Understand Disbursement Cancellation

In order to understand Disbursement cancellation and reclassification in Advantage Financial, you will need to know the following:

• Criteria for Cancellation or Reclassification

• Reclassification Types

• Request Reversal or Cancellation of EFT Payments through the EFT Reversal table

• Disbursement Reclassification document (discussed in another section)

Criteria for Cancellation or Reclassification

In order to cancel any disbursement (for example, Automated Disbursements, Manual Disbursements, or Electronic Funds Transfer), the payment must be ‘eligible’ for cancellation. The following must be true in order for a payment to be eligible for cancellation:

• The payment cannot have cleared the bank. Disbursements that have been cleared by the bank are removed from the Check Reconciliation (CHREC) table at the end of the Check Reconciliation process.  

• The current status of the disbursement on the Check Reconciliation (CHREC) table must be Disbursed/Warranted.

Reclassification Types

In order to account for a variety of possible accounting scenarios, different cancellation and reclassification types have been identified for canceling or reclassifying disbursements in CGI Advantage Financial.  They are as follows: Reschedule, Hold, Close, PR Cancellation, Stale, Escheat, Cancel, and Warrant Reconciliation.  

The first four cancellation types are used to reverse the effects of the original disbursement and are initiated via a Discard to the original disbursement document, or by running the Mass Cancellation batch process.  These first four are referred to as cancellation types. When the disbursement documents with Document Types of AD, EFT and MD are cancelled using the cancellation type of PR Cancellation, Hold, or Reschedule, the value for the Interest Ineligible flag on the referenced Payment Request documents will be checked (set to True). When the value for this flag is checked, it will not be considered during the Automated Interest Calculation batch process to determine interest eligibility. The value comes from the payment request document to the Disbursement Request (DISRQ) table and the AD Chain will update the AD disbursement document. This is to ensure that during the Automated Interest Calculation batch process the disbursement record and all its accounting lines will be excluded from interest payment. Please see "Interest Calculation" section in CGI Advantage Financial Accounts Payable User Guide for more information on this process.

When a disbursement is cancelled with the reasons of PR Cancellation, Hold, or Rescheduled the system will update the Payment Request information to the DISRQ table.  A parameter on APPCTRL called Create DISRQ Records from Disbursement Documents determines where the disbursement options will be obtained that updates DISRQ. If this parameter is set to False, the system will load the disbursement options from the payment request (PR/ABS) document. If this parameter is set to True, the system will load the disbursement options to DISRQ from the disbursement document upon cancellation. The system will update DISRQ with accounting lines from the Disbursement document and a single entry will be made for each accounting line of a disbursement document.

For Payment Requests of document type “PR”, the Commodity Information on DISRQ will be populated from original Payment Request documents since there will be no commodity information on the Disbursement Document.  A combination of Ref Doc Code, Ref Doc Dept, Ref Doc ID, Ref Vendor Line, Ref Accounting Line, Ref Commodity Line in the reference section of disbursement document will be used to get the original Payment Request document.

The Cancellation Types of Stale, Escheat, and Cancel are used to re-classify the original expenditure to a liability account, while Warrant Reconciliation is used to re-classify the monies booked by the disbursement to warrants payable as cash. These four reclassification types are processed via the Disbursement Cancellation (DC) document.

• Reschedule

  The Reschedule cancellation type reverses the effects of the original disbursement, and allows you to reschedule the disbursement by specifying a new Schedule Payment Date.  This type of cancellation is done via a Discard action to the original disbursement resulting in the following updates: The referenced line amounts on the associated Payment Request(s) are re-opened and updated to an Outstanding status. The Disbursement Request (DISRQ) table is updated with the Accounting Lines (and corresponding Posting Lines) of the original Disbursement.  In addition, it is updated with the new Schedule Payment Date. The disbursement record on the Check Reconciliation (CHREC) table is updated with a status of Cancelled and the Cancellation Reason designated on the discarded disbursement.

