Audit Report on the Financial and Operating Practices of the Richmond County Public Administrator’s Office July 1, 2006-June 30, 2008

AUDIT REPORT IN BRIEF

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

The RCPA handles the estates of decedents in the borough of Staten Island who die without a will, a personal representative, known heirs, or heirs not qualified to administer the estates. As the estate administrator, the RCPA makes funeral arrangements, collects debts, pays creditors, manages the decedents’ assets, searches for possible heirs, and files tax returns on behalf of the decedents.

During Fiscal Years 2007 and 2008, the RCPA reported a total of 520 open estates valued at approximately $6.4 million. For Fiscal Year 2007, the RCPA reported total expenses in the amount of $348,095, consisting of $327,872 in Personal Services (PS) and $20,223 in Other than Personal Services (OTPS). For Fiscal Year 2008, it reported total expenses of $361,714, consisting of $338,248 in PS and $23,466 in OTPS. The RCPA’s Office employed five full-time staff members, including the Public Administrator and Deputy Public Administrator.

Audit Findings and Conclusions

The RCPA adequately handled certain estate management responsibilities, including the filing of the required monthly suspense account report with Surrogate’s Court, ensuring that expenses funded by the suspense account were appropriate and necessary for the administration of the estates, and submitting monthly reports to the City Comptroller’s Office.

However, our audit found some issues of concern. Specifically, the RCPA improperly maintained checking accounts in the RCPA’s name totaling $813,961, did not allocate the funds in checking accounts to the corresponding estates, and maintained average monthly balances that exceeded the FDIC insurance limit. In addition, there were significant inadequacies in RCPA’s internal control procedures as they relate to the recording and reporting of the estate funds, payment of legal fees to estates, tracking the progress of each estate, reconciling the books and bank account balances, and segregating key responsibilities.

Audit Recommendations

To address these issues, we make six recommendations, that the RCPA:

• Immediately close all checking accounts under the RCPA’s name and ensure the checking accounts are reopened under the names of the appropriate estates.

• Reconcile all bank accounts with the estates, and ensure the estate assets are accurately reported.

• Monitor all bank balances to ensure they are within the FDIC insurance limit.

• Ensure that affidavits of work are submitted and reviewed before payments are made to attorneys.

• Develop a system to monitor cases adequately, including the use of a “tickler” function that would inform the RCPA of any unusual delays in estate administration and allow for the prompt and appropriate action to be taken.

• Conduct an annual independent audit and properly address all recommendations in a timely fashion.