How can returns due to e.g. damaged or insufficient quality be handled?

• Option 1: the acceptance of the (defective) goods is refused, i.e. they are returned to the supplier. In this case, companies have to provide clear evidence and documentation on the refusal process so that the auditor can transparently verify physical and bookkeeping flows of incoming and outgoing materials.
• Option 2: The goods are returned, but the customer issues an SD for them. In this case, the supplier must have booked out the corresponding quantity in the mass balance. The returned goods can then be booked in into the mass balance again (with the new SD).