Strategy Plan for Auditing the Trading Companies (Agents) of Fish and Fisheries Products

1.Objectives

According to available information from the Food and Agriculture Organization of the United Nations(FAO),for some important fisheries,catches resulted from Illegal,Unreported and Unregulated fishing(IUU) fishing accounts for up to 30% of their total catches. In addition,researches also indicate that the economic loss caused by IUU fishing is roughly estimated between 10-23 billion US dollars per year. Combating IUU fishing is therefore one of the key factors to enhance food security,reduce hunger and poverty and maintain sustainability of resources.

Taiwan’s distant water fishing fleets operate in the three major oceans and the fish and fisheries products are mainly for export. Among which,except that the species of tuna frozen at ultra-low temperature is directly sold to Japan,most of the catches are exported directly from foreign bases to Thailand,South Korea,Mainland China,Vietnam,and the United States,or is further re-exported to other market countries. Such pattern of marketing and distributing the fish and fisheries products,especially those transnational trades conducted abroad,has substantially increased the difficulty for fisheries management authorities to monitor the processes of marketing and distribution of fish and fisheries products.

In view of that the fisheries products by means of transnational trade may be bought from multiple different countries,in order to prevent fish trading companies(agents) from selling illegal catches under the name of legitimate Taiwanese or foreign flagged fishing vessels,it is necessary to establish an auditing mechanism to verify the origins and whereabouts of the catches bought by fish trading companies(agents),to ensure that all the catches in transaction are caught by authorized fishing vessels in a legitimate manner,so as to prevent IUU catches from entering into markets.

2. Auditing Targets

(1) Any fish trading agent has applied and been granted with approval pursuant to the Regulations on the Management of Fishing Vessels and Crew in Foreign Fishing Bases.

(2) Any fish trading company(agent) registered to the Taiwan Government pursuant to the relevant law and regulations,sells or is assigned to sell the catches or fisheries products of Taiwanese distant water fishing vessels,especially those fish trading(companies) agents engaging in transnational transactions.

3. Audit Squad Unit

The team will be constituted by relevant personnel assigned by the relevant divisions and offices of the Fisheries Agency,Council of Agriculture(thereinafter referred to as “the Fisheries Agency of this Council”). If deemed necessary,certified public accountants,logistics specialists and relevant experts may be commissioned to render assistance.

4. Auditing Criteria

Criteria for auditing fish trading companies(agents) shall include but not limited to the followings:

(1) Fish trading companies(agents) shall have sufficient knowledge to the relevant fisheries law and regulations:Such law and regulations include those law and regulations promulgated by Taiwanese fisheries authorities and fisheries authorities of the relevant flag States,conservation and management measures adopted by the regional fisheries management organizations and the relevant law and regulations promulgated by the relevant market States(such as the European Union,the United States and Japan).

(2) Fish trading companies(agents) shall establish standard operating procedure(SOP) for the purchase and sale of catches or fisheries products,to ensure themselves not to purchase or sell IUU catches or fisheries products,and shall implement on the SOP thoroughly.

(3) Fish trading companies(agents) shall activate a mechanism to establish and manage archives of relevant documents and bills for purchasing or selling catches and fisheries products,so as to ensure each batch of catches could be traced during the process from catching,transshipment,landing,transportation,processing to selling.

(4) Fish trading companies(agents) shall establish SOP to deal with IUU catches and fisheries products detected.

5. Auditing Strategy

(1) To establish and maintain the list of authorized fish trading companies(agents) and to guide and assist them to establish catch traceability system.

(2) Authorized auditors shall receive training on specific law and regulations for fisheries management,and carry out audit pursuant to the operating directions for auditing items and standards.

(3) The Audit Squat Unit shall conduct random inspection at the offices of fish trading companies(agents) on an irregular basis,to ensure that the companies(agents) carry out the catch traceability system effectively.

(4) Any fish trading company(agent) was found with any defect shall be required to rectify within the specified time. In case that a company or an agent has not rectified within the specified time and was found with defects for multiple times continuously,the qualification of that company or agent will be suspended or abolished.

(5) Mechanisms for cooperation with the relevant central competent authorities,government of municipality,county and city will be established.

6. Auditing Procedures

(1) Notification of Audit:The Fisheries Agency of this Council shall inform fish trading companies(agents) in written on the relevant auditing procedures and criteria,and the possible consequence in case of disqualification in auditing.

(2) Documentary Review:Upon receipt of the audit notification informed by the Fisheries Agency of this Council,a fish trading company(agent) shall submit the required relevant information within specified timeframe to the Fisheries Agency of this Council for documentary review before the field audit. After reviewed the relevant information provided by the company(agent),if deemed insufficient,the Fisheries Agency of this Council may request the company(agent) to provide supplementary information within specified timeframe.

(3) Field Audit:After review on the documents provided by a fish trading company(agent),the Fisheries Agency of this Council shall dispatch auditor(s) to the registered location or its major operating location of the company(agent) to conduct field audit,to verify whether the systems established by the company(agent),such as the code of conducts,pre-checking mechanism,standard operating procedures and archives maintaining mechanism,have been carried out effectively. The auditing approach may include interview with or examination on personnel in charge of purchase and sale,random inspection on purchase and sale documents and bills,and audit on financial statements and detail ledger for purchase and sale payment and revenue,etc.

(4) Auditing results:During the auditing process,the auditors shall explicitly explain the auditing results on each item(eg. conformity,inconformity or not applicable). After the completion of field audit,the auditors shall inform the fish trading company(agent) with the auditing results in written,together with detail record on the item(s) with defect.

(5) Defect Improvement:Upon receipt of the auditing results in written from the Fisheries Agency of this Council,the fish trading company(agent) shall make improvement on the item(s) with defect,and report in written to the Fisheries Agency for review within the specified timeframe. After review,the Fisheries Agency shall provide comments to the fish trading company(agent) in written. In the event that item(s) with defect still remain,it/they should be put into record and the auditing frequency to that company(agent) should be increased.

7. Auditing Frequency

(1) The audit percentage or frequency as well as the priority target to be audited should correspond with the risk level of the fish trading companies(agents),such as the operating pattern,historical exporting amount,number of catch certificates applied,catch species in transaction,request from market States for verification of catch certificates,etc.

(2) The Fisheries Agency of this Council may adjust the auditing frequency on specific fish trading company(agent),based on its defect record and level. Auditing frequency of fish trading companies(agents) with records of more defects may be increased;auditing frequency of fish trading companies(agents) with records without defects may be reduced,or the date of their next audit may be postponed.

(3) In the event that a fish trading company(agent) is reported of involving in IUU activities or abnormal indication is appeared during its application for catch certificates,the Fisheries Agency of this Council shall conduct audit to the trading agent concerned.

8. Trading Agent Assessment and Restriction

In case that any fish trading company(agent) is audited with defect records continuously for certain times,the Fisheries Agency of this Council may prohibit the trading agent from selling or being assigned to sell fish or fisheries products of Taiwanese distant water fishing vessels,or abolish its approval to handle sale of fish.

9. Evaluation and Review

The audit reports shall be evaluated and reviewed by internal experts or external professional institution in accordance with the auditing objectives and procedures. The Fisheries Agency of this Council may,based on the internal or external evaluation report,review and amend this strategy plan as appropriate so as to prioritize the key targets to be audited,and adjust the auditing criteria and frequency as well as personnel allocation for auditing.