What should I do if a student has already done all the work for my course elsewhere?
Talk to the person in your department who is responsible for overseeing the undergraduate education program (the title is usually a variant on "undergraduate advisor" or "director of undergraduate studies"). Such individuals usually have the authority to waive and approve courses that are not part of the "official" study plan when exceptional circumstances arise. This individual should be able to tell you what is necessary to obtain a waiver, and what could be used to substitute for it within the program.