Preparing for an Unclaimed Property Audit - Basic Presented by: Daniel Mayer, UPRC, LLC David Poehler, MarketSphere Consulting, LLC

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Today’s Agenda • Identifying audit triggers • Preparing for an unclaimed property audit • Managing the audit effectively • Establishing best audit practices

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Audit Triggers • Industry and company publicity • State of incorporation or principal place of business • No reporting history, missed filing periods • Reporting errors, misreporting, and/or underreporting property types • Large size company • Recent merger and acquisition activity • VDA rejection

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Preparing for an Unclaimed Property Audit

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Preparing for an Audit ASK THESE QUESTIONS • Who is performing the audit? • State auditors • Contract/Third party auditors • Kelmar, ACS, Verus, SAS, ASUS, etc. • Which state(s) are involved? • Single state vs. Multi-state • Will the state(s) or their agent sign a confidentiality agreement? © 2014 - All Rights Reserved

Preparing for an Audit • What is the audit scope? • Years included • Legal entities • Property types • What audit procedures will be used? • Lack of records • Sample and extrapolation • Do you have relevant records kept on-site and off-site? © 2014 - All Rights Reserved

Preparing for an Audit • How far back do you have available records? Are they complete? • What are the auditor’s timeline and site requirements? • Should you obtain assistance from outside experts to address audit issues? • Should you perform a risk assessment?

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Preparing for an Audit • Perform an internal risk assessment (for all significant operating legal entities) • Document Internal Controls • Review Chart of Accounts • Consider all company policies and procedures related to unclaimed property compliance and reporting • Review previously filed AUP reports • Compile supporting documentation, including due diligence records © 2014 - All Rights Reserved

Preparing for an Audit • Perform an internal risk assessment • Review voided and outstanding check lists • Obtain non-ERISA benefit plan information and evaluation potential liability • Review contracts with Third-party Administrators • Involve legal counsel in the internal review and in correspondence with the auditors

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Preparing for an Audit • Preliminary data to provide to auditors • Corporate organization chart • Chart of accounts • Merger and acquisition history • Previously-filed state unclaimed property reports • Bank disbursement account documentation • General ledger trial balance, with a focus on: • Write-off accounts • Cash, Liability, AR, Income accounts © 2014 - All Rights Reserved

Preparing for an Audit • Audit considerations • Documentation availability • Timeframe – Periods available • Completeness of available records • System conversions/upgrades • Understand write-off history for AP and Payroll accounts • Review Chart of Accounts and Trial Balance © 2014 - All Rights Reserved

Managing the Audit Effectively

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Managing the Audit Effectively • Assemble an audit defense team • Holder point of contact • Key representative from Payroll, AP, AR, and other property categories • Consultants & attorneys with UP Experience • Obtain state authorization letters • Execute confidentiality agreement • Limit participating states © 2014 - All Rights Reserved

Managing the Audit Effectively • Understand the audit process • Audit scope – legal entities, property types/periods • Information transmission – Email, FTP, E-Data rooms • Process the audit requests timely • Carefully document the final disposition of each audit item © 2014 - All Rights Reserved

Managing the Audit Effectively • Simultaneously create and update an audit calculation of liability • Assists in monitoring the audit progress • Helps prioritize remediation efforts • Challenge the auditor’s samples and assessments with statistical confirmations • At the close of the audit, obtain state release agreements © 2014 - All Rights Reserved

Establishing Best Audit Practices

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Establishing Best Audit Practices • Gain support from upper management • Perform a cursory review of operations to identify compliance posture and risk areas • Perform a high level quantification • Assemble an audit defense team comprised of: General Accounting, Legal, Treasury, Audit, and Outside Consultants and Attorneys • Maintain a documentation transmission log © 2014 - All Rights Reserved

Establishing Best Audit Practices • Hold internal progress meetings frequently • Ask questions to the auditors - Purpose of documentation requests - Use of sampling & extrapolation - Sampling methodology • Stop any purging schedule of any pertinent records

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Establishing Best Audit Practices • Obtain any prior filing records • Perform due diligence • Document effective supporting documentation • Most important: DON’T FORGET TO LEARN FROM THIS AUDIT EXPERIENCE. CONTINUE COMPLIANCE. © 2014 - All Rights Reserved

Your Feedback is Welcome •Questions or Comments?

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Questions • David Poehler - MarketSphere Consulting, LLC - 404.857.1894 - [email protected] • Dan Mayer - Partner, UCPR LLC - 770.437.0506 - [email protected] © 2014 - All Rights Reserved