There’s a lot of talk in the unclaimed property industry about increased audits across all industries. However, some industries still are being targeted more often than others. Oil and gas is one such industry. Below are primary reasons for this, along with solutions to mitigate potential financial damage from high assessments.
- Complexity of the industry. It’s more likely holders in oil and gas will misunderstand and/or mismanage the complex unclaimed property process. Auditors are more likely to uncover reasons to justify penalties, interest and overdue assessments. Assessments are likely to be larger than in industries where there is less complexity.
Mitigation: Create systems and controls to correctly account for all unclaimed property. Review them at least annually and work with expert unclaimed property specialists in this area to ensure compliance with all statutes. Make sure records accurately reflect the true nature of unclaimed amounts.
- Large transactions. The industry tends to involve larger total dollar amounts. Auditors can get higher assessments for the same amount of effort.
Mitigation: Keep good records and follow all mitigation steps listed here to minimize assessments in general. Order a professional oil and gas pre-audit assessment to identify potential risks in any future audit.