutions. Country-specific requirements must be
fulfilled provided they are not incompatible with objective 2. In addition, any
specific enhancement of ASYCUDA must maintain the functional and technical
coherence of the system.
(4) To be provided at no cost. The implementation of the system is carried out
through UNCTAD Technical Assistance projects, comprising general support
activities, training, documentation and/or specific product developments on a
cost-recovery [non profit] basis. Comment [AP13]: √√√√√√√√√

1 ASYCUDA: Automated System for Customs Data

13
(5) That products should match highest quality standards of the industry. In order to
do so, the ASYCUDA software will make use of latest reliable technologies
available on the market.

The version used by the Customs Department in Vanuatu is ASYCUDA++, launched in

1999, and came on line in Vanuatu in 2001. This version has various functionalities that
enable it to serve the needs of the Customs Department. These functionalities are grouped
into three main areas:

A. General Office User Modules

B. Specialist Office User Modules
C. System Maintenance and Reporting Modules Comment [AP14]: √√√√√√√√√

A. General Office User Modules

This module had several other sub-modules such as the

The Customs general office module (MODCBR), which catered for normal customs work
such as data entry, (data capture and validation), calculations, messaging and controls,
storage of data and declaration registration, selection for inspection, inspection
scheduling and reporting, assessment and delivery.

The general office module for Customs brokers, (MODBRK) enabled the preparation and
presentation to Customs by „Direct Trader Input‟, a significant development in customs
normal transactions in that it allowed customs brokers to do a lot of work from their own
offices, increasing efficiencies.

B. Specialist Office User Modules

Functionalities in these modules integrate and support the processes in the General
Officer User modules and include the following:

I. MODCAR – Carrier or manifest module. This module dealt with cargo and
transport documentation particulars and facilitated the recording, and movement
of goods.

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 II. MODACC – Accounting module. The module accounted for all duties and
taxes calculated through ASYCUDA declaration processing. Non-declaration
cash collections - such as fees or charges - are also handled, as well as
reimbursements or refunds.

Customer accounts may also be set up by Customs, allowing declaration

clearances (i.e., payments) against authorized credit levels or prepaid amounts.

III. MODSEL - Selectivity Controls module. This module allows the system to
determine the level of attention or type of inspection carried out on imported
goods, against pre-determined criteria that the Department changes from time to
time. There are four processing lanes determined by color:

1) Red lane for physical check;

2) Yellow lane for documentary check;

3) Blue lane for the option of post import/export audit; or

4) Green lane for release - no inspection

IV. MODTRS - National Transit module

This module caters for transshipment of international goods for example

between Port Vila and Santo.

V. MODSDI – SAD refers to Single Administrative Document

C. System Maintenance and Reporting Module

This module runs the ASYCUDA++ system on a day-to-day basis.

I. MODCHQ - maintains the system‟s reference tables and enables access to

statistical data.

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ASYCUDA FLOW CHART Comment [AP15]: Source??????

Trade
Data

Goods
Broker Assessment Cashier Release cleared for
Green notified notice notice delivery
online

Trade Rev. Acc. Excise

Modify
Data Budget Imp.
Goods ceased, SAD
area Duty/Vat
abandoned or entry
unclaimed

(Not in Asycuda) Physical Exam OK

Modify Checks

Sold at
Auction Yellow Broker SAD not Selectivity Documents
OK
notified assessed officer Checked

Receipted
in Asycuda Physical Modify
OK OK
examination SAD
entry

Examination
Trade
Statistics
Broker
Draft
Red notified Selectivity
assessment
inline officer

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9. MANAGEMENT CONTROL FEATURES IN ASYCUDA

MODCBR refers to the Customs and Brokers Module in the ASYCUDA system
including external use of Direct Trader Input (DTI) by brokers and traders to process
goods declaration. The processes and control mechanisms of DTI will be examined in
detail as it highlights management control and accountability that the system
provides.

AYSCUDA enables the declarants to complete SAD from their premises without
having to come to the department. ASYCUDA gives them direct access to Customs
data base wherein they can process their declaration without human intervention.

