Scrap Sales accounting process audit

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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
1Ensure 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.
2Theft at storage site by employees if not secured physically
3Has metal been segregated by type
Internal Control
4Check 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.
5Ensure proper counting / weighment / measurement of scrap at the Scrap generation point(s) / Scrap yard.
6The 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. 
7The 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
8Ensure that a proper record is kept of receipts, issues, opening and the closing balances quantity of each item of scrap in the scrap yard
9The issues entries should be made on the basis of sales invoices raised on customers / issue slips for consumption within the plant.
10It 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.
11The generation slips / Sales invoices / issue slips should be authorised by a responsible person.
12Scrap 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.
13The 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.
15A 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.
16The  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
17For 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.
18For 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.
19For 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.
20Ensure that no debit balances appear in the Sundry Debtors ledger in respect of scrap customers.
21Ensure that Sales Tax / excise duty is properly charged in the Sales Invoice.
22Earnest Money Deposit and how it is being set off or refunded.
23Amount has been credited to company before sale. No credit sale
Others
23if 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?)
24Compare standard ratio with actual ratio of Scrap generation.