• Hold

  The Hold cancellation type reverses the effects of the original disbursement, and allows you to place the payment on hold. This type of cancellation is done via a Discard action to the original disbursement resulting in the following updates: The referenced line amounts on the associated Payment Request(s) are re-opened and updated to an Outstanding status. The Disbursement Request (DISRQ) table is updated with the Accounting Lines (and corresponding Posting Lines) of the original Disbursement.  In addition, the Disbursement Request (DISRQ) table is updated with a Hold Type of User Hold, and the Reason of Disbursement Cancellation of Hold. This hold will remain in effect until it is removed from the table taken off hold and a Schedule Payment Date is defined. The disbursement record on the Check Reconciliation (CHREC) table is updated with a status of Cancelled and the Cancellation Reason designated on the discarded disbursement.

• Close

  The Close cancellation will reverse the effects of the disbursement, but will keep the lines of the referenced Payment Request(s) closed (these lines would be ‘expended’ at the time of Payment Request).  The Payment Request is never modified or reprocessed.  When this Disbursement Cancellation method is selected, the payment is not rescheduled for disbursement. Cancelling the Disbursement document and not rescheduling the payment will reclaim the associated funds.  When a disbursement is cancelled using Type 3 (Close), any backup withholding, contract withholding, intercepts and 1099 ledger postings will be readjusted as well. This type of cancellation is done via a Discard action to the original disbursement. This updates the disbursement record on the Check Reconciliation (CHREC) table with a status of Cancelled and the Cancellation Reason designated on the disbursement cancellation document. This cancellation type is not recommended during a cross-year scenario when the budget fiscal year is not equal to the accounting fiscal year.  For cross-year cancellations see Type 6 (Cancel) below.

• Stale

  Once a check is issued, an entity usually establishes a certain number of days in which the check must be redeemed.  A check is stale when it has not been redeemed within the established number of days.  When this happens, an entity has the right to reclaim the funds in question until such time as the holder of the check claims the funds.  The Stale cancellation type creates a memo reference to the accounting transactions of the disbursement to ‘Credit’ the Cash Expenditure and ‘Debit’ the specified Stale Date Payable Balance Sheet account. When this Disbursement Cancellation method is selected, the payment is not rescheduled for disbursement, and the Payment Request(s) is never modified or reprocessed. This type of cancellation is done via the Disbursement Reclassification (DC) document. This updates the disbursement record on the Check Reconciliation (CHREC) table with a status of Stale Dated and the Reclassification Reason designated on the disbursement reclassification document.

• Escheat

  An escheat is the succession of abandoned property to the state. It is commonly associated with property that comes from the estate of a person dying without a will and without any known heirs. However, this concept has been broadened to include the recovery of any property that results from the failure of a person legally entitled to that property to make a valid claim against the holder of the property within a prescribed period of time. Consequently, the terms escheat and unclaimed property are used interchangeably.  The types of property that are often unclaimed may include checking and savings accounts and even uncashed checks. The Escheat Cancellation type creates a memo reference to the accounting transactions on the disbursement to ‘Credit’ the Cash Expenditure, and ‘Debit’ the specified Escheat Payable Balance Sheet account. When this Disbursement Reclassification method is selected, the payment is not rescheduled for disbursement, and the Payment Request(s) is never modified or reprocessed. This type of reclassification is done via the Disbursement Cancellation (DC) document.  This updates the disbursement record on the Check Reconciliation (CHREC) table with a status of Escheat and the Reclassification Reason designated on the disbursement cancellation document.

• Cancels

  The Cancel reclassification type will leave the expenditure open but cancels the disbursement to a Cancel Disbursement Payable account defined on System Special Accounts (SPEC) table.  This reclassification type is typically used during cross-year cancellations but can be used during the normal fiscal year as well. This type of cancellation is done via the Disbursement Cancellation (DC) document.  This updates the disbursement record on the Check Reconciliation (CHREC) table with a status of Cancelled and the Cancellation Reason designated on the disbursement cancellation document.

• Warrant Reconciliation

  The Warrant Reconciliation reclassification type will reduce the warrants payable amount pending and reclassify it as a reduction in cash.  This reclassification type is typically used if a standard warrant or clearing fund warrant disbursement option model, as defined by the Disbursement Option setting on SOPT, is used. In addition, this type of cancellation will update the memo referenced disbursement documents status to Outstanding on the Check Reconciliation table.

