If your Sales Order Line Item is set to "drop ship", and your Purchase Order Type is set to Drop Ship, then the unit costs of the two are independent. If you want them to be the same for reporting purposes, then you must update the sales order cost with the purchase cost before invoicing the customer sales order. 

* When you "sell" the item, the GL Posting is DR to AR Receivables and CR to Revenue.  No posting to Inventory or Cost of Goods.  The reference for COGS on the Drop Ship Sales Order Line is "information only", no GL posting.  
* When you process the PO ROG and ROI, that is when the Cost of Goods is posted, at the actual received/invoiced unit cost.  The posting is Debit to COGS and Credit to Accounts Payable.  

If your Sales Order Line Item is set to "drop ship", and your Purchase Order Type is set to Drop Ship, then the unit costs of the two are independent. If you want them to be the same for reporting purposes, then you must update the sales order cost with the purchase cost before invoicing the customer sales order. 

* When you "sell" the item, the GL Posting is DR to AR Receivables and CR to Revenue.  No posting to Inventory or Cost of Goods.  The reference for COGS on the Drop Ship Sales Order Line is "information only", no GL posting.  
* When you process the PO ROG and ROI, that is when the Cost of Goods is posted, at the actual received/invoiced unit cost.  The posting is Debit to COGS and Credit to Accounts Payable.  

Well, that explains a lot.  Thank you. 

Unfortunately, it calls into question profitability reporting for all drop ship orders.. and I'm still left with the original problem of trying to catch the error before AP and AR invoicing.  

I may be able to summarize the cost shown on the SO by DS Vendor and then summarize the PO's by vendor per Sales Order and flag if the 2 summaries don't match.  It won't be able to tell me what is wrong, only that something may be wrong....  I guess its better then what I have now.

Thanks again.

Are you using the Auto Generate function?  If so, look for the SO# in the PO line, and the PO# in the SO line.

With UoM issues, look for the conversion factor (line value) to make sure you are using the same base.

If you want linking down to the line, try something like this (which doesn't work in retrospect, but could make future reports more reliable):