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AP & P2P Session Recap by Jim Sadik – Unclaimed Property: Beyond Compliance Requirements

By: Jim Sadik Robert M. Tucci |

Robert Tucci and I recently exhibited and presented at the 2018 IOFM AP & P2P Spring Conference & Expo in Orlando, FL.  APP2P connects Accounts Payable executives, leadership and their teams, to focus on issues impacting their departments daily including procurement, payment automation, fraud, and compliance. True Partners was proud to connect with numerous Accounts Payable professionals via our exhibit booth and our interactive session: Unclaimed Property: Beyond Compliance Requirements –  How Critical Unclaimed Property Operational Processes & Procedures Can Impact a Company’s Level of Hidden Financial Exposure.

Key Takeaways from the presentation:

  • Annual compliance reporting involves a “non-uniform” process which requires detailed attention to the unique features of 54+ reporting jurisdictions.
  • Voided accounts payable checks as well as outstanding checks can factor into a company’s compliance obligations, and often represent unseen reporting and audit risk.
  • Statistical sampling can be utilized by state auditors to build efficiencies into calculating an unclaimed property liability, in the absence of complete records.
  • Shared services centers can play a positive role in managing the outcome of multi-state unclaimed property examinations.

We received quite a few questions from session attendees and wanted to share those with you, in case you might have some of the same questions:

Q: What parameters are auditors utilizing to schedule accounts payable transactions as unclaimed property?

A: Generally, all outstanding checks may be deemed unclaimed after reaching a certain age (typically 3 or 5 years after the issuance date).  In addition, auditors will likely schedule all voided checks that were voided more than 30 days from the original issuance date.  While this is an aggressive tactic, without proper supporting documentation, the initial presumption is that these transactions represent unclaimed property.

Q: How long should a company maintain supporting documentation, in case a company is ever audited for unclaimed property?

A: While every jurisdiction has its own record retention provision, a general rule of thumb is to maintain accounting, treasury, due diligence and reporting documentation for fifteen (15) years to cover a reporting period of ten (10) years for jurisdictions with a five (5) year dormancy period.  This meets the provisions of both Delaware and the guidelines of the Revised Uniform Unclaimed Property Act (RUUPA) of 2016.

Q: When undergoing an unclaimed property internal review or audit, should a company focus on the largest dollar transactions first?

A: From a state actuals perspective, yes; the largest dollar items will lend themselves to the largest liability.  Keep in mind however, if your company does not maintain records for the entire review scope, a portion of your liability may be estimated to your state of corporate domicile.  If statistical sampling is utilized, the largest dollar transactions may not necessarily have the greatest impact on a company’s overall unclaimed property exposure.

See True Partners at future AP & P2P events, including the Fall 2018 Conference & Expo at The Mirage Hotel in Las Vegas, on November 12-14, 2018.  We highly recommend this event to financial professionals who are interested in learning more about operations, automation, fraud, risk and compliance issues impacting the accounts payable functions in organizations.  For more information please see the conference website at https://www.iofm.com/conference-fall/.

We had a great time at AP & P2P Spring 2018 and want to thank the IOFM team for putting on a great conference. If you have any questions, please feel free to send Robert or me an email at robert.tucci@tpctax.com or jim.sadik@tpctax.com.