Corrections And Reversals

Purpose

Use this guide when an ADMIN discovers an incorrect document or accounting entry. The correct action depends on what created the entry, whether it has posted, and whether the affected period or fiscal year is closed.

Warning: Do not use a manual journal to force an operational status, inventory quantity, customer balance, supplier balance, or LC status to look correct. Use a supported document cancellation or reversal when one exists. Escalate unsupported cases to the finance owner or CA before posting an adjustment.

Decision Tree

Is the record still an unposted draft? Edit it where the screen supports editing, or use its document Cancel action if it is no longer needed.
Is it an ACTIVE settlement document with a supported cancellation? Use the settlement’s Cancel action. The application creates a reversal and rolls back supported business statuses in one transaction.
Is it an incorrect manual journal? Use Compensate, then create a separate approved correcting journal if the intended net effect is not zero.
Is it a posted opening-balance import? Use Reverse, then create, validate, approve, and post a replacement import.
Is there no supported cancellation or reversal, but an accounting correction is approved? Create a current-period ADJUSTMENT under the approved accounting treatment. This corrects the ledger only, not operational state.
Does the proposed action require posting into a closed period or changing a closed fiscal year? Stop. Reopen only under explicit approval and the controlled close procedure.

When uncertain, stop before posting and ask the finance owner or CA. A duplicate document or an unlinked manual journal usually makes the audit trail worse.

Draft Edit Or Cancel

For supported transactional documents, draft-stage correction is the simplest path:

Edit a DRAFT document where a PATCH/edit screen exists.
Use the document’s Cancel action to retire an unwanted DRAFT document.
A draft cancellation does not reverse accounting because the draft has not posted.
A cancelled transactional document remains visible and immutable; it is not hard deleted.

Examples include Proforma Invoices, Sales Orders, Delivery Challans, Purchase Orders, Goods Receipt Notes, and Letters of Credit, subject to each workflow’s current status rules. Do not assume every draft type exposes cancellation in the current web screen; verify that the saved document actually offers Cancel.

The Cancel button on an unsaved form may only discard form changes and return to the list. It is not the same as cancelling a saved document. Verify the saved document’s status after any document cancellation.

Warning: Posted, received, dispatched, invoiced, paid, matured, completed, or otherwise transitioned operational documents generally cannot use the draft cancellation path. Do not expect a manual journal to reverse their workflow effects.

See Automatic Accounting Postings for the statuses and actions that create accounting entries.

Operational Cancellation

An operational document cancellation is appropriate only when the document exposes a current Cancel action and satisfies that action’s status guards. Use that action instead of deleting records or entering an accounting-only offset.

For draft transactional documents, cancellation changes the document to CANCELLED but creates no accounting reversal. Supply Weave does not currently provide a generic cancellation or reversal for every operational posting. In particular, do not assume a posted Commercial Invoice, posted Supplier Bill, received Goods Receipt Note, or dispatched Delivery Challan can be cancelled merely because a related draft document could be cancelled earlier.

If no supported action exists, retain the source record, document the issue, and obtain the approved operational and accounting treatment. A current-period adjustment may correct financial reporting, but it does not repair inventory or workflow state.

Settlement Reversal

The following ACTIVE documents have supported cancellation paths that create a separate compensating journal:

Expense Entry
Supplier Payment
Customer Receipt
LC Realization
Customer Advance, if it has not been applied
Supplier Advance, if it has not been applied

Use the document’s Cancel action. The cancellation normally:

requires the current UTC date to belong to an OPEN accounting period;
preserves the original journal and marks it reversed;
creates a separate reversal journal with debit and credit sides swapped;
changes the settlement document from ACTIVE to CANCELLED; and
rolls back the supported related business status in the same transaction.

Current business-status rollbacks include:

Cancelled document	Supported rollback
Supplier Payment	Related Supplier Bills return from `PAID` to `POSTED`.
Customer Receipt	Related Commercial Invoices return from `PAID` to `POSTED`.
LC Realization	Related Commercial Invoices return to `POSTED`, and the Letter of Credit returns from `REALIZED` to `MATURED`.
Expense Entry	The expense becomes `CANCELLED`; there is no related invoice status to restore.
Unapplied Customer or Supplier Advance	The advance becomes `CANCELLED`; an applied advance cannot be cancelled.

The action is rejected when its status or relationship guards no longer match. Do not work around a rejection with duplicate documents. Investigate the linked records and obtain approval for the next action.

Manual Compensation

Manual journals are immutable. They have no edit, delete, or generic reverse action. Use Compensate on the manual-journal detail page to create a linked ADJUSTMENT with the original lines exactly swapped.

An original journal can be compensated once. A compensation cannot itself be compensated. Use a separate approved correcting journal when another accounting effect is required.

The operator supplies Compensation Date, Related Accounting Period, Reference, Provided By, and Reason. External Working Paper and Narration are optional. The compensation preserves the original Type, Currency, Exchange Rate, accounts, and descriptions.

The original manual journal remains visible, and the detail pages link the records through Corrects and Compensated By. Compensation offsets accounting only; it does not roll back business-document statuses.

