KeepUP™ Blog

3/13/15 11:43 AM

The Experts’ Four First & Most Important Steps of an Unclaimed Property Audit

by Greg VerMulm

4-first-steps-of-unclaimed-property-audit1At the beginning of an abandoned and unclaimed property audit, unless you’ve had prior experience with this type of audit, it’s difficult to know how to maximize benefits during the audit for your company, as well as minimizing pitfalls. Maybe you experienced an audit when you worked for a previous unclaimed property holder or worked as a professional unclaimed property auditor — either as an employee of a state or for a third-party auditing company. If so, your current company is lucky to have the benefit of your expertise.

Otherwise, because holder companies are not often audited frequently, you are like the rest of the “normal” people facing their first unclaimed property audit. You have a basic idea how an unclaimed property audit will go based on other types of audits you’ve participated in, but you haven’t got a clue how to avoid and reduce the potentially serious damage caused by complex unclaimed property issues, let alone capture potential benefits arising from this type of audit.

You might be surprised to know some of the most important opportunities for holders to make the best of unclaimed property audits occur at the beginning of the process.

After serving as advocates for hundreds of holders in many different circumstances, the professional advisors at MarketSphere have identified a short list of the most important steps of an unclaimed property audit.

  1. Don’t lose the notice. It might sound strange, but the first mistake some companies make related to an unclaimed property audit is ignoring or misplacing the audit notification. This sometimes happens because the notification goes to an employee who isn’t regularly involved in unclaimed property. This person might be unclear as to what should happen with the notice, or doesn’t think it’s important, so it gets placed in a slush pile for future research, where it probably will be forgotten. This opens your company to the risk of missed deadlines — and even a risk of annoying the auditor, who is someone with whom you would much rather have a positive working relationship.
  2. Create policies and procedures to keep your team organized. After the audit scheduling notice is received, your company should spring into action, assembling an efficient team of audit handlers and establishing processes to keep management of the audit under control. Both the team and the processes you establish will depend on the seriousness and specific nature of the unclaimed property issues you expect to face during the audit. If you have been assigned responsibility for managing the audit, part of your task is to nurture this team into a knowledgeable work unit that administers these processes with high-efficiency.
  3. Find your unclaimed property. Many companies leave this step until well into the audit or they don’t do it at all until the auditor forces them to. It’s extremely important to complete an internal assessment of your unclaimed property before you have a great deal of interaction with the auditor, so you understand your unclaimed property status and can more effectively set the stage for best results. It’s common for companies to miss unusual or buried types of unclaimed property an auditor will be highly motivated to find, which can inflate assessments.
  4. Set the tone for the audit. It’s important to enter an abandoned or unclaimed property audit from a position of strength and knowledge, rather than allowing the auditor to take the lead. For example, at the beginning of the audit you have the best chance of limiting the number of states involved through a nondisclosure agreement. There are many other nuances involved in setting the stage for a positive audit experience. One of the most effective actions you can take to ensure you are headed toward best results is to get a professional audit consultant on your side — someone who makes a living identifying unclaimed property audit issues and solving them.

Completing these specific four steps immediately after receiving notice of an abandoned property or unclaimed property audit can make all the difference in the world in audit results. In fact, it’s a good idea to begin thinking about these types of issues before an unclaimed property audit ever hits your radar. Many of the steps your company would take to ensure a positive audit outcome are the same steps you can take to maximize unclaimed property compliance efforts, improve efficiency and establish a stellar reputation for customer service.