Is this covered in Rules:

[VaCoach]

I saw this happen and wondered if it was handled correctly. Please let me know your thoughts and where in the rulebook is this covered.
Team A has 7 team fouls and team A-1 if fouled before a shot is taken. The foul is reported to the scorer's table and the ref indicates the foul shot situation to be a 1 and 1.(bonus) The Lead official before bouncing the ball to A-1 on the line tells players on the lane that it is to be a two shot foul situation. A-1 shoots and misses, ball lands on the floor and no one reacts, then coach yells "rebound", and player A-2, retrieves the ball and puts it into his basket. On one else has moved from the line. What should be done ( if anything) to correct the mistake of the ref telling both teams it was to be a 2 shot foul? The officials discussed this for about 3 mins and then decided to count the basket and give the ball to Team B out of bounds. Needless to say, Team B coach was not happy.
What rule covers this?