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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Michigan enacts new audit standards

Posted By Administration, Thursday, May 25, 2017

Earlier this spring, the Michigan treasurer enacted new audit standards for examination, authorized under the Michigan Uniform Unclaimed Property Act. Following is an overview of those new standards.

 

Rules and rights

The state unclaimed property administrator is charged with determining who will undergo examination. Use of collection goals or quotas is prohibited. If someone under audit believes a contracted auditor is acting outside of the scope of the Act, policy or procedures, a review may be requested and will be carried out by the administrator.

 

Auditor standards

Auditors are expected to meet specific professional standards and supervision requirements, and follow specific fieldwork standards. Their planning should include a timeline for each examination segment, the property types to be included and the documentation the audit subject may need to provide. The timeline should account for whether or not the audit subject intends to provide electronic records.

 

Auditor documentation should provide sufficient detail to enable an experienced auditor with no connection to the examination to understand: the documentation of work performed; the property types reviewed; any estimation techniques used; and calculations that form a basis for the examination findings.

 

Process

For audits conducted only on behalf of Michigan, the state administrator is responsible for notifying and examination subject of the audit, providing the auditor’s contact information and the administrator’s contact information. For audits conducted on behalf of Michigan and at least one other state, the administrator submits an audit authorization to the auditor.

 

The auditor and examination subject are expected to reach agreement on a nondisclosure agreement within 30 days of the notice of commencement of the examination. The auditor is also responsible for ensuring confidential records remain confidential.

 

Before or during the opening conference, the administrator establishes whether the audit subject is an “eligible holder.” The audit standards provide a timeline and process for the audit subject to dispute its standing as an eligible holder.

 

At the opening conference, the audit subject receives a copy of the auditor’s contract with the state. The administrator is charged with investigating complaints that the auditor is not complying with the contract or examination standards. If appropriate, the administrator may replace the auditor with another auditor to complete the audit.

 

The auditor is also responsible for providing:

  • A list of states participating.
  • A description of the components and stages of the audit.
  • Expected duration.
  • A description of the responsibilities of the audit subject and auditor.
  • The potential types of property that may be subject to examination.
  • An initial records request.
  • The time period subject to examination.
  • The applicable dormancy periods for each property type.
  • Explanation of examination methods, including estimation techniques that may be used.
  • A summary of the opening conference.

 

Remediation

After the preliminary audit findings, the auditor will provide a copy to the exam subject, beginning a 120-day remediation period. During the remediation period, the exam subject can provide documentation demonstrating that property presumed abandoned should be removed from the final report.

 

Final conference

Within 30 days of the end of the remediation period, a final conference will occur. The audit subject’s total liability will be calculated at this conference. The auditor may adjust the liability based on information received during the final conference. Within 45 days, the auditor will file the examination report with the administrator and provide a copy to the audit subject.

 

 

Tags:  audits  Michigan  unclaimed property 

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Michigan Treasurer Khouri shares why S.B. 538 will impact the business community

Posted By Administration, Thursday, March 31, 2016

Claps were coming from Michigan as Michigan S.B. 538 passed through the Michigan legislative chambers and was signed into law in December 2015. It’s progressive legislation that contradicts the current enforcement environment in many states, and will positively impact the business community.

 

As Treasurer Khouri stepped into office, his team developed a list of projects to improve efficiency and effectiveness. Onto the list went unclaimed property compliance and enforcement and owner reunification efforts. “One of the main focuses in Treasury is to improve the operational efficiency of Treasury, and unclaimed property was on the list. It [audits] took too long and focused on the wrong thing, and we needed to improve the process for those that enforced the audits and those that needed to respond to audits and escheat property,” says Treasurer Khouri.

 

To get the project moving, the Treasury Department reached out to the business community to better understand the issue and identify solutions that worked. Jon Hallack, a UPPO member, joined the work group assembled by the treasurer on behalf of his employer, Stryker Corp. “Treasurer Khouri came to a meeting of the Michigan Chamber of Commerce Tax Policy Committee and listened to suggestions of improvement Treasury could make. As a result of his willingness to listen, and then act, SB 538 came to be,” says Hallack.

 

“We knew audits took too long, and in affect were collecting less money,” says Khouri. The legislation aimed to shorten the audit period, define the property types involved in audits, and created a tangible timeline for holders and the state to follow.

 

Highlights of the bill

  • Streamlines audit process:

o   To participate in the streamlined audit process the holder must execute a nondisclosure agreement acceptable to the Treasurer within 30 days

o   Goal to complete the audit within 18 months

  • Defines an eligible holder that can participate in the streamlined audit process
  • Exempts property valued $25 or less from being reported to Michigan - equity-related property doesn’t fall under this exemption
  • Checks voided within 180 days of issuance are not included in a streamlined audit
  • Prohibits the State Treasurer from commencing an action or proceeding respected to any duty of a holder under the Act more than four years if the holder is enrolled in the streamlined audit process

The bill became effective immediately and promises to provide positive changes to Michigan’s enforcement environment. “So far, we’ve heard positive things from the holder community. It’s more transparent, easier to administer and will return the department’s focus on reuniting property with the owner,” says Khouri.

 

During the 2016 Annual Conference, March 20 – 23, members voted Michigan as UPPO’s Member Choice Overall Excellence Award recipient. Thank you for your commitment to working with the holder community and achieving a more fair and transparent audit environment.

 


Tags:  Michigan  Michigan Treasurer Khouri  S.B. 538  unclaimed property 

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