THOMPSON AUDIT UNCOVERS SERIOUS FLAWS IN OPERATIONS AT
New York City Comptroller William C. Thompson, Jr. released an audit today finding the Bronx County Public Administrator's Office (Bronx PA) failure to comply with numerous City, State, and Federal laws severely hampered the office's operations.
"Our audit findings lead me to believe that a severe lack of management was taking place at the Office of the Bronx Public Administrator over the past few years," Thompson said. "It is my hope that the Bronx PA takes these recommendations seriously and implements them immediately in order to drastically improve operations within the office."
During the audit, it was discovered that in addition to non-compliance with several other applicable City, State and Federal Laws, the office failed to satisfactorily issue mandatory reports to the State Comptroller, impermissibly invested estate funds in auction-rate securities, and maintained a significant number of open estates with negative balances.
The city's five county Public Administrators are each responsible for administering the estates of those in his or her county who die intestate (or without a will), or when no other individual is willing or qualified to do so. The Administrators report to their respective
The scope of the audit, which can be viewed at www.comptroller.nyc.gov , was estates that were reported closed during Fiscal Year 2007.
The auditors also concluded that the Bronx PA's lack of written procedures and its failure to adequately use CompuTrust, the office's specially designed computer case management system, resulted in inconsistent reporting of the status of estates, inadequate monitoring of the progress of estate administration, miscalculation and incorrect payment of fees and commissions, and unreported and underreported payments in 1099-reportable payments to the IRS.
Thompson said that by utilizing CompuTrust and shoring up its internal procedures, the Bronx PA's Office can dramatically improve how it conducts business.
"Written policies are recognized as good operating practices necessary to accomplish the goals of the organization," Thompson said. "The Bronx PA lacks written procedures detailing how the agency operates, and as such, the goals of the organization are not being accomplished. Couple that with the lack of utilizing the CompuTrust system and we find great cause for concern."
Additionally, the Comptroller took exception to how the Bronx PA conducts its collection and sale of personal property, such as jewelry and collectible coins, found in decedents' homes. The Bronx PA had been hiring independent contractors to conduct searches of the residences without entering into formal agreements. The audit found that these private investigators routinely fail to prepare detailed lists of personal property found during their searches, and despite some efforts by the Bronx PA to maintain an electronic inventory list, there is little assurance that all personal items belonging to estates are ultimately accounted for and secured. Issues with the quality and contents of the videotapes used to document searches of residences include:
- Cameras were placed in a stationary position and recorded areas where none of the investigators were present.
- Portions of videos were inaudible, pixilated and/or unusable for documenting parts of the searches.
- None of the videos showed the completion of searches, which should include exits from the residences.
The auditors also found that the Bronx PA did not comply with guidelines requiring sealed bids for personal property being auctioned off, leaving the process susceptible to corruption and favoritism amongst would-be buyers.
During the audit, new findings emerged that signaled additional cause for serious concern in the way the Bronx PA has been conducting business. Thompson identified the following additional findings:
- The Bronx PA did not properly file a report with the Office of the State Comptroller regarding the status of all open estates. A report was supposed to have been filed in January, but was not submitted until July 2008. In addition, the report was submitted in the wrong format and lacked information as required by the State Comptroller;
- The Bronx PA wrongfully invested approximately $21 million of estate funds in auction rate securities which caused a problem of liquidity and hindered the Bronx PA from satisfying the final decree of at least one estate;
- A review of the Account Balances Report showed 249 of the 1071 open estates had negative balances in their accounts totaling $223,660. This was due to the Bronx PA utilizing the estate funds' pooled account to pay for expenditures associated with the collection, protection, and liquidation of assets belonging to other estates.
The Comptroller found that there are a number of areas that still require significant improvement. He made 15 recommendations, all of which the Bronx PA generally agreed with.
"I hope that this report provides the Bronx Public Administrator with a reference point of how not to operate in the future," Comptroller Thompson said. "These recommendations will go a long way to helping the office improve its functionality."
The Bronx PA was found to be in compliance with a number of applicable rules and regulations, including, among others, the use of an outside CPA to conduct annual audits, using two investigators for residence searches, and keeping personal property in a secure safe.
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