Customs allows licensed brokers to access ASYCUDA by issue of unique user

passwords and identification codes. The system enables the customs department to
extend its services internationally while maintaining the high level of management
control and accountability .For example, through the web, an importer is able to clear
their goods from anywhere in the world.

An important control feature is the automated selectivity profile on importers or types

of goods which enables the system to control and select goods for further customs
examination without the human input. The system automatically selects goods to;
 green-goods released
 yellow-document check
 red-physical inspection of goods required

Another important control feature of the system, once a document check or a physical
inspection of goods is required, the system randomly selects the customs officer to
examine the goods. Comment [AP16]: √√√√√√√√√

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The system provides a self assessment environment where the broker is entrusted
with the responsibility to ensure that the SAD is completed correctly.

Provided the SAD is completed correctly, the system enables the processing of goods
to be cleared within one day, compared to the past, where this process would take a
minimum of three days.

If the broker fails to fill the form correctly, the system will reject the declaration. The
management control features of ASYCUDA will ensure that controls such as those
listed below are correctly entered.
 country codes
 currency
 mode of transport
 declarant code
 importers code
 exporters code
 tariff classification of goods
 value of goods being declared
 exchange rates
 unit prices
 unit measurement

Another distinct feature of the system is that it aligns the business objective of
facilitating trade and ensuring effective revenue collection by releasing seventy
percent of the goods without further customs intervention; however as a control
mechanism the system generates and stores records for auditors to audit at a later
date. The system maintains accurate reports for audit purposes. Comment [AP17]: √√√√√√√√√

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10. DTI PROCESSES AND BENEFITS

ASYCUDA‟s security controls limit access to authorized users. Declarants with DTI
authorization are restricted to accessing only their own Customs declarations.
Customs Administrations may choose to limit the range of functions made available
within the Customs Broker module.

The Declarant uses the transaction details, together with the reference tables of the
ASYCUDA++ software, to prepare the declaration. „Reference tables‟ are part of the
DTI software; all codes, (such as tariff, countries and currencies), tax and calculation
details, are on the „client‟ computer. The new declaration can be prepared, checked
and saved on the Declarant‟s DTI computer, ready for presentation to Customs.
Connection to the Customs server is NOT needed for these processes. When the
Declarant is ready to give the declaration to Customs, the DTI client computer is
connected to the Customs server.

For connection, security controls ask for the Declarant‟s assigned user name and
password. After connection, the server first checks that the client PC‟s reference files
are current. If not, the server transfers an automatic update of non-current files to the
client PC. The system assigns an identifying number and notifies the status of the
declaration. The Declarant can then „give‟ the declaration to Customs, by asking for
Registration or Assessment of the electronic document. On receiving the declaration
transmission from the DTI Declarant the declaration is registered. Progress on further
processes, (such as assessment, payment and release), are determined by the controls
set by Customs.

The Declarant has access to his or her own declarations held on the Customs server: -

 Declarations can be viewed at any time and status checked

 Lists of previous declarations can be prepared
 Declarations can be brought to screen and printed (or to become the basis of a
new declaration).
 Manifest details maybe viewed

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 Transit movements can be initiated

For Declarants, DTI means convenience, time and cost savings, including:

 Quicker service for clients, with lower costs

 Freedom to work outside of Customs normal hours of business
 Reduced traveling, delays and queues at Customs
 Easy access to own declaration data held within the Customs computer
 Access to up-to-date trade related information
 The opportunity to integrate with own internal systems

For Customs DTI means;

 Increased efficiencies
 Reduced costs and greatly improved service delivery
 Frees resources, by relieving Customs of necessary but unproductive work of
data input.
 Spreads workload and reduces demand at peak times
 Reduces data input errors and encourages a „self-assessment‟ environment
 Facilitates trade and the achievement of organizational objectives, without
compromising Customs controls Comment [AP18]: √√√√√√√√√

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 11. CONCLUSION

The ASYCUDA System as acquired and used by the Vanuatu Customs Department
enhances the Department‟s management accounting and control capacity in a general
way but also with particular examples.

