Situation :

Baan IVC4,
ILC is used
Parameter - Negative Inventory allowed is set to NO

For a few project (PCS) items, the inventory on hand is negative.

I wanted to know 2 things.

1) What could be the reason for this?
2) How to prevent it?

Are these manufactured or purchased items?

Negative inventory has been observed in baan for purchased items generally and this occurs at the time of maintaining receipts.
You can check the object size of "maintain receipts",maintain approvals and/or "generate inbound".
We had a problem of decimals with outbound also.
The system was allowing us to outbound decimal quantities in excess of available stocks.
Check for latest objects of these sessions as per your BaaN version. If SP 11 is loaded , you might need to inventigate futher.