Audit Report on the Bronx County Public Administrator’s Compliance with Financial Reporting Requirements

Executive Summary

New York City (the City) has one Public Administrator (PA) in each of the counties that make up the City. Each of these PAs are appointed by the judge or judges of the Surrogate’s Court of their respective counties. The PAs are responsible for administering the estates of individuals who die intestate (i.e., without a will) or when no other appropriate individual is willing or qualified to administer the estate. The Office of the Bronx County Public Administrator (BCPA) administers such estates in the Bronx. As the estate administrator, the BCPA has a fiduciary duty to the estates that requires the BCPA to, among other things, conduct thorough investigations to discover all assets and safeguard them; pay decedents’ bills and taxes; account for and maintain documentation to support estate activities and transactions; and distribute estate proceeds to decedents’ heirs and distributees. Article 11 of the New York State Surrogate’s Court Procedure Act (SCPA) and the Guidelines for the Operations of the Public Administrators of New York State (PA Guidelines) govern the BCPA’s estate-administration process.

The BCPA is managed by a Public Administrator and a Deputy Public Administrator who were appointed in August 2017 and February 2018, respectively. The Public Administrator’s and Deputy Public Administrator’s salaries are included annually in the expense budget of the City pursuant to SCPA §1105(3). The Public Administrator is also authorized to appoint other employees “as may be allowed annually in the budget of the [C]ity” pursuant to SCPA §1108(1). In addition, the PA Guidelines authorize the Public Administrator to maintain a “suspense account” which contains, among other things, fees allowed by the court for PA expenses, and to “use the suspense account to pay office expenses not funded by the PA’s budget.”

The BCPA reported that it made suspense account disbursements totaling $263,999 during Calendar Year 2019.

Audit Findings and Conclusion

The BCPA did not comply with Internal Revenue Service (IRS) requirements for collecting and validating vendors’ tax information and IRS requirements for reporting income that it disbursed from the suspense account to several employees.

Audit Recommendations

Based on our findings, we made the following five recommendations to the BCPA:

• The BCPA should collect W-8s or W-9s from all vendors.
• The BCPA should use the IRS TIN matching service to validate vendor name and TIN combinations.
• The BCPA should appropriately report vendor payments to the IRS based on federal tax classification as reported by vendors on W-8s and W-9s.
• The BCPA should use W-2s to report wages and other compensation, such as car allowances paid under non-accountable plans, to the IRS for employees who are paid with BCPA suspense account funds.
• The BCPA should withhold federal income tax, Social Security, and Medicare taxes for employees who are paid with BCPA suspense account funds.

Agency Response

On December 9, 2021, we submitted a draft report to the BCPA with a request to provide written comments by December 22, 2021. However, the BCPA did not provide written comments in response to this report.