KeepUP™ Blog

7/12/18 8:12 AM

Unclaimed Property Exposure; What Is Your Risk?

Every company’s situation is different, but nearly every organization must identify potential unclaimed property risks and liabilities to avoid damage to finances, resources and reputations. It can be difficult to conduct an assessment of your processes after every reporting cycle. However, if you’re not sure when the last review was performed, or if you know it’s been more than a year or two, holders should carve out time to complete an exposure assessment.

Exposure Risks

Having an inefficient process, neglecting to keep up with, or overlooking, changing legislation and personnel that are not experts with escheat responsibilities are just a few areas where a company can open themselves up to the risks of unclaimed property exposure which can lead to:

  • Lost opportunities to find and reunite owners with their property
  • Increased likelihood of audit
  • Increased penalties/interest when escheat requirements are not being followed
  • Excessive expenditures of time and money to resolve issues
  • Negative public assessments

To avoid these issues and effectively manage data and legislative requirements, organizations must establish and execute smart policies and processes. There are a number of universal action steps that holders can take to decrease their exposure and achieve an efficient process.


Topics: Compliance, Reporting, Audit, Recordkeeping, Best Practices

9/14/17 9:41 AM

Escheat Compliance: Don't Forget About Account Receivable Credits

Accounts receivables (A/R) is an important component to most companies and often overlooked when it comes to unclaimed property compliance. This is unfortunate because A/R can create a substantial amount of unclaimed property and be a key focus in unclaimed property audits. Consequently, any effective escheat program should include policies and procedures for reviewing and including accounts receivables in the reporting process.

How Does A/R Become Unclaimed Property?

Accounts receivables become an unclaimed property issue when credit balances occur that go unresolved and age beyond the respective dormancy period (typically 3 to 5 years). These unclaimed credit balances typically can be found on a company’s books and records in three forms.

  1. On Account Customer Credit Balances
  2. Unidentified Receipts
  3. Write-offs
On Account Customer Credit Balances

On account customer credit balances can become unclaimed property when activity with the customer ceases and the credit balance ages beyond the statutory dormancy period which can vary across jurisdictions.  Customer credit balances can result from a variety of reasons including but not limited to returned product, overpayments and invoice adjustments.  It’s important that an organization understand their specific causes for credit balances, and has standard procedures in place to regularly review and resolve them before they age and become unclaimed property.

With any unclaimed property type, including A/R, it’s vital to maintain documentation sufficient to substantiate the resolution of any credit balance. Procedures should include standardized documentation requirements for resolved credit balances to ensure the outcome can be proven under the scrutiny of an unclaimed property audit.


Topics: Compliance, Recordkeeping, Best Practices

1/27/17 10:37 AM

Delaware Approves Legislation to Overhaul Their Unclaimed Property Laws

On January 27, 2017, the Delaware House of Representatives passed Delaware Senate Bill 13 (“S.B. 13”), finalizing Delaware’s legislative body’s fast-track effort to overhaul the state’s unclaimed property laws.  The bill will now be sent to Governor John Carney, who has indicated he will sign it. The legislature’s approval of S.B. 13 is a much anticipated development in the unclaimed property world, as Delaware attempts to address the scrutiny it has endured over the last few years, which culminated in July 2016 with the critical decision in the Temple-Inland case.  Although S.B. 13 addresses many of the areas on which corporations and unclaimed property practitioners have been seeking guidance, a few key issues in the current Delaware act have yet to be addressed.  Following are some of the key changes for those areas the Senate Bill has definitively addressed.

