BOP Program Statement 8540.03 § 3

Remote and Prime Business Offices ensure that the administration, review, and validation of

inventory-related activity are performed throughout the month. Locations ensure that the data is

accurate at month’s end.

a. Inventory Reconciliation. To ensure the accuracy of inventory counts and general ledger

account balances, a system-generated General Ledger Account Line Items Display Report for

each of the following general ledger (G/L) accounts, using the dynamic selection “Plant,” is

reviewed for the appropriate Profit Center and Plant:

■ G/L Account 151100, Raw Materials and Supplies.

■ G/L Account 152710, Sub-Assembly Manufactured.

■ G/L Account 152100, Finished Goods Manufactured.

The report is run with specific starting dates and ending dates for the period to be reviewed (e.g.,

10/15/20XX through 10/31/20XX).

Entries that appear abnormal are reported to the Field Financial Administrator (FFA) for

corrective action. Abnormalities may be caused by incorrect standards, errors in creating

purchase orders, an incorrect unit of measure, or entries for Government Furnished Material

(GFM) that should have been zero.

b. Inventory Balances. To ensure the accuracy of general ledger account balances, additional

oversight is required. The following system-generated report must be reviewed:

■ List of Stock Values. Balances Report. Reviewed for irregularities in quantities or values

associated with raw materials, class 3000; finished goods, class 7920 and 3100; and sub-

P8540.03 03/18/2015 2

assemblies, class 7900. Irregularities are investigated for corrective action, if required. If the

discrepancy is associated with the “standard” cost, the product costing individuals are

notified immediately. Discrepancies associated with the “prime plants” standard are

documented in the job file.

c. Work in Process. To ensure the accuracy of the Work in Process (WIP) Report and the

general ledger account balance, the remote accountant or prime business manager generates the

Calculate Work in Process: Collective Processing Transaction in “test run” mode. This

report is reviewed to determine if there are large values associated with partially completed jobs.

If so, a further review is done by generating the Production Order Display and selecting the

Cost Analysis function for the planned and actual amounts for each element. The following

occurrences must be monitored:

■ Excessive material costs may indicate that errors are contained in the unit of measure, unit

price, or as a result of over issuance of material.

■ Excessive activity costs could result from incorrect times designated in the routing, incorrect

labor rates in a cost center, or an excessive amount of posted actual standard hours.

The remote accountant, prime business manager, and factory manager should contact the

individuals assigned costing responsibility to ensure corrective action is taken for errors

identified in the cost analysis process. In addition, the FFA is notified.

d. Consignment Payable. To ensure the correct purchase information is recorded, a system-generated General Ledger Account Line Items Display Report for G/L Account 211100,

Consignment Payable Open Item Management, using dynamic selection “Plant,” is

reviewed. If errors are not corrected immediately, they could cause an overstatement on the

balance sheet. The remote accountant or prime business manager ensures that consignment

payables are settled by generating the FPI Settle Consignment/Pipeline Liabilities monthly;

open items older than 45 days are viewed for validity or corrective action.