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#199613 - 06/11/04 07:21 PM Dormant Account Audit
Anonymous
Unregistered

Hi I am new to auditing and am conducting a dormant account audit. What is the general standard for the amount of time until an account becomes inactive and then dormant? This bank has 48 months for inactive and 60 for dormant. This seems like way to long of a time to me...

Please let me know what you all think.

Thanks!!

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Audit
#199614 - 06/11/04 07:34 PM Re: Dormant Account Audit
Georgia Golfer Offline
Gold Star
Georgia Golfer
Joined: Jun 2003
Posts: 415
1st Tee
12 months from the last transaction for inactive accts & 18 months until they reach dormant status. In Florida, accounts that are 60 months since the last transaction are not dormant, they are abandoned and are to be escheated to the state.

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#199615 - 06/11/04 07:43 PM Re: Dormant Account Audit
Jokerman Offline
10K Club
Joined: Nov 2003
Posts: 12,846
Quote:

This seems like way too long of a time to me...





That is much too long in my opinion. Twelve months for transaction accounts and 24 months for savings accounts seems to be common.

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#199616 - 06/11/04 08:38 PM Re: Dormant Account Audit
QCL Offline
Power Poster
QCL
Joined: May 2002
Posts: 6,259
NW IL
6 months checking, 24 months savings.
Escheat after 60 months in Illinois.

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#199617 - 06/14/04 04:49 PM Re: Dormant Account Audit
Anonymous
Unregistered

First thing to do is look at your state's abandonment period - usually found somewhere on the State's website - then determine what is right for your own institution - NJ has a 3 year abandonment period for DDA & Sav accounts, therefore, we do inactive after 1 year and dormant after 2 years -

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#199618 - 06/15/04 07:19 PM Re: Dormant Account Audit
Anonymous
Unregistered

At our bank, accounts go dormant on the system after 6 months. We have it this way, b/c we only have an active and a dormant status on or system and feel it necessary to review activity to accounts that had previously been inactive for 6 months or longer. We are waiting on a new "inactive" status, to help simplify things. Then we can seperate accounts that simply need to be reviewed for status changes and accounts that are actually dormant according to law and need to be service charged or escheated to the state. In SD 5 yrs of no contact is considered dormant. If a statement is successfully mailed, that is considered contact. This is one thing that is often forgotten (although it may be different in your State). People often think dormancy goes by the last transaction to the account.

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#199619 - 06/17/04 06:06 PM Re: Dormant Account Audit
Anonymous
Unregistered

Hey Anon, I tend to disagree.

We consider both Inactive and Dormant to be "no customer contact". Just by merely not receiving a statement back as undeliverable does not mean that you had contact with your customer - they could have moved, not given a forwarding address and someone else is receiving their mail and throwing it away - Yes, I know that's not legal but people do it anyway.

Transaction activity does not have to happen for an account to remain at ACTIVE - we go by customer contact - if I send out an audit confirmation to the customer on a dormant account, and that customer signs it and returns it to me, I verify their signature to the signature card for agreement and then we change the account back to ACTIVE based on customer contact. I have the customer's signature and the dated letter to ensure a proper audit trail.

If the government had wanted us to only escheat accounts that are undeliverable, don't you think that they would state that specifically in the Unclaimed Property regulations?

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#199620 - 06/17/04 07:27 PM Re: Dormant Account Audit
auditmind Offline
New Poster
Joined: Jun 2004
Posts: 1
Quote:

Hey Anon, I tend to disagree.

If the government had wanted us to only escheat accounts that are undeliverable, don't you think that they would state that specifically in the Unclaimed Property regulations?




I see where this can be confusing. In Louisiana, the law states the following:

Property is presumed abandoned if it is unclaimed by the apparent owner during the time set forth below for the particular property for the following:
-- A demand, savings, or matured time deposit, including a deposit that is automatically renewable, five years after the earlier of its maturity or the date of the last indication by the owner of interest in the property; however, property that is automatically renewable is deemed matured for purposes of this Section upon its initial date of maturity, unless the owner has consented to a renewal at or about the time of the renewal and the consent is in writing or is evidenced by a memorandum or other record on file with the holder. However, no property under this Paragraph shall be presumed abandoned if a banking or financial organization has forwarded a statement or other written communication to the owner within the preceding ninety days with regard to the property at the owner's last known address and the statement or communication has not been returned to the banking or financial organization as undeliverable or unclaimed by the forwarding agent.


How would you interpret this?

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#199621 - 06/17/04 10:13 PM Re: Dormant Account Audit
mrenderman Offline
100 Club
mrenderman
Joined: May 2003
Posts: 123
Wisconsin
Our dormant procedures include the account being dormant and have undeliverable mail for a period of five years and then is sent in to the state. (Which is Wisconsin) In our state laws it says that we are not to send in all customers just because they haven't had activity for five years and they are still getting their statement. If we do not receive a statement back in the mail, they consider it to be contact with the customer. Now this may vary from state to state, so this may be the discrepency between the answers that are coming in. I know that it can be a confusing situation but that is how we are doing it in Wisconsin.

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#199622 - 06/21/04 11:08 PM Re: Dormant Account Audit
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 555
Louisiana
Quote:

Quote:

Hey Anon, I tend to disagree.

If the government had wanted us to only escheat accounts that are undeliverable, don't you think that they would state that specifically in the Unclaimed Property regulations?




I see where this can be confusing. In Louisiana, the law states the following:

Property is presumed abandoned if it is unclaimed by the apparent owner during the time set forth below for the particular property for the following:
-- A demand, savings, or matured time deposit, including a deposit that is automatically renewable, five years after the earlier of its maturity or the date of the last indication by the owner of interest in the property; however, property that is automatically renewable is deemed matured for purposes of this Section upon its initial date of maturity, unless the owner has consented to a renewal at or about the time of the renewal and the consent is in writing or is evidenced by a memorandum or other record on file with the holder. However, no property under this Paragraph shall be presumed abandoned if a banking or financial organization has forwarded a statement or other written communication to the owner within the preceding ninety days with regard to the property at the owner's last known address and the statement or communication has not been returned to the banking or financial organization as undeliverable or unclaimed by the forwarding agent.


How would you interpret this?




The way I understand it, in LA, as long as you do not get return mail from the customer, it does not have to be turned over to the state. I agree with Starter, in the fact that you do not really know if you have lost contact with the customer. However, LA law is very specific, as you can see. This is why a lot of banks and credit unions in our area have "dormant account fees" to try and zero out the account before you have to send it to the state.

As for the amount of time, our system changes an account to "dormant" after 6 months of inactivity. It should be called "inactive", but that's the way it does it.
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