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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 Disclosure and Notice of Intent to Convert Unclaimed Property Examination into a Review under the Secretary of State’s Unclaimed Property Voluntary Disclosure Agreement Program (“Form NOI CONV”) within 60 days of the adoption of the Department of Finance Regulations pursuant to 12 Del. C. § 1176(b). Pursuant to that statute, regulations will be adopted on or before December 1, 2017 by the Department of Finance. Form NOI CONV must be signed by a duly authorized officer of the Company that is seeking to convert, and may be delivered to the Department of State in the following manner:

A PDF copy of this form which has been executed by an officer of the Company can be sent via email to SOS.VDA@state.de.us.

Alternatively, Holders may send a copy of this form which has been executed by an officer of the company via overnight or regular mail to:

Secretary of State, State of Delaware
ATTN:  SOS VDA Program
Townsend Building, 1st Floor
401 Federal Street, Suite 3
Dover, DE 19901

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 its examination into an SOS VDA, the expectations are the same. In order to expedite the resolution of an examination converted into an SOS VDA, Holders are not expected to begin the SOS VDA process from the beginning. Further, the Holder’s examination work papers will not be transferred to the Secretary of State or its assignees, 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 an SOS 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 SOS VDA. For examinations that have been scoped (entities, property types, and/or years), the Department of State (and its assignees) 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 SOS 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 Estimation Regulations. Similarly, when the SOS VDA report and schedules are presented, the findings will be validated by the Secretary of State’s Office or its assignees in accordance with the Implementing Guidelines and Estimation Regulations. For Holders that have substantially completed its examination that choose to convert to a VDA, the SOS VDA process should be expedited and there is an expectation that the Holder will conclude the SOS VDA quickly.

As with any SOS VDA, every Holder that converts its examination into an SOS 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 its examination into an SOS VDA are encouraged to work with the Department of State (and its assignees) 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 SOS VDA report and schedules.

Pursuant to 12 Del. C. §1172(b), the look back period for examinations that convert to VDAs is ten reporting 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 an SOS VDA, the SOS VDA will only cover any remaining entities and property types.

The Secretary of State expects every SOS VDA enrollee to reasonably estimate liabilities related to periods for which the Holder’s records are unavailable to prepare a report of presumed past due unclaimed property liability. Estimation is not required for non-Delaware domiciled entities. Estimated unclaimed property for any period a Holder determines it does not have available records would be reportable to the Holder’s state of incorporation or formation.

On July 1, 2017, the Department of State published final regulations relating to estimation in the SOS VDA Program. The regulations address the scope of an SOS VDA, permissible base periods, items to be excluded from the estimation calculation, aging criteria for outstanding and voided checks, and the definition of what constitutes complete and researchable records.

Here is a link to the final SOS VDA Estimation Regulations:

View Regulations

Pursuant to 12 Del. C. §1176(b), on or before December 1, 2017, the Secretary of Finance will adopt regulations regarding the method of estimation. These regulations have not yet been finalized. The 60 day period to convert from examination to SOS VDA will not commence until the Department of Finance Regulations are adopted.

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 may be referred to the State Escheator for examination. Similarly, if a settlement cannot be reached on any property type or entity, the Holder may be referred back to the State Escheator for 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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