Audit Report on the New York County Public Administrator’s Estate Management Practices
June 23, 2017 | MG17-057A
The objective of this audit was to determine whether the Office of the New York County Public Administrator (NYCPA) has adequate controls to ensure that it properly executed its fiduciary responsibilities, including whether it safeguarded estate assets, accurately reported estate revenues and expenses, and managed estate activities in accordance with Article 11 of the Surrogate’s Court Procedure Act (SCPA) and other applicable State and City regulations.
Public Administrators (PAs) are responsible for administering the estates of individuals who died intestate—without a will—and left property in the county, when no other individual, such as an eligible family member, is available and willing to administer the decedent’s estate. The general functions of the PA are governed by Article 11 of the New York State Surrogate’s Court Procedures Act (SCPA). In his or her official capacity, the PA makes funeral arrangements, collects debts, pays creditors, manages the decedents’ assets, files tax returns on behalf of the estate, and searches for heirs. The NYCPA administers the estates of decedents in the County of New York. The NYCPA uses CompuTrust to administer the estates under its jurisdiction. The Fiscal Year 2016 City Comptroller’s Comprehensive Annual Financial Report (CAFR) reported that NYCPA collected $995,570 in revenues on behalf of the City and received $1,599,926 in appropriations from the City, consisting of $673,493 for Personal Services (PS) and $926,433 for Other Than Personal Services (OTPS) expenditures.
Audit Findings and Conclusions
The NYCPA does not have adequate controls to ensure that it properly executes its fiduciary responsibilities for safeguarding estate assets, reports estate revenues and expenses, and manages estate activities in accordance with Article 11 of the SCPA and applicable State and City rules. Specifically, we found that the NYCPA has not implemented sufficient controls over its physical case files, its centralized record-keeping system, and its inventory records to ensure their accessibility, accuracy, and integrity. The NYCPA was unable to readily locate 23 percent of the 40 sampled estates’ files we requested—the file for one estate was still missing as of the date this report was issued. We also found that CompuTrust did not accurately reflect the status of nearly one-fifth of the estates recorded therein. Further, we found that the NYCPA’s inventory records did not accurately reflect the physical inventory of items in the NYCPA’s custody for nearly half of the sampled estates.
The NYCPA also did not ensure: (1) that an independent CPA audit was timely conducted; and (2) that bank account reconciliations and financial statements were adequately reviewed and signed in accordance with New York City Comptroller’s Directive #28.
Finally, we found specific deficiencies in the NYCPA’s administration of 11 of 16 estates selected for an in-depth review, including: inadequate documentation of disbursements; estate files missing essential documents; and CompuTrust records that did not accurately reflect the status of several estates.
To address the issues raised by this audit, we make 11 recommendations, including:
- The NYCPA should formulate an efficient internal control system that allows NYCPA management to effectively identify and promptly account for all estates under its administration.
- The NYCPA should ensure that it maintains a continuously-updated master list of all estates under its administration, including for each estate: the decedent’s name; the NYCPA’s designated estate number; and the account control number automatically generated by CompuTrust.
- The NYCPA should establish controls to ensure that all of the required documents are maintained within each estate’s files and that supporting documents are obtained and maintained in those files when disbursements are made on behalf of an estate.
- The NYCPA should ensure that all estate data in CompuTrust is continuously updated so that it is always complete and accurate, and so that the status of each estate as reflected in CompuTrust is regularly and independently reviewed.
- The NYCPA should strengthen controls for the recording, safeguarding, and disposition of estate assets. The strengthened controls should include inventory procedures that require the clear identification of personal property found in decedents’ residences and elsewhere, items moved from one location to another, and items sold.
- The NYCPA should ensure that sale proceeds, and all other receipts, are promptly credited to the estates in the CompuTrust accounting record and promptly deposited in the estates’ accounts.
In its response, the NYCPA does not explicitly indicate its agreement or disagreement with a number of the audit’s recommendations and instead addresses many of the specific findings of the audit. However, in doing so, it appears that the NYCPA generally agreed with 9 of the audit’s 11 recommendations. The NYCPA did not address our recommendations that it maintain a master list of all estates under its administration and that it maintain a complete inventory list of its office equipment. We note that many of the procedures that the NYCPA cites in its response that address audit findings were not in effect during the scope period of our audit. However, we are pleased to see that the NYCPA appears to be trying to address concerns raised by the audit.