Baltimore, MD - City Auditor Josh Pasch presented a report on Baltimore City’s escheat funds procedures at the February 16th Board of Estimates meeting. Escheat funds are managed in the Department of Finance (DOF).

After an informal request from the DOF, the audit evaluated DOF’s compliance with state requirements for reporting escheat funds, and if there are documented policies and procedures to track funds in compliance with the State requirements. The audit covered fiscal years 2018, 2019 and 2020.

Escheat is the right of the government to take ownership of estate assets or unclaimed property, which in the U.S. is facilitated at the state level. In Maryland unclaimed property is managed by the state’s Office of the Comptroller. The Department of Finance manages escheat transactions that occur in Baltimore City.

Concerning its escheat practices the Department of Audits recommended that DOF:

• Create formal policies to property identify and track escheat transactions.
• Better delineate which employees are responsible for transactions and record keeping.
• Follow up on outstanding checks on a timelier basis.
• Maintain escheat fund records for eight years in accordance with state statute of limitations.
• Outline specific timelines and dates for each step in the escheatment process to be completed.

The Department of Finance agreed with the audit recommendations and has outlined an action plan, which includes developing a stronger workflow timeline for executing the escheatment process including utilizing Workday. Finance will also establish a General Ledger account and work with BCIT to consolidate escheatment records. Their action plan includes the following milestones:

• January 15, 2022 - Develop the workflow and timeline for steps in the escheatment process.
• April 30, 2022 - Review current proposed Workday configuration in order to identify and timely process due diligence letters as recommended.
• April 30, 2022 - Finance will work with BCIT to establish a centralized repository to consolidate escheatment records.
• July 1, 2022 - Finance will establish a segregated General Ledger account.

A full audit report can be found at https://comptroller.baltimorecity.gov/audits/reports

“I want to thank our Fraud, Waste, Abuse group in the Department of Audits for helping DOF identify ways to strengthen their operations,” Comptroller Bill Henry said. “Our goal is to help city departments become more efficient and transparent, and audits should be viewed as another tool in that process.”

Background

The Department of Audits (DOA) is the city's independent auditor, providing various audit attestation engagements and assurance services with the overall goal of improving government accountability.