Audit Report on the Operating Practices of the Kings County Public Administrator’s Administration of Estates

Executive Summary

There are five Public Administrators (PAs) within New York City (the City), each appointed by the judge or judges of the Surrogate’s Court of their respective counties. The Office of the Kings County Public Administrator (KCPA) administers estates of Kings County residents who die intestate (without a will) and without a family member or other person authorized to administer their estates. In Kings County, two elected Surrogate’s Court judges (Surrogates) preside over the Surrogate’s Court. They divide judicial responsibility for the estates that the KCPA administers and share the power to appoint and remove the PA.^[1]

Article 11 of the New York State Surrogate’s Procedure Act (SCPA) and the Guidelines for the Operations of the Public Administrators of New York State issued pursuant to SCPA §1128 (PA Guidelines) govern the KCPA’s estate-administration process. A core component of the KCPA’s responsibility under these rules is to identify, collect, inventory, and manage the sale of real and personal property that belongs to the decedents’ estates it administers.

The City partially funds the operations of the KCPA. In addition, in accordance with the SCPA, the KCPA charges each estate an administrative fee of up to one percent of estate’s gross value, which it deposits in a suspense account that is used to fund office expenses and certain estate expenses.

In Fiscal Year 2020, the KCPA’s City-funded expenditures totaled $848,753. That year, the KCPA employed 14 individuals, consisting of a PA, a Deputy PA, and a staff of 12 investigative and office personnel. As of September 18, 2019, the KCPA maintained a caseload of 2,740 open estates, according to its records.

We conducted this audit to determine whether the KCPA maintained sufficient controls over certain operations integral to its administration of estates and whether the KCPA complied with related requirements of the SCPA, the PA Guidelines, and other applicable regulations.

Audit Findings and Conclusions

The audit found significant weaknesses affecting the KCPA’s management structure and operating practices related to the administration of estates. Specifically, two conflicting court orders issued by the two Kings County Surrogates have created confusion and dissension within the KCPA’s office relating to the proper chain of command and the authority of its two senior managers to make and approve necessary decisions. We also found that the KCPA lacked sufficient detailed policies and procedures to govern some of its estate-administration processes.

The combination of insufficient operating procedures and diminished management authority has compromised the existing weak control environment and allowed noncompliant practices to persist. In that regard, we identified significant weaknesses and inconsistencies in the KCPA’s searches for, and its collection, inventory, and retention of, personal property belonging to decedents’ estates.

Audit Recommendations

To address the issues raised by this audit, we make two recommendations to the Surrogate’s Court and nine recommendations to the KCPA. They include the following.

The Kings County Surrogate’s Court should:

• Review its Administrative Orders of May 18, 2020 and May 20, 2020 with the assistance of the Office of Court Administration to address and as far as possible resolve any contradictions that may exist between them.

The KCPA should:

• Establish written policies and procedures that include detailed guidance to staff, consistent with the SCPA and the PA Guidelines, for the proper performance of their assigned duties.
• Ensure that it properly logs and maintains essential information concerning all personal property of every estate during or immediately following investigations at decedents’ residences.
• Ensure that it consistently documents all aspects of the in-office inventory intake process on the required forms.
• Perform and obtain appraisals of non-liquid inventory items belonging to closed estates, sell the items at auction, and ensure the proceeds of the sales are credited to the estates and remitted to the appropriate individuals in accordance with the applicable decree wherever feasible.
• Regularly download, preserve, and periodically compare copies of video surveillance records with access log records to ensure a complete record of access to the vault.

Agency Response

In its response, the KCPA did not address or specifically state whether it agreed or disagreed with each of the audit’s recommendations. The KCPA stated, in part, “The Comptroller’s audit report focuses on the specific areas of KCPA which continue to need improvement, rather than on improvements which have been implemented since the 2015 [audit]. The Comptroller makes several valid recommendations with respect to improving operations of the agency. These recommendations will be implemented where possible. However, until the agency’s reporting structure is re-established in accordance with the NYS Surrogate’s Court Procedure Act, additional efforts to improve KCPA operations will not be possible.”

King’s County Surrogates Response

One of the two Kings County Surrogates provided a written response to the audit report. The Surrogate’s response did not specifically address or state whether the Surrogate agreed or disagreed with the audit’s recommendations.^[2] The Surrogate stated in part that “the problems and issues raised and identified in the preliminary audit report are symptomatic of the fundamental structural problems of the manner in which the office of PA is supervised, not just in Kings County, but in New York City as a whole. Until this underlying structure issue is rectified, the problems that have confronted the various public administrator’s offices in New York City for a century will only continue.”

Endnotes

[1] The estates handled by the Surrogate’s Court in Kings County are assigned to an individual Surrogate based on the decedent’s date of death. One Surrogate presides over cases involving the estates of decedents who died during odd-numbered months; the other Surrogate presides over cases involving the estates of decedents who died during even-numbered months. With respect to the appointment and removal of the PA, the Surrogate’s Court Procedure Act §1102(1) provides, in part, “The public administrators of Kings, Richmond, New York, Bronx and Queens counties shall be appointed by and may be removed by the judge or judges of the court of their respective counties and shall continue in office until removed.”

[2] The written audit response submitted by one of Kings County’s two Surrogates was initially provided in response to the preliminary draft report. Thereafter,  Surrogate Margarita Lopez Torres who submitted the initial response, requested that it be considered as her response to the draft report.