To reduce cost and e ort, e-government is trying to maximize the digital interaction with its citizens. E-customs is a carry-over of such an e ort. Worldwide Customs is transforming from the labor intensive paper work it used to be for ages to e-customs, where international trade is facilitated fully exploiting the global digital infrastructure of the 21st Century. Service-Oriented Auditing (SOAu), is a label for high-tech auditing services based on the Service-Oriented Architecture. In this paper, the question is addressed what the impact of SOAu is on the relationship between government (e-customs) and business (trading companies), and vice versa. Currently, we are already observing a shift in the distribution of responsibilities (so-called horizontal supervision). We show how this shift can be leveraged by further developments in SOAu. Another issue is coordination. There is a need for increased coordination. We explore di erent coordination mechanisms to support this development.
To reduce the burden on the front-o ce in government organizations the concept
of e-government has been introduced. In E-government, most of the government
functions and processes are carried out in the digital form over the Internet.
Over time e-government is becoming a challenge at di erent levels of public
administration. To cope with this challenge, E-government is usually managed
in terms of stages of growth and E-government architectures [
When E-government uses SOA, this allows for a exible and adaptive
composition of services that communicate with each other via a general platform.
In recent years, the focus of SOA research has shifted to management, control
and monitoring [
In this paper, we will consider the Customs and its trade facilitation as an Egovernment organization example. Customs controls are rapidly innovating from a labour-intensive and paper-based door-keeping function to international trade facilitation that explore the current global digital infrastructure (e-customs). However, the use of the modern technology concepts (like SOA, SOAu, Monitoring, RFID) in the automation of custom control has by far not been explored to its limits. The focus of this explorative paper is to consider the possible use of SOA and SOAu in E-government organization, especially in custom controls, and how SOAu in uences the relationship between government and business. The paper is organized as follows. Section 2 gives an overview of the background knowledge including recent developments in customs control and the Extended Single Window (ESW) project of which our research is a part. Section 3 describes the e-government evolution towards the service oriented architecture. Section 4 categorizes auditing con gurations in terms of coordination, audit object and audit subject. Section 5 closes with the main conclusions and directions for future research. 2
In this section we introduce four concepts that are at the basis of this paper. These concepts include Custom Controls, Modernized Custom Code, Extended Single Window, Service-Oriented Architecture and Auditing. 2.1
The Modernized Customs Code (MCC) was adopted by the European Communion in April 2008 but the process of realization is still enduring. The aim of MCC is to simplify legislation and administration procedures for both customs authorities and traders. The purposes of MCC are: Goods Tracking: Streamline the customs procedures in such a way that it reduces the e ort to keep track of the goods.
Custom Guarantee System: Streamline and harmonies further the customs guarantee systems Develop Paperless Environment: Lot of paper work is needed for a simple custom procedure. MCC will ensure the computerization of all customs formalities, with a view to a completely `paperless environment for customs and trade', e-customs Decision No 70/2008/EC of the Parliament and of the Council, adopted on 15 January 2008, by (i) Electronic lodging of customs declarations and accompanying documents as the rule (ii) Exchange of electronic information between the national customs, and other authorities; Centralized Clearance: Introduce and promote the concept of \centralized clearance", by which authorized traders can declare goods electronically and pay their customs duties at the place where they are established. These all procedures will be irrespective of the Member State through which the goods will be brought in or out of the EU customs territory or in which they will be consumed.
Single Window: An extension of the concept of centralized clearance by providing the documents at a single point. It provide a base for the development of the 'Single Window' and 'One-Stop-Shop' concepts, under which economic operators give information on goods to only one contact point (`Single Window' concept), even if the data should reach di erent administrations/agencies, so that controls on them for various purposes (customs, sanitary,...) are performed at the same time and at the same place (`onestop-shop' concept).
