How does INVOICED_FLAG in MTL_MATERIAL_TRANSACTIONS get set to 'Y'?

I am not too familiar with the autoinvoicing process yet but I have come across a lot of bugs on INVOICED_FLAG being set to 'N' rather than NULL which is supposed to make the transaction ineligible for autoinvoicing.  But my problem is the opposite.  We have been getting the following error in RA_INTERFACE_LINES_ALL:

This line has the same transaction flexfield as another row in the interface table. For each transaction line, the combination of interface_line_context and interface_line_attribute values must be unique.

Based on our analysis, this error occurs because autoinvoicing attempts to create an invoice for transactions in MMT that have already been processed thus creating duplicate records in the interface.  The question now is why doesn't the INVOICED_FLAG of transactions successfully invoiced get updated to 'Y'?  I cannot find any documentation on which specific process/program or at what specific point is INVOICED_FLAG supposed to be changed to 'Y'?  This should be my starting point for investigating why the program intermittently fails to update the said flag.