And the Winner (or Loser) Is?...Another Unclaimed Property Contingent Fee Audit

If you have received yet another notice of a state-initiated unclaimed property contingent fee audit, you certainly are not feeling like a winner. In fact, you may be wondering, how are you going to manage two independent audits from audit firms with very distinct cultures and audit styles from a cost and efficiency perspective. If you recently received a Transition or Reassignment of Unclaimed Property Audit notice from the state of Texas, there are even more questions to contemplate before engaging with the new audit firm. Specifically:

  • Do I have to start the audit over from the beginning?
  • Is Texas and the prior audit firm required to provide records previously provided in the original audit to the new audit firm?
  • Do I have to share records pertaining to states, other than Texas, with the new Texas audit firm?
  • What has Texas done with records shared with them from the prior audit firm?

If your company is in receipt of a Transition or Re-assignment notice from Texas, you have already commenced an initial multi-state audit with a contingent fee auditor of which Texas was a participating state. Texas recently terminated its contract with the original audit firm and has re-assigned all of its audits to four other firms. While Texas is well within its rights to terminate and change audit firms, the question becomes What Are Your Rights, as the auditee?

Duff & Phelps is familiar with third-party audit firms that have been designated to conduct the audit on behalf of Texas, including their audit procedures and practices. Contrary to common belief, all audit firms are not necessarily equal. Each have their own unique methodology, which depending on your organization's facts and circumstances, may work to your advantage or conversely may require specialized consideration. At Duff & Phelps, we recognize that each organization's past practices, policies and culture are important differentiators in prescribing how best to manage the audit process, while at the same time, ensuring that your rights, as a holder, are protected. Careful consideration should be given to:

  • Negotiation of a Non-Disclosure Agreement with the newly appointed audit firm;
  • Consideration of whether to allow the new audit firm to commence their audit anew;
  • Limitation of the scope and nature of all information requests specific to Texas addressed property only; and a
  • Determination of the scope of accounting records that may be available and researchable as defined under Texas guidelines vs. those in other states.

Our unclaimed property professionals have assisted numerous companies in your circumstance to navigate through jurisdictional waters of the state's right to audit, and the protection of the company's rights as the auditee. We welcome the opportunity to speak with you to understand your specific circumstances and share some preliminary thoughts on how best to manage the Texas (and, if applicable, other state unclaimed property audits).  

To schedule a brief introductory call, please contact Robert Peters, Sonia Walwyn or Keela Ross. Further information on Duff & Phelps' unclaimed property services is available here.

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