Christa DeOliveira, CIA, CCEP
With the fall reporting season behind us and the hustle and bustle of the holiday season upon us, it could be easy to lose sight that the spring reporting season, especially due diligence activities, is just around the corner. To survive and thrive through another reporting cycle here is a quick guide for successful reporting:
- Identify and export potential unclaimed property from source systems
- Load files into TRACKER
- Determine which properties are dormant
- Conduct due diligence
- Update records as necessary
- Finalize the report
- Send reports and remittance to states
Step 1- Identify and export files with potential unclaimed property from source systems: this is undoubtedly a critical step as it feeds all of the other steps. For complete reporting it is essential to capture all general ledger and industry specific unclaimed property that your company generates. Many companies have ongoing processes throughout the year to achieve this. Also, many companies review records either prior to loading or shortly after initially loading to verify that their data does not contain any accounting errors and they represent liabilities that are due and payable. (For more information on common accounting errors, see Accounting Errors Disguised as Unclaimed Property by Christa DeOliveira)
While every step of unclaimed property reporting is important, some upfront work to ensure complete information is captured really pays off in the long run by increasing efficiency and ensuring subsequent processes only need to be performed once. You will run the risk of under reporting if a property category is omitted or if you exclude property within a certain date range.
Step 2- Load files into TRACKER: Loading data files with key data extracted from source systems into TRACKER is necessary for TRACKER to determine what will be dormant for the next reporting cycle.
Step 3- Determine which properties are dormant: TRACKER will calculate what is dormant based on key fields such as the identified Property ID Code and the last activity date. These fields are also used to determine which properties will need due diligence to be conducted.
Step 4- Conduct due diligence: TRACKER will identify which properties require due diligence based on the properties that meet the state level required criteria. As one of the underlying premises of unclaimed property is to returning property to its rightful owner, this outreach to owners, along with meeting any statutory requirements, also provides holders the opportunity to get property back into the hands of the owners. (For more information on due diligence, see Unclaimed Property Due Diligence Essentials, by Deborah Beauchamp)
Step 5- Update records as necessary: Update records in TRACKER, where appropriate, as any responses to due diligence letters are processed.
Step 6- Finalize the report: Generate reports and prepare remittances accordingly. TRACKER will use the records, including any changes made to them to calculate what is due to the state and generate final reports.
Step 7- Send reports and remittance to states: Many holders compile reporting packets containing electronic media, Verification Checklists, and remittances to send to states and jurisdictions. However, in the case of securities and mutual funds, in addition to any cash remittances, proof of transfer of shares is also necessary. Similarly, in the case of safekeeping unclaimed property, such as unclaimed safe deposit box contents, remitting tangible property according to the applicable guidelines is required.
In recent years, this process is changing based on the increase of required (and optional) online reporting availability. While there have been some changes to the vehicle of reporting the basic underlying goal remains unchanged: submit an accurate and complete report and any associated remittances to the appropriate state or jurisdiction on time. (For more information on what dictates the appropriate jurisdiction refer to A Primer on the Priority Rules of Unclaimed Property, by Christa DeOliveira.)
In the past, it was always recommended to keep a copy of any cancelled checks and send the report with some type of receipt confirmation, whether that was Certified, return receipt requested through the US Postal Service, or using a courier service such as FedEx or UPS. In light of new technology and delivery methods, this could be altered to include keeping copies (printed or electronic) showing confirmation of uploaded reports. If an EFT is used for payment, keep documentation of the payment in the event that subsequent proof of payment is ever needed.
With another cycle of unclaimed property compliance reporting just around the corner, it can be beneficial to take a moment and reflect about the specific steps involved. With planning and the right tools for unclaimed property compliance, you can work through the important step of capturing your company’s unclaimed property liability and take on the process of the subsequent steps to report with confidence.