Look-Back Periods, Statute of Limitations, and Record Retention

One of the main areas of contention with Delaware’s escheat act has been its audit look-book period and statute of limitation provisions.  As Delaware’s act is currently written, a holder may be subject to a reach-back period of 20+ years, which is especially problematic because such a lengthy audit reach-back period typically far exceeds generally accepted corporate document and data retention policies.  In recognition of this clear misalignment, S.B. 13 stipulates a 10 year look-back period for ongoing and future audits.  The look-back period is based on the calendar year in which the Delaware audit notice was mailed to the holder.  Accordingly, the look-book period for holders already subject to a Delaware audit will vary depending on the age of the specific audit.  To ensure consistency, the look-back for the Voluntary Disclosure Agreement (“VDA”) program will also be amended to 10 years.  We note that this change for VDA’s merely represents a codification of what occurred administratively this past summer following the Temple-Inland decision.

Under S.B. 13, the statute of limitations increases to 10 years from 3 years (or 6 years in cases where a report contained an omission of unclaimed property that was more than 25% of the value disclosed in the report).  This 10-year statute is tolled if a holder is placed under audit or if the Delaware State Escheator determines that the report contained a fraudulent or willful misrepresentation.


Topics: Delaware, Compliance, Due Diligence, ULC, Reporting, Audit, Recordkeeping, Voluntary Disclosure Agreements, gift cards, U.P. Law

9/22/16 10:53 AM

Industry Focus: 3 Ways Healthcare Companies Can Ensure Proper Escheatment

In addition to the massive numbers of transactions that end up in the unclaimed property bucket for large healthcare providers, the nature of provider transactions also causes unique issues in this industry. Escheatment for healthcare providers and insurers can be very complex, especially if an organization has not yet come into compliance. However, MarketSphere has identified several high-level unclaimed property focus areas providers can target to get well on their way to proper escheatment.


Topics: Reporting, Recordkeeping, Healthcare

8/18/16 12:28 PM

Fall Reporting Readiness: Due Diligence Tip Roundup

When you’re looking ahead to a new unclaimed property reporting cycle, it’s important to identify some of the aspects of reporting that haven’t gone so well in past cycles. Due diligence often falls into this area, because it can be challenging to sort through varying requirements of multiple states and ensure all steps of the due diligence process are carried out accurately.

With little concentrated effort, you and your team can probably come up with solutions to streamline due diligence processes—and even avoid triggering future issues. Paying attention to the process now may take a little time and require a meeting or two, but the preemptive effort now will pay off later in less stress, better accuracy, better records in the event your company is audited, and potentially lower liabilities.

Due diligence for fall reporting in particular can be more demanding than for summer or spring reporting cycles. For most corporations and banks, fall reporting contains a majority of the states, so process requirements are much more demanding. Unclaimed property personnel must manage greater printing, mailing, email and phone calls — both inquiries and responses. Although there is a longer break between summer and fall reporting deadlines than between fall and spring deadlines, many staff members are on vacation before the fall cycle, which can make report processing more challenging.

Challenges of Unclaimed Property Due Diligence

Some of the most challenging due-diligence-related reporting issues fall into these categories:

  • Keeping up with varying state time thresholds triggering due diligence
  • Getting the timing of mailing, responding and reporting correct
  • Meeting specific wording requirements of different jurisdictions
  • Preventing and dealing with fraudulent responses
  • Owners can misunderstand efforts to reunite them with their property

Topics: Due Diligence, Recordkeeping, Best Practices, Fraud

6/3/16 5:03 PM

Unclaimed Property Policies: You Know They’re Working When Nobody Notices

Unclaimed property tends to lie below the surface within a company’s day-to-day operations—until it doesn’t. And then suddenly, because things have gone wrong, abandoned and unclaimed property can become highly visible.

It takes confident action to keep unclaimed property from being noticed 

In many organizations, unclaimed property has been a second thought for a number of years, and coming into compliance can require a substantial investment of time and resources. The situation is even more challenging if a company doesn’t have in-house staff experienced in unclaimed property management.

One of the greatest challenges is managing surges of escheatment work that can interfere with other tasks. Every state has different laws, and they change frequently. It takes time to keep up with the changes and follow them. Some states are very aggressive in enforcement (often with help from third-party contingent-fee auditors).


