Our client, an Auditor at an international accounting firm faced a challenge with an Auditee.

The Auditee is a scrap metal merchant with international distribution, and strategically placed scrap metal yards across Australasia. Its scrap metal yards were over capacity because the business was struggling to move stock due to shipping container shortages and other supply chain restrictions brought on by COVID. The resulting high reported inventory levels was identified for investigation and confirmation by the Auditor.

Recognising that they did not have the experience or capabilities to verify the complex piles of mixed scrap metals against inventory reports to the accuracy and confidence level required, the Auditor engaged Hilco as an auditor’s expert.

The scrap metal yards contain over 50 different classifications of scrap metal, at different stages of production, packaged or stored using differing techniques and with unrecorded stock locations presenting a considerable challenge for accurate verification.

With the end of financial year recently passed, our client needed an in-depth, time sensitive verification of the reported stock on hand at the scrap metal yards, across multiple sites in different countries.

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Hilco were able to deploy boots on the ground to the multiple scrap metal yards and provide a time sensitive verification of the stockpiles to meet financial reporting requirements.

Hilco undertook aerial surveys, by deploying drones, to produce volumetric assessments of commodity stockpiles. With a further density calculation required to derive the tonnage of the scrap metal piles. The drone footage provided volumetric figures to within 99% accuracy.

The team used its industry contacts, locally and globally, to determine the characteristics of the range of metal types and grades onsite across RAW, WIP and FG.