Constantly having to deal with this report not being correct finally became such a problem that we invested some time into determining why it doesn't work. We haven't tested all possible scenarios so in my estimation these are not all of the errors:

Inventory Valuation Report doesn’t agree with General Ledger when the report is backdated because:

1. When the backdated quantity is zero, the residual value includes the Current Total Cost from the Item Master.
2. When the current quantity is zero, and the backdated quantity is not, ignores the current residual cost when calculating the backdated Total Cost.
3. When the current quantity is zero, ignores the Cost Only adjustments.
4. Adjusting the quantity only to bring the current quantity to 1, the backdated cost doesn’t add in any manner that we could determine.
5. Even though, it doesn’t affect the cost. This report shows the quantity removed from inventory (Rec. Return) when in PO it was setup not to return from stock. So the Quantity on Hand is not correct.