A step to take when reviewing a bad physical inventory/reconciliation, is to review accounting when all else is exhausted (see prior posts). Start with the last 30 days, and pull all accounts which effect physical inventory in Accounting. Then sort by largest to smallest, and review if the postings are correct.
When an inventory reconciliation goes bad, it’s a long drawn out process that requires many weeks of review. Normally, after your review, large postings within Accounting that effect Physical Inventory from the last 90 days, you’ll see trends – good (reaffirming proper postings) or bad; where it affects parts physical inventory.