company to request that the company certify that a report previously submitted to the state is complete, or if no report was submitted, that there is truly no property to report. The OUP Verified Report (“VR”) process is not an examination, but rather a means to evaluate the existence, comprehensiveness, and adequacy of a holder’s unclaimed property policies and procedures. VR notices are mailed by the State, or its agent, directly to the holder (or an agent in possession of its records) via certified mail. The timeline for completion of the VR is 270 days upon receipt of notice. Holders are required to complete the following tasks: 1. Provide a copy of the company’s unclaimed property policies and procedures for review. 2. Complete the Verified Report form for the report year referenced in the mailing. In doing so, the holder certifies on behalf of the parent and all subsidiaries populated on the form. 3. Notarize the form and return it per OUP’s instructions. The analysis of a holder’s unclaimed property policies and procedures may uncover inefficiencies or other inadequacies which the reviewer may request be addressed. Examples of requests made by OUP may include, however are not limited to: 1. Incorporation of definitions, dormancy periods, priority rules, and other useful information. 2. Exhibit of parent and subsidiaries that includes the state of incorporation. 3. Reference to property types of which the holder is susceptible to generating.
response to the notices. By statute, a Compliance Review may also be initiated by the OUP without first requesting the holder submit a verified report. The purpose of the State’s Compliance Review is to allow the state to request and review certain documentation to confirm that the report submitted by the holder was complete and accurate. The OUP Compliance Review (“CR”) is a limited scope evaluation of compliance. The scope of the review focuses on the most recent filing period to ensure a holder included all properties that were reportable. The timeline for completion of the CR is 360 days from receipt of notice. Holders can expect to receive data requests consistent with their most recent annual unclaimed property reports such as, by way of example, but without limitation:
1. Lists and corporate formation information for the holder, subsidiaries, and related entities;
2. Accounting and related records;
3. Details of unclaimed property reported to Delaware within the most recent cycle; 4. Disbursements, accounts payable, and payroll records;
5. Accounts receivables aging reports; and
6. Records of other accounts of interest (i.e. rebates, securities, royalties, depository accounts, etc.). CR notices are mailed by the State, or its agent, directly to the holder (or an agent in possession of its records) via certified mail. Holders are provided 30 days to respond to the First Notice. If no response is received, a Second Notice is forwarded. Holders that do not respond to the Second Notice, within 30 days, or fail to complete the CR within the 360-day period, may then be considered for involuntary audit, or participation in the Department of State’s Voluntary Disclosure program.
4. Procedures on reporting properties to the States.
Holders are provided 30 days to respond to the First VR Notice. If no response is received, a Second Notice is forwarded. Holders that do not respond to the Second Notice, within 30 days, or fail to complete the VR within the 270-day period, may then be referred for Compliance Review or other statutorily available alternative means to evaluate its unclaimed property compliance.
Conclusion
Just as with the Delaware Department of State’s Voluntary Disclosure Program notices (“DE VDA”), holders should be on the lookout for OUP VR or CR notices. Timely response to any notice from the State of Delaware is critical, as non-response may result in a DE VDA invitation or DE audit eligibility. Holders should review their policies and procedures, as well as filing history, to ensure the company is positioned to respond to the notices timely and sufficiently.
Compliance Review
The Compliance Review Notice is the next step after a verified report if a holder either fails to respond after the Second VR Notice or submits an insufficient
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G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2023
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