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Audit Checklist for Scrap

The document outlines essential checking points for managing a scrap yard, emphasizing the need for secure storage, proper documentation, and internal controls for scrap generation and sales. It details procedures for recording receipts and issues, ensuring accurate measurement, and maintaining updated registers. Additionally, it highlights the importance of evaluating offers for scrap sales and monitoring discrepancies in inventory and accounting practices.

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sulman143
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28 views3 pages

Audit Checklist for Scrap

The document outlines essential checking points for managing a scrap yard, emphasizing the need for secure storage, proper documentation, and internal controls for scrap generation and sales. It details procedures for recording receipts and issues, ensuring accurate measurement, and maintaining updated registers. Additionally, it highlights the importance of evaluating offers for scrap sales and monitoring discrepancies in inventory and accounting practices.

Uploaded by

sulman143
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Sr.

Checking Points
No.

About Scrap Yard

Ensure that a separate space / scrap yard is earmarked for keeping the scrap material.
1
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

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
4
generation slip should be made in 2 copies giving details of the item of scrap and the Qty
of scrap.

Ensure proper counting / weighment / measurement of scrap at the Scrap generation


5
point(s) / Scrap yard.

The weighment / measurement / counting can take place either at the point(s) of
6 generation or at the scrap yard. However, the scrap generation slip should contain the
details of the quantity.

The slips should have a serial control and should be authorised by a responsible person.
7 The scrap yard should receive the material on the basis of slip and enter the receipt in
the scrap register
Documentation

Ensure that a proper record is kept of receipts, issues, opening and the closing balances
8
quantity of each item of scrap in the scrap yard

The issues entries should be made on the basis of sales invoices raised on customers /
9
issue slips for consumption within the plant.

It should be ensured that the entries in respect of receipts and issues in the Scrap Stock
10
Register are made on the basis of generation slips / Sales invoices / issues slips.

The generation slips / Sales invoices / issue slips should be authorised by a responsible
11
person.

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
12 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.

A gate pass should be issued at the time of despatch of material from the Scrap Yard and
14
the gate pass should then be checked at the exit gate by the security.

A periodical physical verification of scrap stock in scrap yard should be made and the
15
physical Qty tallied with the book quantity. The discrepancies, if any should be reported.

The total scrap generation as per the Scrap Stock Register should be tallied with the
16 quantity of scrap generation of various types as shown by the costing data. Comment if
any difference / discrepancy is observed.
Accounting

For sale of scrap ensure that a comparative chart of offers / quotations is prepared and
17 the Sales order is made in the name of the best quoted party. All the offers / quotations
should be properly evaluated.

For sale of scrap ensure that a comparative chart of offers / quotations is prepared and
18 the Sales order is made in the name of the best quoted party. All the offers / quotations
should be properly evaluated.

For sale of scrap ensure that a comparative chart of offers / quotations is prepared and
19 the Sales order is made in the name of the best quoted party. All the offers / quotations
should be properly evaluated.

Ensure that no debit balances appear in the Sundry Debtors ledger in respect of scrap
20
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

if there *is* an inventory aging program in place, how are obsolete items disposed of and
23
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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