Written Policies and Procedures: The Key to Unclaimed Property Compliance

By: Eric Mauldin, Senior Manager

Written Policies and Procedures: The Key to Unclaimed Property Compliance

It is no secret that Unclaimed Property is a function within a company that nobody wants to own. First, who should oversee this function? The Tax Department? The Controller? Shared Services? Unfortunately, there is no clear-cut answer and if you ask 10 different companies, you are likely to get 10 different responses. In many instances, this responsibility gets passed around like a hot potato as employees change jobs, companies merge, offices move and system conversions are implemented. As a result, maintaining compliance becomes more and more difficult and it is imperative that written policies are developed and adhered to.

There are several reasons for having properly developed and comprehensive written policies and procedures. First, it increases the likelihood that a holder will get into and remain in compliance. Second, it helps to establish each individuals’ roles so in the event of employee turnover, the transition is relatively seamless. Finally, if a company is audited – this is one of the initial documents an auditor will request. Providing meaningful policies and procedures and proving that they are being followed, will only enhance your standing with the auditor.

While developing these processes can be a bit painful and time-consuming at the outset, the long-term benefits far outweigh any initial headaches. Fraud is a very real occurrence in the realm of unclaimed property, so while it is important to establish a central point of contact, of equal importance is developing segregation of duties so that there are multiple people involved. This is also key because it takes away the burden of an individual having too much responsibility. Teamwork is paramount because deadlines must be met several times a year to ensure that reporting is completed on time.

While a solid Policies and Procedures document needs to be unique to be able to fit what works best at a particular company, all documents should hit on the following items:

1. Establishing the types of unclaimed property to be reviewed (i.e. – Accounts Payable, Payroll, Accounts Receivable, etc.)

2. How to handle a liability that reaches a certain number of days outstanding (i.e. – 60, 90, 180)

3. Establishing appropriate G/L accounts to move any escheatable items

4. Assurances that all items related to compliance are being followed to state requirements such as due diligence letters, aggregate thresholds, reporting due dates, etc.

5. Creating concise roles for each individual responsible for a certain facet of the process and establishing deadlines for information

6. Record retention

Once this document is established, be sure to review your policies at least annually in order to capture unforeseen circumstances such as a change in the company structure, accounting system conversions, state law updates, etc. While the procedures will generally remain the same, it needs to be a fluid write-up so that it can remain current.
Having a working Policies and Procedures document is beneficial to a holder in so many ways. And who knows, maybe it can help the process to run so smoothly that unclaimed property won’t be such an unpopular subject! We can dream, right?

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