It has been a while since I was in manufacturing, but I will list concerns I remember with the assumption that you are not auditing a dealers' procedures but instead your company as a scrap customer:
1. Consider having truck go through certified scales for every trip to scrap dealer or at least for your audit because sometimes the dealer told us the weight and we had to trust them 2. Has metal been segregated by type since prices by type metal vary or does dealer pay a blended price that may be paying you too little 3. I have seen scrap dealers pay in cash and have no way to confirm amount paid is correct or all of it was turned in 4. Theft at storage site by employees if not secured physically 5. Contractors sometimes take their scrap back to sell when you have paid for it and it should be left at your place of business for you to sell 6. Gate passes should be reviewed if they document what left the grounds, found sale of scrap that had not been turned in to petty cash, driver forgot to turn in if you can believe that 7. Find out scrap prices if possible from other sources and compare to dealer's prices 8. If trailer is dropped off at site until full see who pays for trailer or if any unusual arrangements are being used
Don't know if this would apply to your scope, but when I've done scrap audits, I also looked at obsolete parts to see if they were properly sold as scrap and monies recovered.
If your co has parts inventory (or any metal inventory, for that matter), perhaps the sale of obsolete parts should show up in scrap sales (depending on your business).
Lack of such activity in scrap sales raises two red flags for me: 1. inventory may not be properly aged & the obsolete inventory sold (reduces warehousing costs and generates a bit of revenue) 2. 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?)
Just food for thought...
Edited: Tuesday January 09, 2007 at 5:05 AM by JanetFike
These are very good sites that can guide you and you may be able to find a contact to discuss what is specific to your company: www.scrap.org www.isri.org/ look specifically for a report on "Recommended Practices and Procedures for Minimizing the Risks of Purchasing Stolen Scrap Materials."