When we receive a deposit and later go back and apply the funds to an invoice the AR-R report lists both the deposit and the allocation as a payment which overstates the total.

I see the problem.  It is something with the "Deposits Applied or Received" question that is being handled incorrectly.  If you select Received, you get the original deposit payment as a positive (which is what you should get) and then get the application again resulting in doubling of the amount.  If you select Applied, you do not get the original receipt but the application shows the deposit as negative againse a positive invoice netting to 0.  Neither one is correct.  Will get it fixed.