As the majority of Unclaimed Property Audits are performed by 3rd party (or outside) auditors and most audits are Multi-State audits, be prepared to spend significant time preparing and dealing with the auditors: this summarizes the primary and first type of Unclaimed Property audit: the LONG audit. You should easily expect your audit to last at LEAST 12 months. Some Fortune 500 audits have been known to take 2-3 years.
Depending on the circumstances, Unclaimed Property Audit scope, or the location of the auditor’s office, State Governments may choose to audit your company for Unclaimed Property (also called Escheat Funds) using one or a combination of the following types of Unclaimed Property Audits:
- Third Party Audit – the state may provide authority to audit your company to an independent auditing firm. These firms typically receive between 12%-13% of the Unclaimed Property liability that they determine. This provides great incentive for them to look under every rock for any flavor of Unclaimed Property during the audit.
- Desk Audit – the auditors don’t visit your company; rather the Unclaimed Property Audit is conducted from the office of auditors (either state employees or 3rd party auditors). This may seem like a desirable situation at first, until you find out that there are a multitude of requests made by the auditors. In addition, the auditors do not have time to wait in your office until you fulfill their requests.
- Field Audit – expect to provide a desk or office to the auditors. This may occur at some time during your Unclaimed Property Audit. Once the data has been submitted and all of the auditors’ requests have been completed, you may receive a request from the auditors for an extended stay at your office.
- Multi-State Audit with other state jurisdictions – at first, you may think that you only received an Unclaimed Property Audit letter from one state. But after a few days, additional letters come. As the weeks progress, more states’ Unclaimed Property Audit letters are delivered. Pretty soon, you could have 35 different states auditing you at once. As the auditors accumulate more and more states into the fold, their overall compensation also increases. There is great incentive for the auditors to have as many states as possible in their Unclaimed Property Audit of your company.