Audit Report on The Financial and Operating Practices of The New York County Public Administrator’s Office

AUDIT REPORT IN BRIEF

The objective of the audit was to determine whether the Office of the New York County Public Administrator (NYCPA) complied with Article 11 of the New York State Surrogate’s Court Procedures Act (SCPA), the Report and Guidelines of the Administrative Board for the Offices of the Public Administrators (Administrative Board Guidelines), and other applicable federal, State, and City laws, rules, and regulations. There are five Public Administrators in New York City, each of whom serves one of the City’s five counties and reports to the county Surrogate’s Court. Each Public Administrator is responsible for administering the estates of individuals in the county who die intestate (those who die without a will) or when no other appropriate individual is willing or qualified to administer the estate.

As of June 30, 2006, the New York County Public Administrator (NYCPA) was administering 1,011 open estates with assets valued at more than $106 million. According to the City’s Fiscal Year 2006 annual financial report the NYCPA collected $1,470,250 in revenues and had expenditures totaling $1,085,912.

Audit Findings and Conclusions

The NYCPA generally adheres to procedures of the SCPA, Administrative Board Guidelines, and its own guidelines and procedures. However, we identified a few instances of noncompliance relating to certain practices. The NYCPA did not always comply with the Administrative Board Guidelines during decedents’ residence searches. Investigators do not prepare an inventory listing of jewelry items retrieved during residence searches; and there was no evidence that two investigators were present as required at 2 of 12 residence searches. In addition, the NYCPA did not always submit final accountings to the Surrogate’s Court, underreported $3,764,520 in 1099-reportable payments to the Internal Revenue Service (IRS), and did not have an independent Certified Public Accountant (CPA) conduct an annual audit.

Audit Recommendations

Based on our findings, we make nine recommendations, five of which are listed below. The NYCPA should:

• Ensure that a complete and detailed inventory list is prepared of all items retrieved from decedents’ residences, including jewelry items, and that the inventory list is signed by both investigators.

• Ensure that two investigators are present during searches of decedents’ residences and that the investigators document their presence by signing the Investigator’s Reports.

• Ensure that final accountings and amended final accountings are prepared and filed with the Surrogate’s Court.

• Ensure that IRS 1099-MISC forms are issued to all individuals with 1099-reportable income (payments made to individuals who provide a service relating to the NYCPA operations, including services provided on behalf of the estates).

• Have an independent CPA conduct annual audits that comply with SCPA requirements.

NYCPA Response

In their response, NYCPA officials generally disagreed with the audit’s findings, but stated that they would take some steps to implement four of the audit’s nine recommendations. They disagreed with three of the recommendations and did not respond to two.