The concept of centralized clearance implies that when an \authorized operator" declares at the customs o ce, this o ce carries out the documentary risk analysis. The o ce then forwards the results of its analysis to the border customs o ce in that Member State or in another Member State where the goods are actually to enter or leave the Community (the `o ce of entry/exit'). Border o ce can apply physical controls if needed. Procedures are di erent for the compliant and trusted traders. As a bene t of centralized clearance, the goods need not to be moved to the o ce of import or export but could be delivered directly to the point of sale. This would allow multinational companies to conduct all of their EU business with one customs o ce. Centralized clearance leads to the single electronic entrance point which is called as \Single Window". In \Single Window" authorized operators provide the information required by customs once and then all other agencies have access to it. 2.2
The vision of the Extended Single Window project (ESW)1 started in 2010 is to develop an integrated and coordinated border management solution for ports and airports integrating with previous and subsequent procedures for reliable, secure, and cost e ective logistic chains throughout the Netherlands as a logistic gateway to Europe. The coordinated border management solution is referred to as `Extended Single Window'. It requires e cient and reliable handling of data to generate information for e ective joint supply chain planning for shippers, goods owners, transportation companies, forwarders, terminals and other logistic service providers. This data is also used to generate information for government agencies, like customs, agricultural and tax. Currently, shippers and goods owners are faced with a wide range of regulations and procedures when goods enter or exit the EU. Completion of declaration processes and risk analyses and planning and coordination of inspections by the various agencies before shipments 1 http://www.dinalog.nl/institute/projects/research-development-projects/ extended-single-window-information-gateway-to-europe/271 are (un)loaded from an aircraft or vessel enables logistics actors (terminal operators, forwarders, transport operators) to plan and execute transportation of shipments with hinterland hubs e ciently (improving modal shift, throughput time i.e. for perishable goods and reducing congestion). E cient and reliable government controls reduce administrative costs, increase reliability of the supply chain, and ultimately reduce transport costs for shippers and logistic operators. ESW project is a source for realization of all these discussed tasks.
Thus, ESW covers all regulations and procedures for coordinated border management at ports, airports and extending to hinterland hubs according to the MCC for both incoming and outgoing logistic ows, including integration with previous (outgoing goods for instance preceded by export) and subsequent procedures (incoming goods for instance followed by transit). Basic research in advanced information technologies is in Event Driven Architecture with a Logistic Interoperability Ontology: { Event Driven Information Service Bus (EISB). It is an extension of the concept of Enterprise Service Bus (ESB). Basically, each logistic operation triggers an event. Minimally, an EISB supports publish/subscribe functionality to events in virtual data space. Since the data space is virtual, relevant data can still reside with each actor depending on governance and logistic innovations at business level. Thus EISB can support traditional document-driven processes as well as new event-driven processes for tracking and tracing of movement of goods. { Logistic Interoperability Ontology Framework. It speci es the semantics of all physical objects as shared by business actors in supply chains, e.g. semantics of containers, goods items, and trucks thus allowing that each actor shares only relevant information with one or more other actors.
Using the EISB concept it is possible to extend the Single Window concept in
at least two important ways. The Single Window is based on digital documents,
whereas the ESW is based on events, which is much more exible. It is not
necessary anymore for the sender to collect the data needed in the form of document
template. The receiver speci es which data he wants to see (by subscribing to
events), and these data are collected then (that is, continuously) from the virtual
data space fed by all the distributed events. Secondly, the Single Window only
streamlines data ow in one direction, from logistic operators to government
agencies, whereas the EISB also supports data ow among logistic operators,
among government agencies (e.g. to realize a One-Stop-Shop), or from
government agencies to operators. One of the very powerful new possibilities opened
up this way is end-to-end supply chain integrity as advocated by Hesketh [
Enterprises need to respond quickly to the today's more competitive and global
market. To ful ll this purpose business needs to streamline its business
processes in highly standardized manner. A contemporary approach for addressing
these critical issues is service oriented architecture (SOA) [
Auditing is evaluation/monitoring/control of an organization/person/product
on the basis of some norms. Traditionally, auditing can be de ned in two
scenarios (a) an internal audit (b) external audit. According to ISA standard 2010,
internal auditing is `to monitor and evaluate the e ectiveness of an organizational
risk management and control system' [
e-Government Evolution towards SOA
E-government growth has been studied in two ways: (i) content analysis of the
government web sites for speci c features of E-government [
Di erent models of e-government growth have been developed. For public
administrators of e-government Layne and Lee [
The two-stage model of Reddick [
Governmental agencies are trying to migrate their traditional systems
architectures to more horizontally and vertically integrated architectures. Janssen
and Veenstra [
For improving service delivery, departments and agencies have to work
together and manage the mutual information ows. Stage models can help further
e-government development. The stage model proposed by Klievink and Janssen
[
From the above, we can see that integration has always been an important
e-government concern, evolving from an intra- to an inter-organizational scope.
