Audit Report on the Financial and Operating Practices of the Queens County Public Administrator’s Office

AUDIT REPORT ON BRIEF

This auditdetermined whether the Queens County Public Administrator’s Office (PA) complied with Article 11 of the New York State Surrogate’s Court Procedure Act (the Act), the Report and Guidelines of the Administrative Board for the Offices of the Public Administrators (Administrative Board Guidelines), and other applicable City and State laws and regulations.

The PA generally adheres to procedures of the Act, Administrative Board Guidelines, and its own guidelines and procedures. Specifically, the PA:

• Maintains a central record of estates, as well as accurate records of estates’receipts and disbursements.
• Files estate tax returns for estates that meet the required criteria for gross income.
• Ensures the presence of at least two investigators during the search of decedents’ residences.
• Ensures all estate assets held in the bank are adequately safeguarded for risks such as loss or forgery and are protected by FDIC insurance.
• Maintains estate assets in interest-bearing accounts and ensures that interest is posted monthly to estate ledgers.
• Correctly accounts for the legal fees, Finance Administrator’s commissions, and PA expenses related to the administration of the estates.
• Has an audit performed annually by an independent CPA firm (certified public accountant).
• Correctly files the required monthly and annual reports with the Surrogate’s Court, State Comptroller’s Office, Mayor’s Office, and City Comptroller’s Office.

However, we identified problems related to certain practices. Specifically, the PA:

• Underreported $31,547 of miscellaneous income to the IRS and did not include all required information on the 1099-MISC forms.
• Underestimated the values of the estates reported to the Surrogate’s Court by $7.5 million.
• Did not document in the computerized inventory all of the items brought from the decedents’ residences. The items not recorded had appraised values totaling $1,638.
• Did not comply with Administrative Board Guidelines during some residence searches.

Although the dollar amounts of the above-mentioned findings may not be material in relation to the total dollar value of PA assets, if the Office does not resolve problems with its procedures, it may have to deal with problems of a greater magnitude in the future.

To address these issues, we make seven recommendations that include the following. The PA should ensure that:

• All required information, including the Tax Identification Number, is reported for each 1099-MISC form issued.
• It includes the correct values of all estates’ properties in its semi-annual reports to the Surrogate’s Court.
• All decedents’ assets are recorded in its computerized inventory system.
• It complies with the Administrative Board Guidelines for searching decedents’ residences.

The matters covered in this report were discussed with officials from the Queens PA during and at the conclusion of this audit. A preliminary draft report was sent to PA officials and discussed at an exit conference held on April 7, 2003. On April 15, 2003, we submitted a draft report to PA officials with a request for commentsWe received a written response from the Queens PA on April 29, 2003. PA officials generally agreed with the audit’s findings and recommendations, stating:

"We thank the auditors for pointing out areas of improvement. All of the recommendations made to the Queens County Public Administrator have already been considered and implemented where possible."