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COMMERCE DEPARTMENT
CONTRACT AUDITS
In early 1999,
a number of Ohio Chamber members informed us that they had been contacted
by auditors under contract with the Department of Commerce. These auditors
demanded the right to enter the company's premises to audit its books
for unclaimed funds.
After a little checking, the Ohio Chamber discovered that the fee for
the auditors' service was based on a percentage of the amount these
auditors determined our member companies owed in unclaimed funds.
The Ohio Chamber
raised concerns about this practice with Commerce Department officials
and legislators. We emphasized the serious due process implications
associated with paying such so-called "independent" auditors on a contingency
fee or commission basis. We felt that when an auditor has a direct financial
interest in the outcome of an audit, questions naturally arise about
that auditor's ability to be neutral or even-handed in conducting the
audit.
After much deliberation, Gov. Taft on June 1, 1999 ordered a temporary
suspension of this practice, pending further investigation.
The Ohio Chamber believes businesses now have an excellent opportunity
to convey their concerns about proposed draft rules governing unclaimed
funds audits. And in an effort to begin this process, the Ohio Chamber
submitted initial recommendations to the Commerce Department. This is
merely the first step toward a comprehensive reform of the regulations
pertaining to unclaimed property held by Ohio businesses.
Click
here to read the set of recommendations we submitted. If you have
any comments or questions or wish to be updated on this issue, please
contact Daniel Navin, Ohio
Chamber director of taxation and public finance, at (614) 228-4201.
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