Congratulations. You’ve survived the audit! Now What?


May 6, 2013, Blog post by Moyer & Osibodu

Your unclaimed property audit is finally over and you’ve settled all your past due unclaimed property reports with the audit state(s).  What’s next?  Take the lessons learned from the audit experience and use them to minimize the risk of another long drawn out unclaimed property audit, especially with another state that did not participate in the prior audit.  Some lessons learned:

1. Perform your research and due diligence early in order to return the unclaimed funds to the rightful owners or determine whether the funds are not unclaimed.  For example, it’s easier to conduct the research when a check is 90 days outstanding as opposed to 3 years outstanding.

2. Document why an item is not unclaimed property.  If returning the property to the owners, document the replacement check number, payee name and address.  If the funds were applied to an open account balance, also document this in your files.

3. Review your document retention policies and procedures.  As you have undoubtedly found out that, in the absence of records, the auditors will estimate or extrapolate to determine your unclaimed property for those years with no records.  At a minimum, all your unclaimed property reports in addition to the proof of payments to the states should be retained permanently (i.e. scan and save to your permanent files). 

4. Review your merger and acquisition procedures to insure that unclaimed property is part of the due diligence process.  Read more on this subject in our April blog post.

5. Track and report the remaining unclaimed property identified during the audit to the respective states that did not participate in the audit.  In addition, plan to report in future those unclaimed transactions that were identified during the audit but not yet dormant.

6. Implement an unclaimed property compliance reporting program.  In addition, written policies and procedures and a formalized process for identifying, tracking and reporting unclaimed property would minimize the risk of another unclaimed property audit.  

As you are reviewing your current process and lessons learned, consider all the compliance options available for your future process.  Purchasing unclaimed property compliance software (i.e. license or hosting environment) or compliance outsourcing offers viable options that can be customized to fit your specific needs.        

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