Request Reversal or Cancellation of EFT Payments through the EFT Reversal Table

The EFT Reversal (EFTREV) table is a user-maintained table that allows authorized users to:

• Request the reversal of EFT payments that went to the bank for processing.

• Request the cancellation of EFT payments that were reversed successfully by the bank.

Requests to reverse applicable EFT transactions can only be inserted manually on the EFT Reversal table. However, records on this table can be updated manually by authorized users, the Reversal ACH Transaction batch process or the Returned ACH Transaction batch process (see run sheet for more information on these processes). The Generate Reversal ACH file batch process selects the records with the EFT Reversal Status set to Request Reversal and builds the ACH file.  The file will be sent to the bank. Once the bank confirms the reversal of the ACH transactions, the status will be changed to Reversal Confirmed. The Initiate Disbursement Cancellation batch process selects the records with status set to Reversal Confirmed and initiates the disbursement cancellation by inserting the records into the Disbursement Cancellation parameter table.  This table supports EFT documents with the Disbursement Type of EFT and the Disbursement Format of CTX, CCD, PPD or IAT.

The EFTREV table has the following edits.

• The entered combination of Bank Account Code and EFT Number must exist on the Check Recon table, the EFT Status on the Check Recon table must be set to Disbursed or Warranted, and the entered amount must match the net amount on the Check Reconciliation table.

• Requests to reverse EFT transactions with $0 net amount are not allowed.

• Requests for reversal are only applicable to EFT transactions.

• Only records with the Reversal Status of Request Reversal can be deleted by authorized users.

• This table provides the capability to manually set the Reversal Status to Reversal Confirmed for records with the Reversal Status of Reversal Sent to the Bank when the bank sends a notification (via fax, letter, email, phone call, and so forth) indicating the successful reversal of corresponding EFT payment. In this case, an explanation can be entered on the Comment field.

• If the request to reverse an EFT payment is returned by the bank on the ACH file (that is  the reversal is rejected), then the Returned ACH Transaction batch process will set the Reversal Status to Reversal Returned by the Bank and the Date Reversal Returned to the Application Control Date. However, an authorized user could manually change the Reversal Status of applicable transactions to Reversal Confirmed if the bank confirmed the reversal of the EFT payment. You are encouraged to enter an explanation on the Comment field. Transactions on the EFT Reversal table with the Reversal Status of Reversal Confirmed will be picked up by the Reversal ACH Transaction batch process when it runs next time. The EFT Return table stores the information of the returned EFT payments and EFT reversals by the bank.

• If an EFT payment is reversed successfully by the bank but its cancellation in the Advantage system request fails, then the Reversal ACH Transaction batch process will set the Reversal Status to EFT Cancel Request Failed. However, an authorized user could manually change the Reversal Status of applicable transactions to Reversal Confirmed after conducting adequate research. You are encouraged to enter an explanation on the Comment field. Transactions on the EFT Reversal table with the Reversal Status of Reversal Confirmed will be picked up by the Reversal ACH Transaction batch process when it runs next time.

• Even authorized users cannot change the Reversal Status to one of the following values for existing records on the EFT Reversal tables:

• • Request Reversal

  • Reversal Sent to the Bank

  • Reversal Returned by the bank

  • EFT Cancel Request Failed

  • EFT Cancel Initiated

• If a Hold Type is entered, it must exist on the Payment Hold Maintenance by Department table (PHLDTD), where the Hold Level equals User Hold or Automated Payment Request and the Payment Type Hold Department and Payment Hold Type Unit combination must be either ALL / ALL, Document Department / ALL, or Document Department / Document Unit.

• If a Hold Type is entered but the Payment Hold Type Department and/or Payment Hold Type Unit fields are blank, the Payment Hold Type Department and/or the Payment Hold Type Unit fields are defaulted to ALL.

• If the Cancellation Type is set to Hold, then the Hold Type, Hold Request Description, Payment Hold Type Department, and Payment Hold Type Unit fields must be populated.

• The following table summarizes allowable / not allowable manual changes of the Reversal Status field on the EFT Reversal table: