Poor metal accounting could leave value on the table for mining organizations. Is your audit leaking gold?
Deloitte’s mining leaders explore key elements to include in your internal audits and why metal accounting is vital for operational excellence.
Key takeaways:
- Metal accounting is vital for mining organizations to track metal throughout each stage of the production process.
- With gold prices at an all-time high, poor metal accounting puts organizations at risk of operational inefficiencies, as well as metal losses.
- Key elements of a strong metal accounting audit include toll milling or royalty agreements, multiple data sources, sampling procedures, and measurement devices.
Robust metal accounting systems track metal movement and quantity through each stage of the production process. They help you track every single ounce of gold or metal.
Small losses over time can add up. And with gold prices at an all-time high, strong metal accounting has never been more vital.
Think of it this way: gold prices in 2025 are over triple the prices of 2020. How much would you lose if your organization leaked 100 ounces of gold per day?
But robust metal accounting isn’t just for gold mining companies. It’s the backbone of financial reporting and operational excellence for the entire mining sector.
Why your internal audit needs metal accounting reviews
Mining organizations with strong metal accounting systems tend to show higher operational excellence. After all: if you don’t measure it, you can’t optimize it.
Metal accounting helps you match your predicted production with the actual result. It’s vital in your audit for two main reasons:
- Transparency and trust: Ensuring production matches expectations
- Operational excellence: Adjusting operational processes to recover more gold or metals
Metal accounting is a core business process and high-risk operational area, with room for improvement in any mining organization. There’s incredible value in excellent internal audits, even more so than payroll and financial controls.
-Warren Rosenberg, Internal Audit Mining Leader
Your mining organization must also consider reporting best practices from industry authorities. We can look to the AMIRA P754 Code of Practice, the global leading metal accounting guideline, for metal accounting requirements and best practices. It highlights a few requirements for mining organizations, such as:
- Accurate mass measurements
- Transparent and consistent sources of data
- Internal and external audits
- User-friendly and well-documented accounting procedures with clear controls and audit trails
- Timely accounting reporting
- Clear procedures and authorization for accurate data reporting, including correcting rogue data
- Unbiased measurement and computational procedures
- Established target accuracies for mass measurements, sampling, and analysis
- Annual verification of physical inventory with stock counts
- Reasonable measures to remove bias from measurement and sampling
7 key elements of metal accounting audits
1. The number of sites
The audit scope depends on the overall organizational maturity of your metal accounting systems and practices. In a mature organization where there is a uniform approach across all the sites, a cyclical multi-year program of deep dive reviews single sites may be sufficient to assess compliance.
If you have sites that may have different systems and practices, a multi-site approach is the way to go. The results of this type of audit will include better recommendations that drive organization-wide consistency.
2. Toll milling or royalty agreements
Toll milling and royalty agreements typically have specific requirements around metallurgical accounting processes. To avoid the possibility of disputes, your audit needs to ensure the volume and grade of ore going into the system is consistent with the gold or metals that are produced.
3. Heap leach or mill processing operations
If you’re a gold mining organization, your goal is to accurately estimate recoverable gold on the leach pad. These estimates are vital to preserve the accuracy of your financial statements and unlock value.
With mill processing, measurement and sampling points are better defined and don’t have as many variables around sampling.
4. Data from multiple sources
Data is collected from multiple sources and different systems. This includes laboratory results, enterprise resource planning (ERP) software, as well as the whole SCADA system (Supervisory Control and Data Acquisition system). This is a system of measurement devices like weightometers, densitometers, and flowmeters.
Assess the controls over the applications, databases, and interfaces to ensure that data feeds are accurate, complete, and timely.
5. Measurement devices
Processing plants may have a multitude of devices installed, including weightometers, flowmeters and densitometers. Regularly assess the calibration and maintenance of these devices to ensure you collect accurate data.
6. Sampling and lab procedures
Does your organization follow standard operating procedures (SOPs) across different sites and labs? Assess your sampling and lab procedures to ensure they’re consistent and aligned with industry norms.
7. Spreadsheets, calculations, and reconciliations
Metal accounting management often involves complex spreadsheets. Internal auditors may be in their comfort zone when assessing the adequacy of their spreadsheet controls; however, it’s crucial to understand underlying assumptions that support any calculations.
How Deloitte can help
Deloitte’s mining and audit leaders have experience conducting metal accounting audits for mining organizations across Canada, the United States, and internationally. Our cross-functional teams also bring the knowledge needed to look at a mining audit from all angles, including technological and operational, as well as with the intricacies of toll milling agreements and royalty contracts.
The challenge that internal audit departments have is that auditors have been trained how to do internal controls work over broader financial reporting across different operations. Failing to address these elements can result in poor operational excellence; in other words, missed opportunities to recover more gold and metals.
-Jordan Marr, Audit Partner
Recover more with metal accounting
Here are some of the outcomes we’ve achieved through metal accounting transformation for clients with gold mines across Canada and the United States:
- Improved calibration and maintenance of measurement devices
- Improved control environments with revised standard operating procedures (SOPs)
- More gold recovered with metal accounting
Metal accounting can feel daunting. But with strong planning, operational awareness, and a diverse engineering and audit skillset, you can extract significant assurance value. Deloitte’s leaders know their way around a mining site and a spreadsheet.
Ready to recover more? Connect with a leader below.
