Current through Register 1531, September 27, 2024
Pursuant to M.G.L. c. 200A, § 12, the Treasurer, his/her
designee or agent may at any reasonable time and upon reasonable notice examine
or audit a holder's books, papers or other records to verify proper compliance
with the reporting requirements of M.G.L. c. 200A.
(1)
Period of
Limitation. Pursuant to M.G.L. c. 200A, § 12, the Treasurer
may examine the records of a holder at any time within six years of the date
upon which an annual abandoned property report was due to be filed with the
Division, or the date upon which such report was received by the Division
pursuant to an extension granted under the provisions of M.G.L. c. 200A, §
13B, whichever is later. In the case of a holder who has filed abandoned
property reports with the Division as required by law, the scope of the
examination of the holder's records will be limited to property that had become
reportable during the six-year period of limitation defined in M.G.L. c. 200A,
§ 12(f). In the case of a holder who fails to file abandoned property
reports with the Division as required by law, or who files a false, fraudulent
or insufficient report, the six-year period of limitation shall be waived for
purposes of record retention and the conducting of examinations.
(2)
Records
Retention. In accordance with M.G.L. c. 200A, § 12(f),
holders are required to maintain abandoned property records for nine years from
the date of last activity for any property which has been reported to the
Division, or six years from the date such property is reported to the
Division.
(3)
Failure
to Maintain Records. In the case of a holder that has met the
annual reporting requirement of M.G.L. c. 200A, § 7(d), but where the
holder does not meet the records retention requirements of M.G.L. c. 200A,
§ 12(f), the Treasurer, his designee or his agent may employ such
estimation techniques in the conduct of an audit as are customary and
reasonable in the area of regulatory compliance and enforcement to fairly and
accurately estimate the liability for property category types that may not have
been reported or fully reported by the holder.
(4)
Audit Process.
(a) Excluding any state-authorized
multi-state abandoned property audit/examination, the Treasurer ma y co nduct
either a "desk audit" or a "field aud it" of holder records pursuant to M.G.L.
c. 200A, § 12 and the provisions of 960 CMR 4.07.
(b) A "desk audit" shall consist of the
Treasurer, his/her designee or agent examining the books, papers or other
records of a holder at the office of the Division to determine compliance with
the abandoned property reporting requirements of M.G.L. c. 200A, § 7. The
person authorized to conduct this audit may request any information necessary
to complete the audit and may require the holder or his/her representative to
appear in person. Performance of a desk audit does not preclude the Division
from the subsequent performance of any future desk or field audit, provided
however, that following the conclusion of a field audit as defined in 960 CMR
4.07(4)(c) and upon payment by the holder of any assessments issued in such
audit, or upon payment of any assessments upheld in an appeal of such audit
assessments, the period audited shall be closed to any future Massachusetts
abandoned property audit in perpetuity.
(c) A "field audit" shall consist of the
Treasurer, his/her designee or agent conducting an examination of the books,
papers or other records of a holder at the holder's place of business. The
holder shall be notified in advance that he or she has been selected for audit
and shall be instructed as to the books, papers and other records which should
be made available to complete the audit.
(5)
Audit
Procedures.
(a) Excluding any
state-authorized multi-state abandoned property audit/examination, every
abandoned property audit conducted in accordance with M.G.L. c. 200A, §
12, shall include, but not be limited to, the following audit procedures:
1. A Notice of Intent to
Audit shall be issued to the holder. The notice will provide the
holder notification in writing that the Division intends to commence an
examination of the holder's records pursuant to M.G.L. c. 200A, § 12, and
that the holder will be required to provide certain records to facilitate the
examination.
2. An
Opening Meeting will be held. This meeting will be
attended by the holder and/or his representative, the Treasurer or his/her
designee or agent will be present to discuss how the examination will be
conducted.
3. A Field
Review will be undertaken, at which holder records made available
for the opening meeting will be briefly discussed and examined.
4. A Pre-Engagement
Analysis will be conducted by the Division or its agent to
determine whether the examination should be continued or concluded.
(b) If it is determined by the
Director and Assistant Treasurer that an examination/audit should be
continued,the audit shall be deemed a "field audit." The field audit will
include, but not be limited to, the following audit procedures:
1. A Letter of
Engagement shall be prepared by the Treasurer's agent and, upon
approval by the Director and Assistant Treasurer, shall be sent to the holder
prior to the commencement of the actual examination. The Letter of Engagement
shall inform the holder of the Treasurer's intent to commence a "field
audit".
2. The Field
Work shall be conducted under Audit Program Guidelines established
by the Director and updated yearly as needed.
3. A Monthly Progress
Report shall be prepared by the Treasurer's agent and forwarded to
the Director detailing the status of the examination/audit.
4. A Holder
Conference shall be held, at which the holder and/or his
representative shall be afforded the opportunity to discuss the preliminary
results with the Director and the Treasurer's agent. At this time, the holder
shall be provided with a 30-day Review Period in order
to perform additional due diligence or to present documentation to negate the
presumption of abandonment. At the holder's request, a second conference may be
held prior to the issuance of a Draft Report.
5. A Draft Report
shall be prepared by the Treasurer's agent and forwarded to the Director for
final review after all field work is completed.
6. A Final Report to
the Division shall then be prepared by the Treasurer's agent and forwarded to
the Director who, upon approval, shall transmit the Final Report to the holder
by certified mail. The Final Report shall detail the results, methodology and
objectives of the audit and shall be accompanied by a Letter of
Demand, which will express to the holder the terms and conditions
under which any findings are to be reported to the Division, and outline the
right of appeal to the holder should he/she choose to appeal any
findings.
(c) An audit
shall be deemed closed when all property identified as abandoned property in
the Final Report is remitted to the Division, or all adjustments made by the
holder during the Review Period are confirmed by the Treasurer's agent and all
remaining properties are remitted to the Division in the prescribed
format.
(6)
Order of Priority of Audits. Excluding any
state-authorized multi- state abandoned property audit/examination, all audits
undertaken pursuant to M.G.L. c. 200A, c. 12, shall be conducted in the
following order of priority, unless otherwise directed by the Treasurer:
(a) First Priority - holders who have never
reported abandoned property to the Division;
(b) Second Priority - holders who have
reported abandoned property to the Division in a previous year or years, but
who are not currently reporting, or holders whose current reporting levels
appear deficient;
(c) Third
Priority - holders who are currently in compliance with the reporting
requirements of M.G.L. c. 200A, § 7.
(7)
Appeals. Appeals
of the findings of any abandoned property audit conducted by or on be half of
the Treasurer shall be undertaken in accordance with the provisions of M.G.L.
c. 200A, § 12.
