5 Strategies for Building an Effective Unclaimed Property Compliance Program

Unclaimed property compliance is a growing concern for businesses.

Failure to manage it can lead to audits, penalties, and reputational damage.

Building an effective unclaimed property compliance program is essential for minimizing risk.

But how can companies stay ahead of complex regulations and reporting requirements?

In this article, we’ll explore five proven strategies to help you create a robust compliance framework.

Whether you're starting a new program or refining an existing one, these steps will ensure your business stays compliant and protected.

Let’s dive in.

How to Build an Effective Unclaimed Property Compliance Program

5 Strategies for Building an Effective Unclaimed Property Compliance Program

1) Centralize Tracking and Reporting Across All Departments

Centralizing tracking and reporting is critical to streamline unclaimed property compliance. Without this, you risk inefficiencies and missed deadlines. You need a system that consolidates data, which makes reporting easier and more accurate. Here's how you can implement this effectively:

Identify all departments: Ensure you involve every department that handles transactions, such as accounts payable, payroll, and customer service. Include them in your unclaimed property program to capture every source of potential unclaimed property.
Select a centralized platform: Choose software that integrates with your existing systems. Ensure it allows real-time tracking across departments. This eliminates silos and gives you a unified view of your unclaimed property obligations.
Create clear lines of responsibility: Assign a dedicated team or individual to oversee the unclaimed property process across all departments. Central accountability helps avoid confusion about who should report what.
Train your teams: Regular training sessions for department leads are essential. Ensure they understand what qualifies as unclaimed property and the steps for reporting it. This minimizes errors and missed deadlines.
Automate notifications and reminders: Set up automated reminders for important deadlines. A centralized system should flag upcoming reporting obligations well in advance, reducing the risk of non-compliance.

Insider Tip:

We recommend establishing a cross-functional task force that meets quarterly to review the centralized data. This allows for quick identification of trends, anomalies, or new risks. It also helps your company adapt swiftly to any regulatory changes and avoid potential compliance issues.

2) Establish Clear Policies and Procedures for Identifying Unclaimed Property

Your compliance program cannot succeed without clear, consistent policies for identifying unclaimed property. You need to eliminate guesswork and establish precise criteria. This reduces errors and also strengthens your compliance framework. Follow these steps to build an efficient system:

Define what qualifies as unclaimed property: Categorize all forms of unclaimed property specific to your business, such as uncashed checks, inactive accounts, or unclaimed vendor payments. This helps ensure nothing slips through the cracks.
Document specific procedures: Create a step-by-step guide for how each department identifies unclaimed property. Include clear instructions on reviewing, reporting, and escalating issues.
Set time thresholds: Based on state requirements, establish strict timelines for when property becomes "unclaimed." Apply these consistently across all departments to avoid discrepancies.
Standardize reporting formats: Use a uniform format for collecting and reporting unclaimed property. Consistent reporting prevents confusion and makes auditing smoother.
Update policies regularly: Review your policies annually to reflect changes in state regulations or internal procedures. Keeping policies current minimizes compliance risks and ensures your process stays accurate.

Insider Tip:

We recommend creating an internal audit checklist specifically for new employees. This ensures consistency from day one and provides a fresh perspective on potential gaps in your process. Make this part of your onboarding to tighten compliance at the department level right away.

3) Leverage Technology to Automate Compliance Processes and Reduce Errors

Automating compliance processes gives you a significant advantage in managing unclaimed property. It reduces manual errors, speeds up workflows, and allows your team to focus on higher-value tasks. With today’s technology, failing to automate puts your organization at risk of inefficiency. Here’s how you can leverage automation effectively:

Choose compliance software with audit trails: Select technology that tracks every action and change made within the system. This feature is essential for keeping records accurate and defending your practices during external audits.
Automate property aging: Use tools that automatically calculate the aging of unclaimed property and flag items when they approach reporting deadlines. This avoids manual tracking and reduces the risk of missing key dates.
Enable real-time reporting: Opt for a system that updates in real-time across departments. This keeps everyone aligned, reduces lag in data visibility, and allows for more accurate decision-making.
Set up automatic notifications: Build in reminders for critical deadlines, audits, and changes in state regulations. Automation here ensures compliance managers stay on top of evolving requirements.
Integrate with accounting and ERP systems: Ensure the software integrates seamlessly with your accounting and enterprise resource planning (ERP) systems. This centralizes data and ensures consistent, error-free reporting.

Insider Tip:

We suggest exploring AI-driven solutions that predict which accounts will likely become unclaimed based on historical patterns. This not only helps you manage risks earlier but also allows you to proactively reach out to property owners, minimizing the volume of unclaimed assets. Implementing this could make your compliance efforts even more forward-thinking.

4) Conduct Regular Internal Audits to Ensure Compliance and Readiness for External Audits

Regular internal audits strengthen your unclaimed property compliance. They help you identify weak points before external auditors get involved, giving you time to fix issues. You need a structured approach to make these audits effective and insightful. Here's how to conduct them systematically:

Set a fixed audit schedule: Depending on your property volume and reporting deadlines, decide on quarterly or bi-annual audits. Regularity ensures that no department falls behind or overlooks unclaimed property.
Create a clear audit checklist: Include everything from the timeliness of reporting to whether the property was correctly identified. Checklists standardize the process so nothing gets missed.
Review high-risk areas: Focus on departments that handle a high volume of transactions or have historically struggled with compliance. This minimizes the risk of repeat issues and makes your audits more impactful.
Validate data accuracy: Compare current reports to past filings to ensure consistency. Flag any discrepancies and investigate them immediately to prevent larger issues during external audits.
Document audit findings: Record your audit results in detail, including action plans for addressing gaps. This documentation helps you track progress and shows external auditors that you take compliance seriously.

Insider Tip:

From our experience, setting up an internal peer review system between departments makes your audits even more robust. Each team can cross-check the findings of another department, adding an extra layer of accountability and fresh eyes to spot potential issues. This collaborative approach enhances compliance readiness across the board.

5) Develop a State-Specific Compliance Calendar to Manage Reporting Deadlines Efficiently

Managing reporting deadlines across multiple states is complex, but a state-specific compliance calendar can prevent you from missing key dates. You need a tailored approach that accounts for each state’s regulations. Failing to track deadlines efficiently can result in penalties or non-compliance. Here's how to create a calendar that works:

List each state's reporting requirements: Start by outlining the unclaimed property rules for each state where your business operates. Include details like dormancy periods, thresholds, and special filing requirements.
Track varying deadlines: Different states have different deadlines, often falling in different quarters. Use a calendar that lists these deadlines and provides reminders well in advance.
Include grace periods and extensions: Note any states that offer grace periods or allow for filing extensions. This gives you a cushion for unexpected delays and helps you plan proactively.
Automate reminders for key dates: Set up automated alerts for all upcoming filings. Make sure your system can send reminders for multiple deadlines within the same month to avoid overlap confusion.
Review annually for regulation updates: Regulations often change, so review your calendar annually to account for new state laws or shifting deadlines. Keeping it current ensures you stay compliant year after year.

Insider Tip:

We recommend creating a color-coded system for your calendar, where each state’s deadlines are marked based on risk levels. High-risk deadlines (where penalties are stricter) should trigger more frequent reminders. This visual approach makes it easier to prioritize filings and manage your compliance workload effectively.