The Key to Unclaimed Property Compliance

It is no secret that unclaimed property is a function nobody truly wants to own.

Many businesses ask: who should oversee this function? The Tax Department? The Controller? Shared Services? Unfortunately, there is no clear-cut answer.

This responsibility is often 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 difficult, and written policies and procedures must be developed.

Importance of Policies and Procedures

There are several reasons for having properly developed policies and procedures:

• Increase the likelihood that a holder will get into and remain in compliance.
• Help establish everyone’s roles so that the transition is relatively seamless in the event of employee turnover.
• If audited, these policies and procedures are one of the initial documents an auditor will request. Providing meaningful policies and procedures that are being followed will enhance your standing with the auditor.

While developing these processes can be time-consuming initially, the long-term benefits far outweigh any initial headaches.

Fraud is common within unclaimed property, so while it is important to establish a central point of contact, it is equally important to develop segregation of duties so that multiple people are involved.

This takes away the burden of an individual having too much responsibility. Teamwork is paramount, as unclaimed property deadlines must be met several times a year.

What Your Policy and Procedures Should Cover

While your policies and procedures document will be unique based on your business needs, all documents should cover the following points:

1. Indicate the types of unclaimed property to be reviewed (Accounts Payable, Payroll, Accounts Receivable, etc.).
2. Clarify how you will handle a liability that reaches a certain number of days outstanding (60 days, 90 days, 180 days).
3. Establish appropriate G/L accounts to move any escheatable items.
4. Assure all items related to compliance are following state requirements (due diligence letters, aggregate thresholds, reporting due dates, etc.).
5. Create concise roles for each individual responsible for a specific facet of the process and establish deadlines for information.
6. Determine record retention.

Once your document is established, be sure to review the policies annually to capture unforeseen circumstances, such as a change in the company structure, accounting system conversions, and state law updates.

And who knows, maybe these policies and procedures can help the process to run so smoothly that unclaimed property won’t be such an unpopular subject! We can dream, right?

‍Need help establishing your company’s unclaimed property policies and procedures? Get started here.