Topics: Recordkeeping, Best Practices

2/15/16 9:22 AM

4 Ways Company Size Affects Unclaimed Property Compliance


Although unclaimed property laws are the same for all sizes of companies, an organization’s size does have some bearing on how unclaimed property should be managed.

Smaller companies often have less to worry about, because they are less often the target of auditors, and it’s less complicated to deal with smaller numbers of records.

Larger companies face a number of complex challenges related to reporting of unclaimed property. Below are four of the most common.


    1. Recordkeeping: massive numbers of records and greater potential for human error 

      Many small businesses still keep paper records, which can complicate research if needed for an unclaimed property assessment. On the other hand, most small offices in any industry have few enough records that research isn’t overly cumbersome.

      Larger companies have a different type of problem. While they may have more sophisticated recordkeeping systems, owner and transaction records often are spread across multiple ERP systems. It’s easier to set up feature-heavy recordkeeping systems to track records and account for resolved unclaimed property, but the sheer number of records that needs to be properly coded for unclaimed property tracking can lead to many more incidences of human error.

Topics: Due Diligence, Reporting, Audit, Recordkeeping

1/7/16 4:02 PM

Unclaimed Property Audits: Disproving Assumption of Abandonment

One of the most frustrating aspects of an unclaimed property audit is that auditors sometimes assume certain properties are abandoned or unclaimed, when the holder believes the property should not be defined as unclaimed. If the holder doesn’t take specific action to prove the auditor’s claim is incorrect, the property will be considered abandoned or unclaimed for the purposes of the audit—and assessed accordingly.


Topics: Reporting, Audit, Recordkeeping

11/12/15 2:37 PM

Financials: Getting Your Unclaimed Property House in Order for 2016

Every company’s budgeting situation is different, but it’s not uncommon for unclaimed property budgeting considerations to be overlooked or deemphasized compared to other, more familiar, budgeting concerns. In truth, because unclaimed property management is an ongoing discipline with potentially costly consequences for mismanagement or neglect, it should be addressed with the same level of concern as many other budget items.

The challenge is documenting and justifying costs for a financial discipline not everyone in the company understands. But the reality is, in a normal year, unclaimed property management requires routine funding for items such as staff hours, software and due diligence services. If a company faces an audit, especially if a potentially large assessment could be in the cards, it is necessary to prepare by setting aside special funds.

How can a company forecast unclaimed property expenditures for any given year? You can begin by studying common scenarios and accompanying costs. Below, to help you understand budget considerations in varying circumstances, we provide three common hypothetical business scenarios, each containing unique budgeting considerations. Start with one of these scenarios closest to your own situation, then add or subtract unique unclaimed-property-related items for your company to come up with a list of costs you can research to put together your tailored unclaimed property budget for 2016.

When you’re ready, contact us and we’ll help you walk through expectations for next year. Most unclaimed property holders seek professional assistance in estimating potential exposure and establishing a reserve within the budget to account for potential liability.

Budgeting Scenario #1:

Ordinary Annual Compliance with Unclaimed Property Laws

Every unclaimed property holder must budget for ordinary annual compliance, whether it is managed in-house or outsourced. To come up with budgetary needs for this, simply identify known and estimated costs, which should be relatively static from year-to-year. The only normal variation would be in the volume of last-contact mailings from one year to the next, which would result in varying postage costs.


Topics: Recordkeeping, Best Practices

10/2/15 8:55 AM

Finding Owners: Balancing Unclaimed Property Due Diligence Notification with Protection

Abandoned and unclaimed property due diligence can be tricky in a number of ways. Of course, it's important to carefully follow laws in each state to which property must be reported, which can be a challenge. Due diligence efforts must be timed just right so the process is complete before reporting is required. Fraud also is a concern. Is there anything your company can do to protect potential unclaimed property owners during due diligence actions?


Topics: Due Diligence, Recordkeeping, Best Practices