Follow Manual & Adjustment Journals for the complete workflow and verification steps.

Opening-Balance Reversal And Replacement

A posted opening-balance import cannot be edited. Use Reverse on the import:

Obtain approval and enter a specific nonblank reversal reason.
Confirm the current date belongs to an OPEN accounting period.
Select Reverse and verify the import becomes REVERSED.
Confirm the original opening journal remains visible and is marked reversed.
Confirm a separate OPENING_BALANCE_IMPORT_REVERSAL journal exists with swapped lines.
Create a replacement draft using the frozen cutover date.
Validate, approve, post, and reconcile the replacement as a new import.

The originally posted content hash remains reserved after reversal. Corrected content must produce a different hash. Use the detailed Opening-Balance Import Guide for validation, posting, reversal, and replacement controls.

Current-Period Adjustment

Use a manual ADJUSTMENT when the approved treatment is to correct the ledger in an open period and no supported source-document reversal should be used.

Set Date to the approved actual posting date in an OPEN period.
Set Related Accounting Period to the period the issue concerns.
Complete Reference, Reason, and Provided By.
Add External Working Paper when one exists.
Use only active leaf accounts and an exactly balanced, nonzero entry.
Verify both the adjustment and the original remain visible over the appropriate report range.

Warning: A current-period adjustment does not rewrite the related prior period. Related Accounting Period is evidence only. Reports ending before the adjustment’s actual posting date do not include it.

Period Or Fiscal-Year Reopen

Reopening is an exception, not a routine correction method. Prefer an approved current-period adjustment when policy allows it.

Monthly Period

A CLOSED monthly period may be reopened only while its fiscal year remains OPEN. The action requires a nonblank reason. Obtain approval, post only the approved correction, rerun reports and reconciliations, and close the period again with a reason linked to the correction evidence.

Fiscal Year

A fiscal-year reopen is a controlled year-end action. Later closed fiscal years must be reopened first. The workflow reopens period 12 and, where a close journal exists, creates an exact YEAR_END_CLOSE_REVERSAL dated at the fiscal year end. It preserves the original close journal and close run. After the approved correction, complete the period and fiscal-year close procedures again; re-close creates a new sequenced close run.

Use the Operator Period-Close Checklist. Do not reopen solely to make an error message disappear or to avoid documenting a current-period adjustment.

Original And Reversal Visibility

Supply Weave preserves accounting history:

A settlement or opening-balance reversal keeps the original journal, marks it reversed, and adds a separate compensating journal.
A manual compensation keeps the original manual journal and adds a linked ADJUSTMENT; manual vouchers do not use the system journal’s reversed flag.
A fiscal-year reopen keeps the original close journal and close run and adds the controlled close reversal where applicable.
Reports include original and compensating postings when their dates fall within the selected report scope. They do not silently erase the original.

Seeing both entries is expected. Verify the net effect and linkage instead of expecting the original to disappear.

Source Dates And Reversal Dates

Dates determine when corrections appear in reports:

Entry	Date behavior
Original system posting	Uses the source document’s business date.
Original manual journal	Uses the selected Date, or the current date if omitted.
Settlement reversal	Uses the current UTC date and current open period.
Opening-balance reversal	Uses the current UTC date and current open period.
Manual compensation	Uses the selected Compensation Date, which must be in an `OPEN` period.
Current-period adjustment	Uses the selected actual Date in an `OPEN` period.
Fiscal-year close reversal	Uses the fiscal year-end date in reopened period 12 as a controlled exception.

An ordinary reversal is not backdated to the original source date. Therefore a report ending before the reversal date can still show the original effect, while a later report can show both entries. Use report dates deliberately during verification.

Business Status Rollback

A reversal changes business status only when the dedicated service implements that rollback. Settlement cancellation performs its supported journal reversal and status rollback atomically: either all changes commit or all roll back on failure.

Manual compensation and current-period adjustment have no operational rollback. Opening-balance reversal changes the import to REVERSED, but does not alter later operational documents. Fiscal-year reopen changes fiscal-year and period-close state under its own controlled workflow.

Always verify both sides after an action:

The original and compensating accounting records.
The source document and every linked document whose status should have changed.
Inventory, advances, customer or supplier balances, and LC status where relevant.
General Ledger, Trial Balance, and affected financial statements.

Evidence To Retain

Retain evidence that lets another reviewer understand the error, approval, action, and result:

Original document or voucher number and source evidence.
Description of the error and when it was discovered.
Approver, approval date, and applicable CA or finance-owner instruction.
Reversal, cancellation, compensation, replacement, or adjustment reference.
Reason, Provided By, Related Accounting Period, and External Working Paper where applicable.
Original and compensating journal IDs or voucher numbers.
Source date, reversal or compensation date, and actual posting periods.
Before-and-after business statuses and linked-document checks.
General Ledger and financial-report review for relevant date ranges.
Audit Log entries for supported audited actions.
Period or fiscal-year reopen and re-close reasons, actors, timestamps, and close runs where applicable.

Return to the Accounting User Guides index.

Reviewed against the application on: 2026-08-21