What basis is to be used for reconciliations, volume (gallons or barrels) or weight? What does EPA consider to be perpetual inventory? (Is a plant balancing considered a perpetual inventory?)
Section 80.128 (Agreed upon procedures for refiners and importers) provides for comparison of records on the basis of volume except in section 80.128(b) which provides for analysis of gasoline inventory reconciliation records. While EPA anticipates that the standard practice is to keep gasoline inventory records on a volume basis, it is conceivable that a company could maintain such records on the basis of weight. Where a company has maintained its gasoline inventory reconciliation analysis and its perpetual inventory on a weight basis that is susceptible to analysis by an attester, that basis would be acceptable to EPA for purposes of section 80.128(b).
Section 80.128(b) refers to a company's "perpetual inventory." EPA intended that this term refer to a company's regular method of keeping a running record of gasoline production and distribution volumes. In most cases, EPA believes that the industry standard practice is to keep a daily record of inventory. To the extent that a "plant balancing" would represent the most stringent customary recordkeeping practiced by a company, the "balancing" may be acceptable to EPA as a perpetual inventory. A company with specific questions with respect to this issue may contact EPA for case-by-case guidance. (7/1/94)
This question and answer was posted at List of Reformulated Gasoline and Anti-Dumping Questions and Answers: July 1, 1994 through November 10, 1997 (pdf)