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Organizational Responsibility for the Escheatment Process

Introduction

In the United States, the Escheatment process, also commonly known as the Unclaimed Property process, consists of turning over unclaimed or abandoned checks, whose owners cannot be traced, to a state authority.  Every company is required to file unclaimed property reports with states annually and to make a good-faith effort to find the owners of their dormant accounts. The escheating criteria are driven by individual state regulations. 

The Escheatment process can reside in a variety of different organizations within a company, since it can impact a number of different functional areas, such as Accounts Payable, Accounts Receivable, Payroll, and Tax and requires significant coordination across the company. The major steps related to the Escheatment process include the following:

  1. Identification
  2. Due Diligence
  3. Resolution
  4. Tracking
  5. State Remittance
  6. Reporting

It is not uncommon for companies to divide oversight responsibility for these different steps to multiple organizations based on a number of different factors, including inherent expertise, process evolution, and available resource bandwidth.  Unfortunately, this approach often results in sub-optimal performance for the process as a whole.

iPollingTM Results Review

Recently, a Peeriosity member company was considering where to best locate the Escheatment process within their company, with primary consideration being given to Corporate Tax and Finance Shared Services.  Utilizing the iPollingTM technology, a poll was created and sent to a large number of major corporations from across the world. 

The first question included in the poll was regarding what organization within the surveyed companies has primary responsibility for the administration and oversight of the Escheatment process.  Finance Shared Services was clearly the dominant design, with 41% of the companies using that approach.  This was followed by the Corporate Tax Department, with 15% of the responses.  From a shared responsibility perspective, the most popular configuration was a combination of Corporate Tax and Finance Shared Services, with 22% of the companies utilizing that model.

The second poll question then addressed the status of companies performing the entire Escheatment process in a Shared Services environment.  Reviewing the results, 56% of the companies indicated that they have implemented this approach, with another 7% that are currently evaluating it.  The remaining 37% have either evaluated the idea and rejected it (4%) or have not yet evaluated it (33%).

Some of the poll comments made by Peeriosity members include the following:

Consumer Products & Services Member: Escheatment process has been in Finance Shared Services for over a decade.

Financial Services Member: Primary responsibility for BAU ops resides in a Financial Shared Services operation, but Corporate Tax takes the lead in handling responses to state communications regarding fines and assessments.

Manufacturing Member: Escheatment processes have been implemented, but due to our many different businesses and mixed ERPs, it has been a challenge and, in some cases, a work in progress.

Healthcare, Pharmaceuticals, Biotech Member: Patient Financial Services sends out the majority of our due diligence letters.

Energy & Utilities Member: Our Shared Services Finance Department coordinates the escheatment process with other Shared Services functions (Payroll, AP, Billing, etc.) and administers the due diligence and filings.

Financial Services Member: Escheatment has been within the Finance Shared Services organization for about one year.

Real Estate & Construction Member: We are in the process of creating an escheatment process. I look forward to suggestions for a successful implementation.

Computers & Electronics Member: Unclaimed monies owed to the company (receivables) are executed at the Shared Service center with Corporate Finance oversight. Unclaimed monies owed to 3rd parties (payables) are managed by Corporate Tax.

Financial Services Member: Shared responsibility between Finance Shared Services, Accounting Shared Services and Operations.

Closing Summary

While the Escheatment process can be effectively administered utilizing a variety of different organizational configurations within most corporations, the trend certainly appears to be to transition the entire process into a Shared Services type structure.  While expertise will certainly continue to be needed from other functional areas, such as Corporate Tax, this process may likely benefit from the consolidated and standardized environment that Shared Services typically provides.

What is the status at your company regarding where the Escheatment process is currently administered and performed?  Would there be any potential benefits to consider by moving this important process to Shared Services?

Who are your peers and how are you collaborating with them?

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“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.



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