SOA can very well support this development, but it also requires a more holistic
view to the coordination of e-government services [
The relationship between computer science and auditing is bi-directional. In a
computer science perspective, applications of computer science are subject to
audit, e.g. the information system infrastructure and accounting system, while in
audit perspective, IT applications are employed as a powerful means to support
risk management and auditing, for instance ACL audit software (www.acl.com)
and the AuditSystem-2 used at Deloitte (www.deloitte.com). Service oriented
auditing (SOAu) aims at the use of service-oriented technology to further
support audit processes and realize the vision of continuous and online monitoring.
In this article an audit module can be de ned with the help of the following
model proposed by Weigand and Bukhsh[
Monitoring management is a second and important component of the model that is responsible for adapting and optimizing the rst component in the face of internal and external changes. This activity is responsible for deriving process patterns from a xed SOLL (normative) model, and uses process mining or other machine-learning techniques.
From a coordination perspective, we can divide the government and company audit relationship into two categories. (i) uncoordinated: in which one company is audited by one government authority at a time. (ii) coordinated: when many collaborating companies are audited by many government authorities in a coordinated action. 4.1
Uncoordinated means that one government authority audits one company at a
time, based on direct communication between the company (e.g. trading
company) and government authority (e.g. custom). In this category, there are again
two subcategories, depending on the audit subject: (i) government audits the
company (ii) company audits itself, reporting to the government.
Audit by the Government: Audit by Government is of detective and
corrective nature. Government want to check the status of the organization
/company's declarations and trustworthiness. Government authorities or
shareholders or investors usually perform this type of audit. They audit the assets,
controls, declarations and all the matters related to the company's stability.
Audit by the Company: In this case, the company has a rigorous internal
auditing system. According to Starreveld et al [
A company/organization provide services to its customers/users with the help of di erent parallel or stand alone processes. We make an important distinction between operational and control services. Operational Service: Each operational service executes a particular activity in the company's primary processes. Operational services consume and produce value objects, so to safeguard value, operational processes need to be controlled.
Control Service: Control services implement business control on the
operational services. Control services takes place at two levels: control within
the organization and external control. Control services involve the creation
of management systems, managing the consistency and quality of products
coming to/from the company. It also involves the development of programs
and processes that operate automatically [
Whereas the audit type says who is performing the audit (subject), the service type says what is the primary focus of the audit (object). The following table shows the four possible combinations:
Audit/Service Operational Control
By Company Type I Type II
By Government Type III Type IV Type I: Administration in the companies always needs to keep an eye on the status of the company. A focus on operational processes corresponds to traditional transaction-based auditing. Traditionally, this type is not feasible as the government is not willing to accept the risks of abuse and fraud. It is only willing to leave the auditing responsibility to the company when the company is rmly in control (type II). However, with the use of (automated) audit modules (cf. Fig. 1), the type may become acceptable. The audit module supports a continuous monitoring service of the company's operational services. In this way, it can detect and immune any potential operational issue. The results can be published and made accessible to the government agency.
