Audit Report on the Financial and Operating Practices of the Office of the Bronx County Public Administrator

EXECUTIVE SUMMARY

The Office of the Bronx County Public Administrator (BCPA) is responsible for administering the estates of individuals in the Bronx who die intestate (i.e., without a will) or when no other appropriate individual is willing or qualified to administer the estate. As the estate administrator, the BCPA has a fiduciary duty to conduct thorough investigations to discover and safeguard all estate assets; pay decedents’ bills and taxes; account for and maintain documentation to support estate activities; and distribute estate proceeds to decedents’ heirs.

The BCPA is managed by a Public Administrator (PA) and a Deputy Public Administrator who are appointed and may be removed by the Bronx County Surrogate’s Court Judge.  The current Public Administrator and Deputy Public Administrator were appointed in March 2013, and June 2013, respectively.  Additionally, the Bronx County Surrogate’s Court Judge appoints counsel to the BCPA to render legal services to estates.  The current BCPA counsel was appointed in February 2013 and is responsible for estates opened after this time.

Audit Findings and Conclusions

The BCPA failed to properly carry out its fiduciary responsibilities in accordance with governing laws and rules.  We found multiple circumstances where it did not act in the best interests of estates, where it failed to carry out its duties prudently, and where it did not comply with applicable laws and rules.  We also found that the BCPA did not maintain a reliable case management system, it did not appropriately and effectively use suspense account funds, it failed to properly administer bank accounts as required by the Guidelines for the Operations of the Offices of the Public Administrators of New York State (Guidelines), and it did not submit financial and operational reports to oversight authorities as required by the law that would allow them effectively assess, monitor, and hold the BCPA accountable for its performance.

Audit Recommendations

This report makes a total of 41 recommendations to the BCPA, including:

• The BCPA should institute comprehensive formal written policies and procedures that adequately and specifically address the duties and procedures to be followed by employees for critical functions, including but not limited to: asset identification, collection, safeguarding, and distribution; bank account administration; estate accounting, including the recording, documenting, and reporting of income and expense transactions; and estate management, monitoring, and tracking.
• The BCPA should establish asset identification policies and procedures and checklists detailing basic databases to search, and provide for access to databases including but not limited to: the New York City Department of Finance’s (DOF) ACRIS public database of real property records; the Office of the State Comptroller’s (OSC) public database of unclaimed funds; and the New York State Department of Motor Vehicles’ (NYS-DMV) database of automobiles, boats, and other motorized vehicles records.
• The BCPA should track inquiry, confirmation, and collection letters to ensure that letters are sent, responses are received, necessary follow up action is taken, and ultimately, that funds are collected in a timely manner.
• The BCPA should ensure that BCPA staff properly complete Disbursement Vouchers detailing the amount, reason, and review and approval for expenses, and attach supporting documentation to them.
• The BCPA should select vendors who are competitive with other vendors providing the same services.
• The BCPA should ensure that suspense account expenses are reasonable, appropriate, adequately supported, and authorized.
• The BCPA should ensure that estate funds are secured with FDIC insurance or collateralization agreements between the BCPA and financial institutions which are backed by approved government securities.
• The BCPA should immediately submit to the Surrogate’s Court, State Attorney General, State and City Comptroller’s Offices and the Mayor outstanding audits when they are issued, and thereafter, conduct and submit audits within prescribed timeframes.
• The BCPA should ensure that it submits to the Surrogate’s Court, State Attorney General, State and City Comptroller’s Offices, and the Mayor accurate and complete reports of open and settled estates.
• The BCPA should appropriately report all vendor payments and employee wages to the IRS and state tax authorities and issue 1099-MISC forms to vendors paid more than $600 in a calendar year.

Agency Response

The BCPA strongly disagreed with “significant portions of the Report, and in particular with any notion that the BCPAO [the Bronx County Public Administrator’s Office] has failed to carry out its fiduciary responsibilities in administering the estates under its charge.  The BCPA stated that it “feels the subject Report is replete with misstatements, mischaracterizations and outright inaccuracies as to what if any mistakes might have been made” and attributed this to Comptroller’s Office staff not understanding and applying appropriate governing laws, rules, and regulations and not seeking input from the BCPA during the course of the audit.

However, contrary to the BCPA’s assertions, the Comptroller’s Office appropriately applied applicable laws, rules, and regulations — primarily Article 11 of the Surrogate Court Procedures Act (SCPA), the Guidelines, and the BCPA’s informal policies and procedures.  Moreover, from the outset of the audit, the Comptroller’s Office repeatedly sought and obtained input from and communicated issues to BCPA staff and counsel through meetings, phone calls, and emails.  Further, the Comptroller’s Office formally discussed the audit’s findings and conclusions with the BCPA on numerous occasions up to and including the exit conference held in May 2015, but for the first time starting in July 2014.

Additionally, the PA did not address or criticize report findings that he stated related to issues that occurred or stemmed from events prior to his appointment.  However, upon his appointment in March 2013, the PA assumed full responsibility for BCPA operations and all open estates regardless of when issues originated or when estates were opened.

Finally, the PA stated that budgetary constraints precluded him from addressing several issues, including those related to the BCPA’s case management system.

The full text of the BCPA’s response is included as an addendum to the report.