Month-End Inventory Reconciliation Checklist

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10 critical items still open - these are the highest-risk gaps.

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Before you start

All receipts for the month are posted with correct datesCRITICALAll shipments for the month are posted and invoiced or accruedCRITICALOpen inventory transactions or batches are clearedCRITICALCycle counts for the period are postedNo one is posting into the closing periodPrevious month reconciliation is signed off

Raw material and purchased parts

Inventory valuation report totals recordedCRITICALRaw material ledger balance recordedDifference between report and ledger explainedCRITICALNegative on-hand quantities reviewed and correctedReceipts not yet invoiced accrual agreed to purchasingPurchase price variance reviewed for unusual itemsParts with zero cost but on-hand quantity listed

Work in process

Open work order WIP report run for period endCRITICALWIP ledger balance tied to the reportCRITICALWork orders closed that should be closedOld open work orders with no activity reviewedLabor and overhead applied compared with actual payrollScrap and rework variances reviewedMaterial issued above planned quantity investigated

Finished goods and shipping

Finished goods valuation tied to the ledgerCRITICALCost of goods sold agrees to shipped quantities times costShipped not invoiced list reviewedConsigned and customer-owned stock excluded from valueStandard cost changes in the period documentedObsolete and slow-moving reserve updated

Sign-off

Reconciliation summary prepared with each variance explainedCRITICALAdjusting entries reviewed and approvedReports saved as period-end evidenceController sign-off recordedCRITICALPeriod locked in the system

Aim for every critical item complete before locking the period. Open non-critical items should have an owner and a date.

Close automation

An optional conversation about automating inventory tie-out reports.

Optional. The tool and every export work without this. No spam.

How to use the checklist

Work through the groups in order. Start with cutoff, because every later number depends on it. Record the report total and the ledger balance for each inventory type, and write down any difference with an explanation. Tick items off as you go and export the result as evidence of the close.

Run reports after posting stops, with the same cutoff time
Keep the report totals next to the ledger balances
Do not plug differences, explain them

What the tie-out means

The perpetual inventory subledger should equal the inventory accounts in the general ledger. When it does not, the cause is usually cutoff timing, manual journal entries that bypassed the subledger, or standard cost changes. Explaining each difference, even small ones, builds trust in the numbers and makes the next close faster.

Common mistakes

Teams tolerate small unexplained differences until they pile up. Others reconcile only totals, which hides offsetting errors between raw, work in process and finished goods. Reconcile each category separately.

Late receipts posted into a closed month
Manual journal entries to inventory accounts
Negative balances left in place

Frequently Asked Questions

Does this replace my auditor's procedures?

No. It is a practical close aid. Your external auditors and internal policy decide what evidence and testing are required for inventory.

Why reconcile by category?

Offsetting errors can hide in a combined total. A raw material overstatement can cancel a work in process understatement. Separate ties expose them.

What difference is acceptable?

Your policy sets the threshold, and it should be small and documented. Any difference above it needs an explanation and, if wrong, a correcting entry.

How often should I run this?

Every month at close. Quarterly and year-end closes usually add physical count results and stricter review.

If your close relies on manual reconciliation spreadsheets, we can help look at automated tie-out reports. The checklist is free by itself.

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Infor VISUAL Month-End Inventory Reconciliation Checklist