Scrap Sales accounting process audit

Ensure that a proper record is kept of receipts, issues, opening and the closing balances quantity of each item of scrap in the scrap yard
For sale of scrap ensure that a comparative chart of offers / quotations is prepared and the Sales order is made in the name of the best quoted party.  All the offers / quotations should be properly evaluated.

Sr. No. Checking Points
About Scrap Yard
1 Ensure that a separate space / scrap yard is earmarked for keeping the scrap material. The scrap yard should have an enclosure and a gate with a lock and key.
2 Theft at storage site by employees if not secured physically
3 Has metal been segregated by type
Internal Control
4 Check that proper slips are kept at the point of generation of scrap and at the receiving end ie the scrap yard.  At the generation point(s) the output / production / scrap generation slip should be made in 2 copies giving details of the item of scrap and the Qty of scrap.
5 Ensure proper counting / weighment / measurement of scrap at the Scrap generation point(s) / Scrap yard.
6 The weighment / measurement / counting can take place either at the point(s) of generation or at the scrap yard. However, the scrap generation slip should contain the details of the quantity. 
7 The slips should have a serial control and should be authorised by a responsible person. The scrap yard should receive the material on the basis of slip and enter the receipt in the scrap register
Documentation
8 Ensure that a proper record is kept of receipts, issues, opening and the closing balances quantity of each item of scrap in the scrap yard
9 The issues entries should be made on the basis of sales invoices raised on customers / issue slips for consumption within the plant.
10 It should be ensured that the entries in respect of receipts and issues in the Scrap Stock Register are made on the basis of generation slips / Sales invoices / issues slips.
11 The generation slips / Sales invoices / issue slips should be authorised by a responsible person.
12 Scrap Generation points should be identified and a booklet of generation slips with a serial control given at each generation point. The scrap yard person should sign on one copy of the slip as an acknowledgement of having received the scrap qty as given in the slip and return the slip back to the generation point. The second copy of the slip is to be retained at the scrap yard.
13 The Scrap Stock Register should be kept updated at all times.
14  A gate pass should be issued at the time of despatch of material from the Scrap Yard and the gate pass should then be checked at the exit gate by the security.
15 A periodical physical verification of scrap stock in scrap yard should be made and the physical Qty tallied with the book quantity. The discrepancies, if any should be reported.
16 The  total  scrap  generation  as  per the Scrap Stock Register should be tallied with the quantity of scrap generation of various types as shown by the costing data. Comment if any difference / discrepancy is observed.
Accounting
17 For sale of scrap ensure that a comparative chart of offers / quotations is prepared and the Sales order is made in the name of the best quoted party. All the offers / quotations should be properly evaluated.
18 For sale of scrap ensure that a comparative chart of offers / quotations is prepared and the Sales order is made in the name of the best quoted party. All the offers / quotations should be properly evaluated.
19 For sale of scrap ensure that a comparative chart of offers / quotations is prepared and the Sales order is made in the name of the best quoted party. All the offers / quotations should be properly evaluated.
20 Ensure that no debit balances appear in the Sundry Debtors ledger in respect of scrap customers.
21 Ensure that Sales Tax / excise duty is properly charged in the Sales Invoice.
22 Earnest Money Deposit and how it is being set off or refunded.
23 Amount has been credited to company before sale. No credit sale
Others
23 if there *is* an inventory aging program in place, how are obsolete items disposed of and where is the potential revenue going, if not to scrap sales? (pocket of warehouse mgr?)
24 Compare standard ratio with actual ratio of Scrap generation.

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