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

Introduction

New York City (the City) has one Public Administrator (PA) in each of the 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 Richmond County Public Administrator (RCPA) administers such estates in Richmond County. As the estate administrator, the RCPA has a fiduciary duty to the estate that requires the RCPA, among other things, to 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 RCPA’s estate-administration process.

The RCPA is managed by a Public Administrator and a Deputy Public Administrator who were appointed in January 2019 and February 2019, respectively. 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 RCPA reported that it made suspense account disbursements totaling $95,095 during Calendar Year 2019.

Audit Findings and Conclusions

The RCPA did not comply with Internal Revenue Service (IRS) requirements for collecting and validating vendors’ tax information and IRS requirements for reporting income that it disbursed from the suspense account to an employee.

Audit Recommendations

Based on our findings, we made the following five recommendations to the RCPA:

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

Agency Response

In its response, the RCPA stated that “we have been in touch with our accountant and he agrees with all findings and will correctly handle all filing requirements for 1099s in 2021 and all years going forward.”