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.
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.
Essential First Steps To Reduce Exposure
- Locate all unclaimed property within the organization and determine how these records are being organized and reconciled. Don’t overlook items that are not obvious such as credit balances.
- Identify gaps, errors and slowdowns in your system. Determine the root causes of these issues so you can solve the problems proactively at their origins instead of reacting to them repeatedly every time a reporting cycle begins.
- Work with appropriate personnel to brainstorm effective ways you could fill these gaps, correct errors and speed up processes.
- Take steps as a team to put the people, advisors, technology and other resources in place to improve your unclaimed property functions.
- Create a written plan and project calendar. Use it throughout your team as a framework for taking action.
Time and personnel are precious commodities in every organization. Undertaking a successful exposure assessment on your own can tie up resources and leave room for concern if the review and processes are conducted by someone who is not an escheat expert. After all, would you consider having someone complete your tax filings if they have had little involvement in, or knowledge of, tax requirements? Engaging with an experienced unclaimed property advisor will reduce the internal drain on resources and ensure that recommendations are meeting legislative requirements and are specific to your organizational needs.
Always keep your eye on the goal: a more efficient and effective unclaimed property program that reduces your exposure and potential liability. It’s much better to be proactive and uncover potential risk, so that you can deal with any issues before an audit occurs.
Contact us for a free/no risk consultation at firstname.lastname@example.org or 844.357.1099