Dormant vs. Inactive accounts

Question #1: I was wondering if anyone out there separates accounts into two categories for "Inactive" and "Dormant"? And, if so, what are the time frames for classification into each of these categories?

Question #2: I was wondering if anyone out there in internal audit sends out daily confirmations on inactive and/or dormant accounts? Are confirmations sent for dormant accounts only, or are inactive accounts confirmed as well?

I know that I need to follow state guidelines on the matter of dormant accounts, however, state guidelines do not explain internal controls and the confirmation process. Therefore, that's why I am looking for some other bank input.

I also know that there is a sample dormant account audit program located in the Banker's Tools section of this site - and the program refers to both Inactive and dormant accounts, thus, another reason I am looking for some additional input on this matter.

I just finished doing some housekeeping on my banks dormant accounts. I filled out a tech form asking that our system have both an inactive and a dormant status. Presently, we only have a dormant status, and all accounts go dormant after 6 months of inactivity. I would prefer that only checking accounts would go inactive after 6 mos. , and savings accounts at a year. I am going to use the dormant account status strictly for accounts that are approaching dormancy (5yrs in SD). This will make the list of dormant accounts a lot more manageable, so I can concentrate on the accounts that we have lost contact with or that have been inactive for a considerable length of time, instead of every little savings account that hasn't had a deposit in 6mos. I will continue to review all status changes monthly.

We use both dormant and inactive accounts. Savings accounts become Inactive after one year and Dormant after three years without customer-generated activity. Checking accounts become Inactive after six months and Dormant after one year without customer-generated activity.

Dormant accounts are monitored on a monthly basis and confirmations are sent on those transactions. We are fairly small so monitoring daily and weekly seemed like overkill.

At my previous bank, we designated inactive (1 yr DDA, 2 yr SAV), lost contact (no good address), and dormant (both inactive and lost contact). All three required approval for items to post.

At my current bank, we designate only dormant. Bad address accounts (as of the last audit) were not on a restricted status. Management agreed to place on restricted status after two statements were returned, but I have not verified this yet.

Currently, our accounts become inactive after 180 days of inactivity and dormant after 365 days. We do not send out confirmations at this point. However, I would like to do so. Does anyone have a sample confirmation letter?

One thing to consider when having both inactive and dormant status. Many times, controls (approval for all items posting to the account, controling sig cards and dormant account lists, etc.) are only put in place on the dormants. If I were an employee interested in fraudulent use of deposit accounts, I would look for inactive accounts a few days prior to becoming dormant and funnel funds out of them (and the entries to these accounts would keep them from going dormant).

Moral of the story...if you use inactive status, put controls in place that are similar to dormant accounts.

We have only a dormant status after 6 months - currently. However, I have recommended we establish an inactive classification at the 6 month period, and then dormant at the 12 month period. Controls would remain the same. But, by state law we are not able to charge a service charge on dormant accounts. Since this process is automated and is triggered by the change in status, we are losing 6 months of income on those accounts.

We code inactive after 12 months and dormant after 18 months. I review a combined report every month and send out notices to new additions and keep my eye on older accounts. We are fairly small, so daily or weekly reviews is a little much.

We had coded 6 months inactive and 12 months dormant for DDA and 12 months inactive 18 months dormant for other than DDA.

Inactive carried no transaction restrictions, but created a report to audit/operations, reflecting the transaction details. Dormant accounts were "blocked to post", and needed a supervisory release. Dormant also blocked the signature card from all but control personnel.