Audit Report on the Queens County Public Administrator’s Compliance with Financial Reporting Requirements

Executive Summary

New York City (the City) has one Public Administrator (PA) in each of the five counties that make up the City. Each of these PAs is appointed by the judge or judges of the Surrogate’s Court of their respective counties. The PAs are responsible for administering the estates of individuals who die intestate (i.e., without a will) or when no other appropriate individual is willing or qualified to administer the estate. The Office of the Queens County Public Administrator (QCPA) administers such estates in Queens. As the estate administrator, the QCPA has a fiduciary duty to the estates that requires the QCPA to, among other things, conduct thorough investigations to discover all assets and safeguard them; pay decedents’ bills and taxes; account for and maintain documentation to support estate activities and transactions; and distribute estate proceeds to decedents’ heirs and distributees. Article 11 of the New York State Surrogate’s Court Procedure Act (SCPA) and the Guidelines for the Operations of the Public Administrators of New York State (PA Guidelines) govern the QCPA’s estate-administration process.

The QCPA is managed by a Public Administrator who was appointed in February 2002 and a Deputy Public Administrator who was appointed in January 1996. The Public Administrator’s and Deputy Public Administrator’s salaries are included annually in the expense budget of the City pursuant to SCPA §1105(3). The Public Administrator is also authorized to appoint other employees “as may be allowed annually in the budget of the [C]ity” pursuant to SCPA §1108(1). In addition, the PA Guidelines authorize the Public Administrator to maintain a “suspense account” which contains, among other things, fees allowed by the court for PA expenses, and to “use the suspense account to pay office expenses not funded by the PA’s budget.”

The QCPA reported that it made suspense account disbursements totaling $767,714 during Calendar Year 2019.

Audit Findings and Conclusion

The QCPA did not consistently comply with Internal Revenue Service (IRS) requirements for collecting and validating vendors’ tax information and IRS requirements for reporting income that it disbursed to several employees.

Audit Recommendations

Based on our findings, we made the following six recommendations to the QCPA:

• The QCPA should collect W-8s or W-9s from all vendors.
• The QCPA should use the IRS TIN matching service to validate vendor name and TIN combinations.
• The QCPA should appropriately report vendor payments to the IRS based on federal tax classification as reported by vendors on W-8s and W-9s.
• The QCPA should re-issue W-2s to those employees whose income was either overstated or understated.
• The QCPA should use W-2s to report wages and other compensation to the IRS for employees who are paid with QCPA funds.
• The QCPA should withhold federal income, Social Security, and Medicare taxes for employees who are paid with QCPA funds.

Agency Response

In its response, the QCPA objected to the report’s findings regarding its compliance with IRS requirements for collecting and validating vendors’ tax information and reporting employees’ income to the IRS. The QCPA stated that it complies or will comply with five of the six audit recommendations. The QCPA disagreed with the audit recommendation to reissue W-2s to employees whose income was either overstated or understated, stating that “[n]o employee income was overstated, and the understated amounts were de minimis and will not be reissued.” However, as detailed in the report, the QCPA did not comply with IRS requirements for collecting and validating vendors’ tax information and reporting employees’ income to the IRS.