Escheatment

Introduction

The State of Delaware, along with nine other participating states (NJ, NH, MI, TN, RI, IL, WV, MA, and NV), notified a long-term Broniec client of their intent to perform an audit for escheatment compliance.

Background

The state auditors reviewed extensive media from our client’s bank statements and liability reconciliations for the bank accounts, to compile a complete listing of any items they believed might be unclaimed property from the listing’s assigned sample period. A statistical analysis was performed on each list to provide a sample listing for research. Each item was assigned an extrapolation factor against which it would be multiplied to determine the baseline liability owed. Then, the baseline liability was extrapolated back to 1985 based on the yearly sales figures for each group. Our client had a potential baseline liability of $40,875,298.32.

The Audit

Our responsibilities included:

• Provide examples of remediation from the AP1 listing.
• Track the progress of research on each listing.
• Create a data file for the business unit listing from the raw data found during the review to locate possible duplicate payments.
• Create a data file for business units from our prior audits to allow for complete review in case remediation occurred in a different entity, etc.
• Research and provide remediation detail for the AP1 & AP2 listings.
• Assist with providing explanation of what additional backup was needed for the AP3 & PR1 listings when the states requested more information.
• Escalate items of importance.
• Request Iron Mountain batch detail and pull the detail for possible remediation.
• Provide feedback on the remediation detail provided by the two other research teams.
• Submit the remediation detail via the states’ FTP portal for review.
• Provide explanation of the ISR and Report of Examination, with the calculations in spreadsheet form.

Results

Some accomplishments for during the review included:

• Of the 486 items on the four listings worked, only 55 were considered not remediated or remediated outside the normal course of business. The baseline period total for the four lists combined was $358,153.42. This extrapolated to $975,109.44 on the original ROE dating back to 1981. The revised total reflecting the change from 1981 to 1985 was just over $800k.
• The NUE sample was eliminated from the ROE due to our remediation support combined with the prior escheatment from that location.
• For every dollar of potential liability at the start of our work, our client paid less than nine tenths of a penny or $0.008762 on that baseline total for each item.