Estimated reading time: 3 minutes, 14 seconds

Valerie JundtAccounting firms that perform audits need to be more aware of unclaimed property, held by clients, property that must be handled correctly and properly reported to state governments. But too often, says Thomson Reuters' Valerie Jundt, companies spread the amounts across different accounts and report "This is what this is what the accountants told us to do."

Properly recording unclaimed property during audits was one of the topics that Jundt, director of the unclaimed property group for Thomson Reuters' Tax and Accounting business, is addressing in the 2009 Seattle Roundtable for Unclaimed Property and Property Tax, led by Thomson professionals in Seattle on Sept. 18.Teaching accounting firms the ins and outs of handling unclaimed property is a something that Jundt, a former state audit administrator, had experience in. A few years ago, she reached out to a CPA society and ended up speaking on this topic annually. Among her topics was the information that unclaimed property should be placed in a reserve or protected account.

Unclaimed property comes from many sources and ranges from uncashed tax refunds, uncashed traveler's checks; apartment security deposits not claimed by former tenants, unspent balances on gift cards, and investment securities, such as stock, that owners have forgotten about. In fact, Jundt says many businesses end up with compliance issues when they acquire other companies, along with the unclaimed property that comes with those ventures. Most owners of that property are living and custodians have an obligation to attempt to contact them.

Studies have found that fewer than 20 percent of custodians are in compliance with state laws. And while states cannot directly turn unclaimed property into revenue, they can claim interest generated. States can also assess penalties and interest and can also perform audits and charge the companies audit. In place, this can be $200 per day per auditor, Jundt says. There is more than $30 billion of such property in the hands of custodians.

Jundt is typically hired by companies to perform risk assessments, helping to determine if companies are filing information correction and how they would fare in audits. Thomson's staff also helps determine if there are amnesty or voluntary disclosure programs and utilizes an outsourcing company that files reports annually for clients.

The unspent amount on gift cards is a particularly important topic because of their widespread usage and the fact that so many are not used, or amounts are left unspent, say $1.34 on a $50 gift card that has been used. Some states split that money with the card issuer, using the assumption the issuer has a right to make money on gift cards. Jundt says some will let the merchant recoup 60 percent while 40 percent will fall under state custody. Small amounts may not be a problem. Utah, for example, exempts card with balances of less than $25.

Issues of Special Important to Accountants.

GAAP issues. Failure to properly account for unclaimed property liability could be in violation of Generally Accepted Accounting Principles (GAAP).

State Laws. Unclaimed property compliance is required under all states’ unclaimed property statutes.

Sarbanes-Oxley implications. SOX requirements of internal controls and certification of internal controls mean businesses must properly record unclaimed property.

 

 

 

 

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
Last modified on Sunday, 02 June 2013
Read 8868 times
Rate this item
(0 votes)

Visit other PMG Sites:

Template Settings

Color

For each color, the params below will give default values
Tomato Green Blue Cyan Dark_Red Dark_Blue

Body

Background Color
Text Color

Header

Background Color

Footer

Select menu
Google Font
Body Font-size
Body Font-family
Direction
PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.
Ok Decline