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 unclaimed 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 unclaimed 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 unclaimed 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 unclaimed 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 unclaimed property audit/examination, the Treasurer may conduct either a "desk audit" or a "field audit" 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 unclaimed 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 paragraph (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 unclaimed 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 unclaimed property audit/examination, every unclaimed 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 unclaimed 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 unclaimed 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 unclaimed property to the Division;
    (b) Second Priority - holders who have reported unclaimed 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 unclaimed property audit conducted by or on behalf of the Treasurer shall be undertaken in accordance with the provisions of M.G.L. c. 200A, § 12.