Type II: Companies arrange the audit activity especially auditing the control
services for itself to have self-assessment. This so-called system-based control
is usually more e cient and e ective than the transaction-based type. There
are other reasons for choosing this type as well. Companies with international
supply chain like to show themselves to be compliant and standardized. The
self-assessment can also replace costly governmental controls, as in the case of
custom procedures. For this purpose e-customs provides a standard known
as Authorized Economic Operator (AEO) certi cate [
Type III: When the government audits the operational services then there are
two scenarios (i) government physically audits the operations and operational
services. This is the traditional way of working, where custom inspectors
process clearance request documents per transport and check all or a selection
of the containers passing the border. Evidently, this is a labor-intensive
process. (ii) Government audits the operational processes by using advanced
IT such as the automated scanning, audit tools [
Type IV: This can be seen as a variant of type II where the company has a rigorous internal control system, but rather than doing a self-assessment, the government remotely monitors and evaluates the control system. This variant may bene t both the company and the customs. Probably, it requires an even higher level of \being in control" then in the case of type II. In this case it is not su cient that the internal control system is compliant, according to human interpretation, but that this compliance need to be assessed and monitored online. In other words, the internal control system must be highly formalized and automated. The costs that this brings for the company can be compensated by the fact that (manual) self-assessments are no longer needed: the company only needs to provide access to the control services, via some interface. For the customs, it also saves costs of manual processing of AEO reports, and may provide a higher level of security. On the other hand, it requires sophisticated audit tools. It is also important that the interfaces are well-de ned and based on standards. 4.2
Growing trade and increased security require new controls. In parallel
government would like to reduce the administrative burden. E-customs supports
simplied paperless trade procedures, prevents potential security threats and
counterfeit tax related frauds and also ensures the interoperability with other e-customs
systems within and outside the Europe. The use of SOA in e-customs [
Coordination Service: Co-ordination services can be de ned as services
supporting an exchange process (a set of events) for a good or a service [
Weigand et al [
Next to the co-ordination among the companies in the chain there are multiple government authorities who audit them. Suppose there are n government authorities to audit m companies. In total there will be n:m combination of audits. This will cost lot of e ort and time from government authorities. To overcome this issue, the concept of trusted third part may be adopted. Fig 2 explains the scenario. Audit by Third Party: In this scenario there is a third party who is trustworthy for both company as well as Government/ Investor/ Concerned Authorities. Government selects the trusted third party based on some standards and certi cations. The third party audits the company, combining the different requirements from di erent government agencies, and takes a chain perspective rather than focusing on one company only. The type of audit is of detective, corrective and preventive nature. The audit information can be used by the company itself (it has outsourced its auditing so to say). If Government requires audit information then it can extract this online from the third party's interactive interface. Since the third party is external to both the Government and the company, it can manage the coordination of audit activities.
The concept of third-party can be implemented in several ways. In market
economies, it is not realistic to assume that there will be a single third-party.
Several competing and complementary companies will try to play part of this
role. So it is better to talk about a third party network rather than a third party
actor. Within such a network there may even be opportunities for a fourth-party
actor concept as this also exists in logistics [
Assuming a coordinated auditing approach, three coordination types can be distinguished, from minimal to maximal (Table 2)
Coordination Type Coordination Level Coordination by
Type A Minimal Company Type B Partial Government Type C Maximal Third Party Type A: When coordination is not an assigned function. It means N government authorities will audit M number of companies independently. The lack of coordination results in ine ciencies and problems that the company must try to solve.
Type B: When there is data and information sharing/coordination between the government authorities, as in the one-stop government concept There may also be chain coordination between the companies, but the two are not integrated.. In the e-customs domain, this type should involve not only data sharing but also coordination of inspection activities. For companies that are currently in type A, this type B is a big improvement.
Type C: In this type there is overall coordination between the companies and
as well as between the government authorities. This implies that not only
companies have a single access point to various government services, but
also that the government has a single access point to a logistic chain or
business network. In this case, coordination is maximal. This type can only
be realized by the support of intermediary third parties. It also requires that
the government is willing to retreat from its role of \sole care taker" to the
one of Service Provider/Network Manager [
SOA is a basic architecture for integrating global services. Audit in combination with SOA provides a massive potential of innovation. In this paper we have introduced SOAu as a new area of research within the domain of Information Systems. In order to explore the applicability of SOAu we have developed a categorization of auditing approaches based on three dimensions: the audit object, the audit subject and the coordination level. The Single Window concept represents one type (B, III and IV). Di erent government authorities coordinate among each other and share the company data. When companies and government authorities coordinate with the help of a third party then the concept of ESW comes into play. Type C in combination with any one of type I, II, III, IV provide di erent possible variants of ESW. This paper introduces the concept of SOAu a basic categorization of application possibilities in e-customs. Evaluation of the viability of these types and the respective IT requirements is an open question for further research that we want to pursue together with the ESW industrial partners.
This research is partially supported by the DINALOG (www.dinalog.nl) project \Extended Single Window".