BOP Program Statement 8540.04 § 3

Business Managers ensure the administration, review, and validation of inventory-related activity

are performed throughout the month. FMB ensures the data is accurate at month 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 and ending dates for the period to be reviewed (e.g.,

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

Entries that appear abnormal must be 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).

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

following system-generated report must be reviewed:

■ List of Stock Values. Reviewed for irregularities in quantities or values associated with

raw materials, class 3000; finished goods, classes 7920 and 3100; and sub-assemblies,

class 7900. Irregularities are investigated for corrective action. If the discrepancy is

associated with the standard cost, the business group responsible for product costing must

be notified immediately. Discrepancies associated with the prime plant’s standard are

documented in the job file.

8540.04 9/3/2026 PROPERTY OF US GOVERNMENT 2

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

general ledger account balance, the Accountant or Business Manager generates the Calculate

Work in Process: Collective Processing Transaction Report 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 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 Accountant or Business Manager will contact the business group responsible for product

costing 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 Accountant or Business Manager ensures consignment payables are settled by generating the

FPI Settle Consignment/Pipeline Liabilities Report monthly; open items older than 45 days are

viewed for validity or corrective action.