KeepUP™ Blog

11/19/15 3:15 PM

How to juggle an unclaimed property audit with your REAL job

by Greg VerMulm

Unclaimed property management is often considered to be a minor business function until it begins to eat away at a company’s finances or staff hours — or, in some cases, reputation. Then it becomes major.

If you are responsible for management of an unclaimed property audit, you will find it’s not possible to conduct your daily business as you did before the audit. At certain intervals during the audit process, an unclaimed property project lead will have extreme demands put upon him or her in terms of time. In addition, if this person is not well-versed in unclaimed property, the stress level can be very high. Depending on the situation, there can be a lot at stake.

Minimizing the impact of an unclaimed property audit

A guiding principle to follow to better juggle audit responsibilities with your regular job is this: preparation, planning and risk mitigation conducted long before an audit takes place can extensively reduce the time you will be required to spend managing the audit. These steps also reduce potential financial impact on your company — but today we are talking about the role of an unclaimed property audit project lead.

Before your company is ever identified as an audit recipient, you can take actions that will shorten and/or simplify the process in the event you are audited. These are the basics:

  • Complete an exposure analysis with a professional unclaimed property provider to determine potential risks, costs, possibility of audit, penalties, interest and look-back assessments. This will allow you to take action more efficiently before the audit takes place.

  • Establish a perpetual unclaimed property team, with one person as the lead. During an audit, you will already have your team in place.

  • Create and maintain policies and procedures specifically to minimize negative impacts of unclaimed property on your company. If you are audited, this will not only streamline the process, but will prove to auditors your company is interested in complying properly. This in itself can persuade auditors to work with you instead of against you.

  • Consider engaging in Voluntary Disclosure Agreements (VDAs) with the states before your company is identified for an audit; this usually reduces resulting assessments and penalties. 

Practice efficient workflow principles during an unclaimed property audit

After you receive an audit notice, your focus will change. Analysis, assessment, team, policies and procedures are still important. However, your immediate need is to juggle the periodic high time demand of audit management with your current job duties — and, of course, lead your team to best-possible results.

In some ways, juggling audit duties with your regular job is like any other periodic high-demand time. The unique thing about unclaimed property audits is that they are not as familiar as other types of audit. In addition, if an unclaimed property holder has not carefully prepared unclaimed property reports in the past, an audit can become confrontational.

Here are a few proven, practical ideas to help you juggle your intense audit responsibilities and your regular job:

  • Nurture relationships with state administrators now to set the stage for better collaboration during an audit

  • With your audit team, establish a clear plan and follow it without changing midstream if possible

  • Prepare periodic pre-audit assessments, so you understand internal unclaimed property processes before an auditor digs into them; when you receive an audit notice, immediately conduct a pre-audit assessment, so you know what the auditor might find

  • Establish formal procedures and protocol, including communications protocol, to help minimize staff impact

  • Delegate tasks efficiently to team members and build in progress meetings

  • Don’t share more information than necessary with your auditor — this can lead to irregular audit investigations

  • Negotiate audit scope limits; for example, it’s often possible to block simultaneous audits with multiple states

  • Inform the auditor ahead of time about major company or industry changes in the past year; this can reduce the amount of disclosure needed

  • Use your best diplomacy skills to manage collaboration and avoid misunderstandings and confrontations

  • Use the services of a professional unclaimed property advisory firm — their extensive experience with many different unclaimed property holders can be drawn upon to streamline the process for you, as well as improve results

All in all, if you take time to think the process through before an audit ever happens, then put policies, procedures and a solid unclaimed property management team into place. Your ability to juggle the work as the audit project leader is likely to improve substantially.

Topics: Audit, Best Practices