Reversals and Refunds can, often times, be very similar in that they’re both negative cash and negative net worth transactions. However, there is a basic difference between the two and it depends on context of the situation.
From a basic conceptual level:
a) A Reversed Monetary Contribution is essentially saying “the Monetary Contribution didn’t really happen.” For example, consider a bounced check. The check was deposited, but the bank rejected it and the committee never actually received the money. In order to create the Reversal, click on the transaction to view the details and at the top of the window click the Is Reversal box, then click the Update button.
b) A Refund is saying, “the Monetary Contribution happened but we took action to undo it.” For example, the contribution exceeded limits so a refund check was sent back to the donor. To add a Refund, locate the three dots (hot dog menu) to the right of the transaction from either the Register or within the Transactions section of the entity’s record. Click them and select Add Refund. A new window will appear and from there you can add the Refund details.
Another general rule to keep in mind: If the payment in question was deposited into the account, it would be a refund. If it was not deposited, it would be a reversal.
With regards to Compliance, we generally will show the Reversal Monetary Contributions on the Monetary Contribution schedule as a negative and the Refund with expenses. However, this will vary per agency. Some have specific schedules for either or both of these.