Creating an Effective Unclaimed Property Program

Transcription

1 Creating an Effective Unclaimed Property Program Presented by: Ann (Moore) Fulmer, Keane Jeff Henshall, Ryan UPPO Presentation Disclaimer Use of the Unclaimed Property Professionals Organization, Inc., (UPPO) name of copyrighted materials in this presentation does not constitute an endorsement by UPPO of a member, vendor, product or service. The content represents the opinions of the author and not necessarily those of UPPO. This information is not intended as legal advice and should not be used to replace the advice of legal counsel. UPPO Antitrust Statement UPPO has a policy of strict compliance with U.S. federal antitrust laws. UPPO members and/or meeting attendees cannot come to understandings, make agreements, or otherwise concur on positions or understandings, make agreements, or otherwise concur on positions or activities that in any way tend to raise, lower or stabilize prices or fees. Members and/or attendees can discuss pricing models, methods, systems, and applications, as well as certain cost matters that do not lead to an agreement or consensus on prices or fees to be charged. However, there can be no discussion as to what constitutes a reasonable, fair or appropriate price or fee to charge for any service or product. Information may be presented with regard to historical pricing activities so long as such information is general in nature and does not include data on current prices or fees being charged in any trade area. Any discussion of current or future prices, fees, discounting, and other terms and conditions of sale, which may lead to an agreement or consensus on prices or fees to be charged, is strictly prohibited. 1

2 Today s Agenda Benefits of establishing an effective unclaimed property program Key Ingredients Building Blocks to consider while constructing the program Controls to ensure continued efficiencies and effectiveness. Benefits of Establishing an Effective Program Reduce the overall exposure for unclaimed property liability due to the states; Maintain account owner, customer, vendor and employee relationships; and Reduce the risk of audit. Tone at the Top Key Ingredients Communication between lines of business Willingness to commit time, talent, and treasure. 2

3 Building Blocks Needed to Construct an Effective Program Step 1 - Define the Responsibilities of the Unclaimed Property Program Degrees of Responsibility Reporting Only Reporting and Due Diligence Assuming Responsibly for all Remediation Efforts, Due Diligence and Reporting associated with potential UP properties. Monitoring Compliance from the various lines of business. Monitoring changes to state regulations to ensure ongoing compliance and how they could impact your company. Step 2 Define the Scope of the Unclaimed Property Program Identify lines of business to be captured in the UP Process. Determine the accounting cycles that have unclaimed property exposure Define what constitutes Unclaimed Property within the organization Inactive and Lost Account Owners Outstanding Disbursements, Unapplied Cash, Credit Balances, etc. associated with General Ledger Accounts Transactions handled by TPA s 3

4 Step 3 Identify the possible risk associated with the failure to report; i.e. Interest and penalties due to the states for late filings or failure to adhere to state mandates. Step 4 - Establish the Enforcement Abilities of the Program Establish a Chain of Command with Upper Management to ensure that all lines of business adhere to written policies and procedures. Step 5 Establish Timelines to ensure Compliance Determine when At Risk properties need to be reported / transferred to the Unclaimed Property Compliance Group. Establish When and Who completes Remediation Efforts to contact Property Owners prior to it becoming reportable to the states. Establish timelines and protocols for completing state mandated Due Diligence efforts. Set Spring and Fall Reporting schedules. Step 6 - Communication Channels Establish protocols and primary contact points throughout the organization to ensure that the right people are being contacted. Document how internal systems will talk to each other and feed relevant information to UP Group. Step 7 - Systems Determine what systems will be used to facilitate the tracking of reportable properties, generation of due diligence letters, and state mandated unclaimed property forms; i.e. homegrown system, utilizing free software provided by states, third party program, or third party processor. 4

5 Controls to Ensure Continued Efficiencies and Effectiveness Policies and Procedures Develop corporate policy covering unclaimed property Procedures for the entire escheat process Each functional area generating UP should have policies and procedures P&Ps should be reviewed and updated annually Beneficial when turnover and position changes occur P&Ps posted internally, accessible to all stakeholders Assess if P&Ps require customization (subsidiaries) Ongoing Monitoring Responsibility of the management team Track key business processes/controls of AUP compliance program Monitoring conducted on a constant basis Provides insight into effectiveness of controls/integrity of transactions within process Ensures that P&Ps and business processes operate effectively 5

6 Periodic Risk Assessments Performed from an audit and fraud perspective Verify amounts in property liability account to sources records Trace other aged accounts unassociated with liability account from source records to disposition Was the owner account refunded? Was it reported on an unclaimed property report? Is all property making it into the reporting process? Assess compliance with all current and new statutory requirements Internal Audit Internal audit should be engaged for process review on a regular basis (frequency TBD) A full audit should be commenced if process gaps or risks are identified during ongoing monitoring or risk assessment Mergers and Acquisitions Due diligence included in all mergers and acquisitions balance sheet and unrecorded liability must be assessed determine property types generated by acquired company Has the company been reporting? No Develop a process Yes - Assess the company s current process Centralization - determine whether to merge function into existing process or remains decentralized 6

7 Yearly Education/Updates State requirements and rules are changing more frequently Continuing education is critical UPPO Holder Advocates State Holder Seminar Security and Control Develop a strong data security and internal controls process Who has access to raw data? Set appropriate access to data and reporting software Who has authority to request/issue replacement payments? Assess if all information in data files is required for state reports Set up a review process Separation of duties Security and Control Integrate technology solutions throughout process Leverage data encryption when transferring property records Utilize secure reporting websites Maximize benefits of EFT and wire for filing submissions 7

8 govwatch Basic- Instructional Video Tracks legislative and regulatory activity by: State Priority Categories (Dormancy Periods, Due Diligence, Gift cards/gift Certificates, Mineral Rights, Miscellaneous, Penalties and Interest, Reporting, Stored Value Cards, Unclaimed Property) Weekly reports provided by UPPO govwatch Plus Includes basic features Customized monitoring Choose type and frequency of priority watch triggers Unique user-id and password to access your govwatch reports Questions Jeff Henshall, Principal Abandoned and Unclaimed Property Practice, Ryan Ext C Ann (Moore) Fulmer, CPA, CFE, CIA Senior Manager, KEANE Consulting & Advisory Services P C