KATHLEEN CONNELL               

Controller of the State of California            

Division of Collections            

July 15,1998                                     

Dear Financial Advisor:

As you are aware, you have a responsibility to inform and apprise your clients of all laws that may have an impact on their financial statements. In doing so, make sure you do not overlook California's Unclaimed Property Law (Code of Civil Procedure 1500 et. seq.). If you are already familiar with this law, you know how important it is for your clients to comply with its requirements. If you have not yet discussed it with them, a review of the law is in order.

What is unclaimed property? Simply stated, unclaimed property is any asset --- such as a checking or savings account, credit balance, stock, dividend, bond, wage or commission check--that has remained unclaimed by an owner for more than three years. Under California law, such property reverts or "escheats" to the state until claimed by its rightful owner. Perhaps many of your clients may have already taken this property into their business income. If this is the case, please advise them that such property should be reported to the state before November first of each year. Life insurance companies must report before May first of each year.

This law may greatly affect your clients' financial statements, if over a period of tine they continue to improperly write off unclaimed property to income. The state assesses 12 percent interest on all unclaimed property from the date it should have been remitted until the date of actual receipt by the state. In addition, any person who willfully refuses to pay or deliver escheated property to the state as required can be fined $5,000 to $50,000.

I encourage you to contact your corporate or business clients and inform them of their reporting obligations under California's Unclaimed Property Law. Once your clients are familiar with this law, you can assist them in preparing their reports. In addition, you will be able to ensure that small amounts of unclaimed property that do not have a material impact on current financial statements do not become material adjustments that adversely affect future statements.

For a copy of California's Unclaimed Property Law and our diskette reporting program to distribute to your clients, visit our web site on the Internet at: http://www.sco.ca.gov  If you do not have access to the Internet, you may purchase a copy of the reporting instructions and the law by completing the enclosed order form and sending a check for the appropriate amount payable to the State Controller's Office at the address listed below.

Bureau of Unclaimed Property

P.O. Box 942850, Sacramento, CA 94250-5873 (916)445-8318

If you have any questions in regard to your clients' obligation to report under the law, please call my office at (916) 323-4674.