Gift Certificates: Obligation or Opportunity
Property is considered unclaimed after it is held for an extended period of time with no owner contact and a "good faith" effort to locate the owner. Regardless of any expiration dates, gift certificates that have been unclaimed for more than three years (effective November 1, 2004) are considered unclaimed property. For those restaurants using some type of “smart card” program that charges administrative or inactivity fees against the gift cards, be aware that the law specifically states the reportable amount presumed abandoned is the “price paid by the purchaser” and therefore does not anticipate reductions for fees.
Gift certificates are an obligation of a restaurant and should be recorded, tracked and reconciled monthly to some kind of list of outstanding gift certificates. State auditors (and financial statement auditors) often find incomplete or non-existent record keeping for gift certificates. Because gift certificates are effectively "Cash" and future revenues to the restaurant, it is very important to have a greater emphasis placed on appropriate record keeping as well as internal controls over their issuance and redemption.
A gift certificate database is a valuable tool for any restaurant. An effective database would include the name and address of each purchaser, a sequential numbering system to eliminate risks of misplaced or stolen certificates, and it would provide a means of balancing the totals to the financial statements. This database then affords each restaurant with a dual purpose, a valuable accounting tool and an accurate marketing database.