A refund of an unallocated amount that has already been issued can be cancelled. For example, if there is a change of circumstance that results in a further liability for the client or if the check issued to the client is lost in transit it may be required that the agency cancel the refund payment.
When a refund payment is cancelled, the unallocated amount of the payment received instruction will not be updated. Instead a replacement transaction will be created that will have an unallocated amount equal to the refund payment amount that was cancelled. This is done for accountability and traceability purposes. The unallocated amount in the replacement transaction can then be allocated towards outstanding liabilities or if required it can be refunded to the client.