Project Invoice Credit Memo Created Direct in AR

I have open SR for a Project Billed invoice where a Credit Memo for the original invoice was created direct in AR using the Project Invoice Source.  In PA, the both the original invoice number and credit memo is getting dropped from the Invoice Review screen.  User cannot create a new draft invoice because of the error message  "Need to release all lower draft invoices for this project".  I'm surprised this isn't a fairly common problem.  Has anyone else run across this?  What is the fix and what controls can be put into place in AR to prevent?