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Abandoned or Unclaimed Property
VDA Program



Convert Audit to a VDA


Below are documents related to Converting an Audit to a VDA:

Download Instructions for Notice to Convert Audit to VDA

Download the Notice of Intent to Convert Audit to VDA

 

Pursuant to 12 Del. C. § 1172(b), any Holder currently under examination that received a Notice of Examination from the State Escheator on or before July 22, 2015, except any securities examinations in which estimation is not required, may convert the pending examination into a review under the SOS VDA Program under 12 Del. C. § 1173. This Secretary of State policy statement outlines the administrative requirements to convert, as well as the expected process to be followed by Holders that choose to convert.

Download Instructions for Notice to Convert Audit to VDA

Eligible Holders must file an executed copy of a Notice of Intent to Convert (“NOI”) within 60 days of the adoption of regulations pursuant to 12 Del. C. § 1176(b). The regulations are expected to be adopted on or before December 1, 2017. NOI must be signed by a duly authorized officer of the Company seeking to convert. NOI may be submitted electronically or by mail as detailed below.

Secretary of State, State of Delaware
ATTN:  SOS VDA Program
Townsend Building
401 Federal Street, Suite 3
Dover, DE 19901
 sos.vda@state.de.us
302-577-8959

Download the Notice of Intent to Convert Audit to VDA

Unlike an examination, the SOS VDA Program is a self-review process in which the Holder is expected to perform a rigorous self-review of its books and records for the entirety of the look-back period and present its findings of past due unclaimed property liability to the Secretary of State for validation, and ultimately settlement. The SOS VDA Program was designed, and will be administered, as an efficient and collaborative settlement process for determining the Holder’s past due unclaimed property.

For companies that convert their examination into a VDA, the expectations are the same. In order to expedite the resolution of an examination converted into a VDA, Holders are not expected to begin the VDA process from the beginning. Further, the Holder’s examination work papers will not be transferred to the VDA Administrator, and there will be no coordination or consultation with the Department of Finance or any third-party examination firm regarding the Holder’s examination after the initial transfer of information related to scoping.

For many Holders eligible to convert an examination into a VDA, the examination was previously scoped by the auditor in terms of property types and/or included entities. Since most of the analysis and review performed to date by the Holder will be based on the property types / entities scoped in by the auditors, in the interest of efficiency, Holders are expected to, at a minimum, utilize the same examination scope in the VDA. For examinations that have been scoped (entities, property types, and/or years), the VDA Administrator and the Holder will receive from the Department of Finance a memorandum describing the previously agreed upon scope of the examination. Holders may elect to expand the previously agreed to scope in the SOS VDA Program.

With respect to the remainder of the VDA, Holders should utilize the records reviewed and analysis performed to date in the examination, as well as perform any additional self-review required, in order to present the Holder’s findings of past due unclaimed property liability to the Secretary of State for validation, and ultimately settlement. The presentation of the Holder’s findings shall be in accordance with the SOS VDA Program’s Implementing Guidelines and SOS VDA Regulations. Similarly, when the VDA report and schedules are presented, the findings will be validated by the Secretary of State’s Office in accordance with the Implementing Guidelines and SOS VDA Regulations. For Holders that have substantially completed their examination that choose to convert to a VDA, the VDA process should be expedited and there is an expectation that the Holder will conclude the VDA quickly.

As with any VDA, every Holder that converts its examination into a VDA is understood to be unique. Not only with respect to the extent of review and analysis performed to date, but also with respect to its core operations, historic compliance history, availability of records, and abandoned and unclaimed property types to be reported. Therefore, Holders that convert their examination into a VDA are encouraged to work with the VDA Administrator from the date of conversion to chart an efficient path to conclusion, and to resolve concerns or issues prior to the presentation of a final VDA report and schedules.

Pursuant to 12 Del. C. §1172(b), the look back period for examinations that convert to VDAs is ten report years (or 15 transaction years) from the year the original Notice of Examination was received by the Holder.
If Holders have formally resolved specific property types and/or entities in an executed settlement agreement with the Department of Finance prior to converting to a VDA, the VDA will only cover any remaining entities and property types.

The Secretary of State expects each VDA enrollee to reasonably estimate liabilities for periods where records are unavailable or insufficient when determining past due unclaimed property. Estimation is not required for non-Delaware domiciled entities. Estimated unclaimed property for a period a Holder determines it does not have available records would be reportable to the Holder’s state of incorporation or formation. See SOS VDA Regulations and Implementing Guidelines for additional information on estimation.

View draft regulations.

If a settlement cannot be reached on a particular property type or for a particular entity, the property type or entity will be excluded from the final settlement and release agreement. Pursuant to 12 Del. C. § 1173(a)(4), any property types or entities excluded would be referred to examination. Similarly, if a settlement cannot be reached on any property type or entity, the Holder would be referred back to examination.

 


Legal Disclaimer: The materials contained herein are intended to provide information in regard to the subject matter covered. The Delaware Department of State is not engaged in rendering legal, accounting, or other professional services. If legal advice or other professional assistance is required, the services of a qualified professional should be sought.

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