Abandoned and unclaimed property audits are notorious for being so lengthy that the cost and time involved become a substantial operational factor for holder organizations. If you’ve been in this position, your first thought may have been that the scope of the audit seems unbalanced with the footprint of unclaimed property in your company.
Many elements of an unclaimed property audit inherently cause complexity and lengthen the process. The good news is that some of these elements are within the holder’s power to change, with the result being a less lengthy audit.
Let’s take a look at some of the elements of an abandoned and unclaimed property audit, and explore some ways holders can shorten the process.
Some of this is within the holder’s power to improve, and some of it isn’t. The volume of unclaimed property within the scope of an audit includes multiple subsidiaries and branches, numerous property types, and/or high volume of stale dated property. It may be possible to limit any single audit to certain business units and types of property. To do this, negotiate an audit agreement that specifically limits the audit. This doesn’t keep states from coming back for audits of additional units, but addressing a limited scope of unclaimed property within your company may be preferable to dealing with all of it at the same time. When a lengthy audit is simply due to large amounts of stale dated property within your company, the only way to reduce audit length is to complete a thorough risk assessment and exemption analysis as early as possible. Presumably, this would result in discovery of accounting errors, duplications, and legal exemptions, so you can resolve them before those records become part of the audit dialogue.
If your audit agreement does not limit the number of states involved, the auditor may choose to invite additional states to join the current audit. Once again, limiting the audit to a certain number of states doesn’t keep other states from coming back later and conducting audits. However, limiting the audit may be preferable in order to reduce the current burden on staff time and budget.
Is it possible to shorten the length of an audit? The answer is yes, as long as the holder organization is willing to take certain steps. It may not work in every audit, but the benefits of taking these steps extend beyond the audit, because they streamline the process, which minimizes the impact of unclaimed property upon the holder organization.
In general, it’s possible to shorten the length of unclaimed property audits in some cases by taking the audit seriously, getting records in order, and efficiently using resources. It helps to learn about the audit process and get all your ducks in a row before you receive an audit notice. With the recent increase in audits, it pays to assume your company eventually will face an unclaimed property audit.
To learn more about becoming unclaimed property audit-ready, contact your unclaimed property specialists at MarketSphere and schedule an audit consultation.
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