In general, the ASYCUDA System enables the customs department to automate and
therefore streamline many of its processes. Completions of forms online by declarants,
using the DTI module provides an example of how the ASYCUDA System reduces time
spent on declaration of goods imported and management decision can be made in real
time as to follow up processes necessary.

The specific management accounting and control benefits that the ASYCUDA system,
particularly the DTI module, has for the Vanuatu government customs department, apart
from the others identified in this essay, include:

1. User identification codes – the ASYCUDA System as a whole, but more

particularly, the DTI module is established in a way that each and every entry
onto the system is tracked and accounted for because each internal and external
user is identified by a code. This facilitates the capacity to identify each and
every user of the system and management can therefore be able to:
a. Identify which user made individual or group entries
b. Identify which external user [e.g. Trader] made each entry
c. Be able to track entries so that if there is any inconsistency with policy or
consequences, management will be able to identify user very fast

2. Goods identification codes – the identification of goods by codes and the

consequential decisions as to tax rates and quality control is a good example of
how the system helps management with accountability and control. Each good is
coded and when a particular code is entered into the system by the declarant using
the DTI module, the system automatically works out the necessary compliance
requirement. The compliance requirements vary between goods and quality of
goods, and are required by law or policy. The various levels of predetermined

21
 responses from the system ensures consistency, accountability and effective
management. This accountability and management control tool has the effect of:
a. Making the system of taxation consistent and accurate;
b. Making management accountable;
c. Making the system reliable;
d. Making the system provide real-time reports to support decision making;
e. Making the system less dependent on human discretion;
f. Making the system less prone to human error type of mistakes;
g. Making the system more effective in revenue collection.

3. Workforce allocation and management – when the ASYCUDA system,

particularly the DTI module, streamlines the transaction processes, it adds to the
efficiency of the customs department declaration of goods system. This allows
management to roster and allocate staff to cater for low and peak times, therefore,
optimizing the productivity of staff at current levels.

4. Document management – the ASYCUDA system allows for the storage and
selective retrieval of documents and reports. This gives the added benefit for
management accountability because all documents generated in and by the system
are stored so that with relevant control and authorization and access, documents
can be traced and retrieved for management decision making.

5. ASYCUDA as a system has worked well in enabling the DCIR meet its strategic
objectives outlined. Its ability to make use of the data available to it through the
use of the relational databases has turned the collection of data from being a static
activity into one that uses the information for planning and control purposes.
Without ASYCUDA, the level of revenue collection would not have increased as
currently experienced and the level of corruption which was rampant in the past
has been greatly reduced. Minimising the human element and passing the
responsibility and accountability to Traders „to do the right thing, the first time‟
has greatly enhanced the DCIR‟s ability to perform its functions whilst meeting

22
international standards and leveraged the DCIR activities into the forefront of
advances in the use of information technology in amongst the government
departments in the country. Comment [AP19]: √√√√√√√√√

Comment [AP20]:

This is a reasonable effort.

You have made an effort to demonstrate how

introduction of IT system helps in the management
accounting and control functions.

A commendable effort.

BUT

Your discussion on the benefits of the new system

could have been a bit more critical.

You do cover a lot of important issues, but rather a

bit plainly.

Referencing is problematic. There are very few

instances of in-text referencing.

OVERALL

A good effort

MARK - 24/30

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 12. Acronyms and Glossary

DCIR Department of Customs and Inland Revenue

DTI Direct Trader Input

DDI Direct Data Input

EDI Electronic Data Interface

ASYCUDA Automated Systems for Customs Data

SAD Single Administrative Document

Glossary

Declarant - Someone who declares goods for customs purposes

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13. Bibliography

1. Lecture notes, Dr Acklesh Prasad, 2010

2. www.asycuda.com

3. ttp://www.asycuda.org/asyworld/introduction.htm (26/10/2010)

4. http://www.eulex-kosovo.eu/en/news/000230.php -
o
5. UNCTAD Press release N 40 TAD/INF/PR40 - 26 March 2002

6. DCIR power point presentation, 20th October 2010

7. Face to face interview with Director DCIR Mr Ben Leeshi, and Customs Analyst Mr
George Pakoa

8. Customs Act No 15 of 1999

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