Tuesday, July 19, 2011

Factors That Trigger Unclaimed Property Audits

One of the topics that most unclaimed property want to know (but are afraid to ask) is:   What factors lead to a state's decision to commence an audit?  Obviously, there are a multitude of factors that influence this decision, and from time to time, the audit of a particular holder may be completely random, or part of an industry-wide "sweep" of many holders in the same line of business.

While certainly not an exhaustive list, Section 1301:10-3-04(E) of the Ohio Administrative Code has a non-exclusive list of factors that may be used by the Director "in determining whether reasonable cause exists to believe" that a holder should be audited.  Among the factors are:
  • the size of the holder;
  • the "types and amounts" of accounts reported (and, presumably, whether some types of accounts are not being reported);
  • the holder's past reporting history, "relative to other entities of the same size or industry";
  • significant merger, acquisition, or disposition activity;
  • owner complaints regarding due diligence (or lack thereof);
  • failure to perform due diligence or provide complete reporting information; and
  • the filing of negative reports in consecutive years.
If many of the items below apply to your company, an unclaimed property audit may be in your future.

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