Finding the best way to manage unclaimed property risk is very challenging, especially if you are filing for the first time and not under state audit. If you find your company is in an initial compliance situation you need to immediately initiate an outreach program and make every effort to contact the owners of the property as soon as you have identified and quantified your past-due obligations.
The following tips will help you to establish a solid set of internal controls for unclaimed property reporting:
- Resolve Outstanding Liabilities. The biggest threat caused by past-due obligations comes from a state (or multistate) audit. It is often companies who have the best intentions that unwittingly overlook their obligations or do not fully understand them. The laws of unclaimed property reporting are complex and unyielding and leave companies to face fines and penalties and risk incurring a reputation which they do not deserve.
- Develop a Corporate Philosophy Regarding Due Diligence. Due diligence means mitigating liability to unclaimed property at its source. You need to find the missing people and assist them to reconcile their accounts.
- Reconcile Accounts to Prevent Overpayment. Part of the process of due diligence must include a reconciliation of all the accounts so you can identify and eliminate any duplicate payments and other accounting errors that will cost you money.
- Document a Formal Compliance Roadmap. In today’s corporate governance-driven environment it is essential to have a working environment where compliant behavior is compulsory and your executives are wholly committed to openness throughout the entire company. You must put your compliance expectations on a formal footing and include everyone who is involved in the system.
- Encourage Continuous Learning and Review. Regular in-house training sessions should be held to talk about legal changes and to reinforce your company’s policies and procedures. Become more proactive where unclaimed property strategy is concerned by encouraging industry interaction from your managers so they are up-to-date with any new requirements. They also need to understand the latest trends and be aware of any impending legislation.
To ensure consistency throughout your organization, training should be given to all the departments and executives involved. You should also review performances regularly and modify reference materials so all the staff have access to valid “living documents” they can use to manage the operation successfully.
Take Action
Get in touch with a Sovos unclaimed property expert to learn more about managing your unclaimed property compliance processes.
