Optimizing the Escheatment Process. Raquel Solomon Eversource Energy

Size: px

Start display at page:

Download "Optimizing the Escheatment Process. Raquel Solomon Eversource Energy"

Rosamund Randall
6 years ago
Views:

1 Optimizing the Escheatment Process Raquel Solomon Eversource Energy

2 Overview $28B in assets $7.3B in revenues 3 Regulated States NH ME 14 th Largest Utility in US Operating Companies formerly known as CL&P, NSTAR Gas, NSTAR Electric PSNH, WMECO, Yankee Gas, and Transmission Companies 3.1 million electric and.5 million gas customers in 623 communities; 8,200 employees NY VT CT RI MA PA NJ Northeast Utilities Electric Service Area Northeast Utilities Gas Service Area NSTAR Electric Service Area NSTAR Gas Service Area 2

3 Objectives Establish basis for escheatment concept and process Validate urgency of process reviews Demonstrate in-house discovery of unclaimed property issues 3

4 Escheat Derived from Anglo-French eschete, meaning "succession, inheritance" Middle English eschete, from Anglo-French, reversion of property, from escheir to fall, devolve, from Vulgar Latin *excadēre, from Latin ex- + Vulgar Latin *cadēre to fall, from Latin cadere more at chance First Known Use: 14 th Century (merriam-webster.com, 2015) 4

5 Escheatment includes all forms of property that becomes abandoned by its rightful owner. The purpose of escheatment laws are to: Reunite lost owners with property that is rightfully theirs. Protect the holder of abandoned property from subsequent claims by the owner after the property is transferred to the state. 5

6 Recent Spikes in Abandoned Property & Reporting Sarbanes-Oxley Fines between $1 million to $5 million and a prison sentence between 10 to 20 years. On the Move! Americans are becoming increasingly transient. 6

7 State Differences Dormancy Requirements Due Diligence Filing Deadlines Connecticut New Hampshire Massachusetts 7

8 Did You Know? Escheatment dollars are an appealing revenue source from the states perspectives. Nationwide, for fiscal year 2011, state coffers included over $41.7 billion in unclaimed property. Claims can be made in perpetuity in most cases - even by heirs. 8

9 Surprise! State Audit 9

10 Audit Data Request Copies of all previously filed holder reports (including property type summary and item detail) in electronic format for periods under examination Copies of accounting policy and procedure manual Chart of accounts and trial balances List of divisions, subsidiaries and offices General ledger and trial balances Most recent corporate tax return and annual report or SEC Form 10-k Legal opinions regarding unclaimed property General journals/transaction journals Accounts payable/vendor checks Payroll checks Suspense accounts Stocks/dividends Corporate organizational charts Contracts detailing arrangements with third party administrators, service charges, etc. Summary plan descriptions (SPDs) for all employee benefit trust plans: All Board resolutions relating to unclaimed property Bank reconciliations with outstanding checks attached Returned 1099s for each year under examination Dates of any and all computer conversions or upgrades as well as documentation outlining the upgrade or conversion 10

11 What s Hiding? Process Pitfalls Data Extract Deficiency Complacency Undefined Procedure Non-integrated System Willful Indifference Unintentional Negligence Misaligned Priorities 11

12 Data Extract Deficiency Pitfall Unmatched/Unidentified Cash Accounts How many do we have? Credit Balances 23,786 discoveries Tunnel vision. Peripherally-challenged probing. 12

Credit Balance Total Accounts 60,000 50,000 50,295 40,000 2010 2011

13 Credit Balance Total Accounts 60,000 50,000 50,295 40, ,000 20,000 25,240 29,880 30, ,000 11,730 0 Year 13

14 Complacency Pitfall <$200 Credit Balances We just don t. Opportunity for synergy. Now we do! We ve always done it this way. 14

15 Undefined Procedure Pitfall Reliance on Oral Tradition No written process in public/shared library Accountability impossible Quality subject to interpretation Resolution Comprehensive process flows authored All related processes grouped together You want that in writing? 15

16 Non-integrated System Pitfall Accounts Payable System & Billing System Day in the life of a refund Duplication Solution > 6 Months Uncashed Refund Checks left hand didn t know what the right hand was doing 16

> 6 Months Uncashed Checks 4,500 4,000 4024 3654 3,500

17 > 6 Months Uncashed Checks 4,500 4, ,500 3,000 2,500 2,000 1,500 1, Year 17

18 Willful Indifference Pitfall Returned Refund Checks Sitting on desks Downstream implications Resolutions in plain sight! 18

19 Unintentional Negligence Pitfall Due Diligence No standard due diligence notification letter Missed Opportunities Not a one time action. Solution Automated Letter LexisNexis Tool Paradigm Shift To perform due diligence, we must do our diligence. 19

20 LexisNexis Risk Research 20

21 Misaligned Priorities Pitfall Customer Focus Credit vs Debit Oh yes, that s right the customer! 21

22 A Day in the Life of a Refund Credit Balance Refund Validation Returned Refunds Uncashed Refunds Escheat 22

23 Connecticut $104, $188, Filing Year $134, $106, $188, $421, $835, $93, $- $100, $200, $300, $400, $500, $600, $700, $800, $900,

24 What Happened to the $2.7M? $1.8M 10748, 45% 3801, 16% $75K $852K 9237, 39% Applied to Bad Debt Refunded Escheated 24

25 Wrap Up Company Credibility Reduction in Manual Effort Audit Preparedness Customer Satisfaction 25

26 Questions 26

POLICY CONCERNING ESCHEATMENT

ASSOCIATED STUDENTS, CSUF INC. DATE APPROVED: 10/11/2016 POLICY CONCERNING ESCHEATMENT PURPOSE The Associated Students, CSUF Inc. ( ASI ) is required by law to comply with the requirements of California