Delaware VDA vs. Verified Report: Understanding the Key Differences

There are several important distinctions between the Delaware Voluntary Disclosure Agreement (VDA) program and the Delaware Verified Report process that companies should understand when evaluating their unclaimed property compliance obligations.

Delaware Voluntary Disclosure Agreement (VDA)

The Delaware VDA program is a comprehensive, multi-year compliance initiative, typically spanning two or more years, in which a holder conducts a detailed review of its books and records. The objective is to assess historical compliance, identify any unreported unclaimed property, and quantify potential exposure.

This program is administered by the Delaware Secretary of State (SOS) and is designed to be a self-review process. However, it is not informal. Companies entering the program must follow strict, established testing procedures and documentation standards. Each participant is assigned an independent third-party VDA administrator (acting on behalf of the state) who reviews the holder’s workpapers and methodologies to ensure the review was performed in accordance with Delaware’s expectations.

Companies may proactively elect to participate in the VDA program, which is generally viewed as a more favorable path to resolving exposure. Alternatively, the Secretary of State may send an invitation letter to companies it believes may be out of compliance. If a holder receives such an invitation, it typically has 90 days to respond and enroll in the program. Failure to respond within this timeframe results in referral to the Delaware Department of Finance for audit, which is a significantly more burdensome and potentially costly outcome.

A key benefit of the VDA program is that, if completed successfully, it often allows companies to mitigate or eliminate penalties and interest, making it an attractive option for proactively addressing historical exposure.

Delaware Verified Report

In contrast, the Delaware Verified Report program is a targeted, shorter-duration review, typically completed within one year. This program is administered by the Delaware Department of Finance, not the Secretary of State, and functions as a compliance check on a company’s most recent filing (or non-filing).

Under this program, Delaware, often through third-party audit firms acting as program administrators, selects holders and issues a notification letter outlining the scope and requirements of the review. While third parties are involved, the process is fundamentally different from an audit and is explicitly not considered a formal examination.

Instead, the Verified Report focuses on:

• Reviewing the most recent annual report
• Identifying errors, omissions, or inconsistencies
• Providing the holder an opportunity to correct and validate their filing

Unlike the VDA, the scope is intentionally limited, as it does not involve a full historical lookback or comprehensive risk analysis. Delaware’s broader objective with this program is to periodically touch all reporting entities (approximately once every five years) to promote ongoing compliance and accuracy in annual filings.

Summary

While each program is different, both are mechanisms for Delaware to ensure holders’ stay compliant with unclaimed property reporting.

If you or your company has received a notice from the State of Delaware, be mindful of the type of notice received. Contact our team of experts to assist in navigating any notice received. We would be pleased to guide you and your company in determining next steps to ensure you are compliant with your unclaimed property obligations.

*Content contained in this article is considered accurate as of the publish date.