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.