At the heart of abandoned and unclaimed property management are administrative tasks, such as identifying stale-dated property, producing due diligence letters, taking calls from owners and reporting to the states. However, states’ and third-party auditors’ enforcement efforts often upset the unclaimed property routine. Even companies with proper escheatment programs find themselves facing the possibility of stiff penalties, substantial accumulated interest and increased escheatment amounts.
To address enforcement challenges, those responsible for abandoned and unclaimed property in holder companies must understand and plan for potential risk exposure. After an audit is scheduled, the company must carefully navigate the process to minimize resulting liabilities and ensure auditors do not over-reach. Dealing with an unclaimed property audit can be time-consuming and costly, and it’s a lot to ask of personnel with many other business responsibilities.
MarketSphere’s expert audit and consulting services help organizations minimize risks and mitigate the effects of non-compliance.
The proliferation of third-party auditors, states’ realization that significant dollar amounts are involved and an escalation of unclaimed property litigation have increased companies’ likelihood of an unclaimed property audit. Escheat compliance is no longer optional, and being audited is not a matter of if, but when. Unclaimed property audits are disruptive and costly, but limiting an audit’s scope and establishing ground rules can reduce the impact.
MarketSphere’s audit services team:
In the past, some state administrators could not dedicate resources to enforce unclaimed property statutes. As a result, many property holders were either unfamiliar with their reporting responsibilities or became lax in reporting. Some companies hold years of unreported unclaimed property or have written it off. If an audit reveals noncompliance, holders are often hit with substantial escheatment amounts, penalties and interest. The overall impact is far larger than the original value of the property.
MarketSphere offers a streamlined program to assist nonreporting or under-reporting holders to cost-effectively and efficiently become compliant. Services include:
A Voluntary Disclosure Agreement is an essential tool in any company’s unclaimed property mitigation toolbox. VDAs allow companies to become unclaimed property compliant more efficiently with greater control, more favorable review procedures and shorter lookback periods than state-driven audits. In many cases, states waive penalties and interest for VDA participants, significantly mitigating costs.
MarketSphere is well versed in managing and completing the VDA process in all jurisdictions that offer them. Services include:
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’s much better to uncover potential risk before an audit. However, understanding the escheatment laws and nuances practically requires a master’s degree in unclaimed property.
Through a highly consultative risk and exposure assessment, MarketSphere goes below the surface to identify underlying unclaimed property issues. This risk and exposure assessment can:
Mergers and acquisitions present distinct unclaimed property challenges. For companies acquiring another entity, understanding the consequences of that entity’s historical noncompliance can help to proactively mitigate inherited risk and provide an opportunity to integrate historical risk into the M&A transaction. For companies that are potential acquisition targets, compliance with unclaimed property laws can assist you with negotiations and make the company a more attractive acquisition target.
Companies that have completed recent mergers or acquisitions often find themselves at greater risk of unclaimed property audits. Consequently, resolving historical issues can significantly reduce the risk of an unclaimed property audit.
MarketSphere helps companies involved in mergers and acquisitions navigate the unclaimed property ramifications of M&A transactions. Services include:
Unclaimed property compliance and reporting involve irregular cycles, multiple jurisdictions and various accounting processes, making comprehensive policies and procedures essential. MarketSphere’s professional unclaimed property advisors are experts at analyzing client conditions, identifying best-practice policies and procedures, and helping staff implement them to achieve specific goals.
MarketSphere’s policy and procedure development:
If you have received an invitation letter from Delaware to join their Voluntary Disclosure Agreement (“VDA”) program, MarketSphere can assist you with understanding your options for responding to the letter and implementing a course of action that best suits your organizations’ needs. More information regarding the Delaware VDA program can be found here.
We offer a customized approach to fit your specific needs.
On Sept. 14th 1-2pm CDT, MarketSphere will deliver information to help attendees gain a better understanding of what unclaimed property is, why it is important and risks that could be faced for non-compliance. Tools and strategies will be discussed that aid an organization to identify gaps in their compliance program and improve procedures. This session is free to attend and is 1 CPE credit eligible.