The fact that items issued (WO-G) to Indirect Work Orders show up in WIP, JC-P and in IN-A, is becoming an accounting issue for us. My understanding is that the items have gone through all of the accounting steps and are properly expensed, according to the class of the parent, and should not be counted as inventory on hand. We are able to exclude these items from reports but must repeatedly explain to financial auditors why some of our WIP is not WIP  
 
Any chance of getting this changed? Or is there some reason that this needs to be?

John is correct, JC-P defaults to only status R & F so the Indirect Work Orders would be excluded unless you explicitly changed to include them.

I can look into a change to IN-A to suppress indirect work orders from the "In WIP" display but as far as reports go, you can already do it and I would think the auditors are more likely to be looking at reports.