Unclaimed property is often an involved, complex arena, and developing guidelines to ensure compliance is vital to identifying manageable challenges before they snowball into more substantial setbacks. All too often, organizations only consider developing formal policies and procedures — or reintroducing outdated iterations — when faced with the possibility of an unclaimed property audit. Here, we’ll dive into the role of unclaimed property policies and procedures as they relate to unclaimed property reporting services.
What Should Policies and Procedures Include?
In short, policies and procedures should incorporate a detailed narrative of an organization’s protocols surrounding the management of inactive, uncashed, and dormant accounts and the process of reporting these accounts to the appropriate jurisdictions.
For each policy pertaining to particular departments, detailed procedures should be outlined and work in tandem with the company’s greater standard accounting and record retention policies. Unclaimed property policies and procedures act as a foundation for compliance with reporting requirements, maintaining a streamlined method to process, report, and remit unclaimed property.
While a sound policies and procedures document must be unique and fitting for a particular company, all documents should address the following items:
- Identify all areas of an organization that have the potential to generate unclaimed property, including accounts payable, accounts receivable, payroll, etc.
- Ensure a consistent, repeatable process is applied throughout the organization for adherence to state unclaimed property laws.
- Establish appropriate general ledger accounts to move escheatable items.
- Create roles for each individual responsible for a facet of the process and set deadlines for information.
- Create appropriate segregation of duties to reduce the risk of internal fraud.
- Define levels of management sign-off throughout the process.
- Lay out detailed record retention provisions.
Why It Pays to Be Proactive With Policies and Procedures
Being proactive about developing your company’s unclaimed property policies and procedures offers several advantages, including:
- Comprehending reporting responsibilities: For many, the lion’s share of unclaimed property exposure resides in a handful of states. Staying abreast of the legal requirements in these states where the majority of business occurs can be effective uses of resources in certain instances.
- Identify potential sources of unclaimed property: It’s crucial to leave no stone unturned when developing company policies and procedures since states consider myriad types of property as reportable.
- Be audit-ready — in perpetuity: If auditors or stakeholders require documentation regarding unclaimed property decisions, following policies and procedures ensures the legwork is complete.
- The learning curve for new employees is shortened with clearly defined procedures for the entire process.
Fortify Unclaimed Property Policies and Procedures With Experienced Specialists
State administrators are targeting smaller and smaller organizations for compliance review concerning unclaimed property laws. Non-specialists — especially companies that lack dedicated unclaimed property employees — often run into challenges navigating complicated laws and struggle to establish long-term compliance processes. That’s where Dunbar steps in.
We have assisted companies just like yours in developing unclaimed property policies and procedures to minimize future audit exposure with comprehensive solutions geared toward compliance, efficiency, and transparency, including property recovery services. For more information, contact us today!
