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August 26, 2008

State Audit Finds $14 Million in Unaccounted for NYC Court Funds

NYC Department of Finance is Working to Replace
Outdated System Responsible for Discrepancies

The New York City Department of Finance has agreed to improve oversight over court funds after an audit released today by State Comptroller Thomas P. DiNapoli’s office found that the department was unable to account for $14 million in court funds. State auditors found that the money supposedly collected by the courts does not match the actual amount in the bank ― one bank account is short $10.8 million and the other has $3.3 million more than records show.

“These discrepancies have existed for years, and it is virtually impossible to untangle these records, some of which are hand written receipts from the courts,” DiNapoli said. “The city must pursue a long-term solution to replace its outdated accounting system and tighten controls over these funds.”

The city courts collect bail, court ordered payments, funds from estates and other miscellaneous revenues and turn over the funds to the city Department of Finance. The department is required to maintain separate accounts for this money.

“While this has in no way affected our ability to give people the money they are entitled to,” said Department of Finance Commissioner Stark, “It is clear we must replace our antiquated mainframe system with new technology capable of reconciling court fund records and ensuring our data is accurate.”

Auditors found that the department cannot reconcile the amounts in the separate accounting ledgers with the actual amount of money in the bank. One ledger indicates the department collected $284.5 million in court funds, but the department has only $273.7 million in the bank, a discrepancy of $10.8 million. Another ledger shows that $47.3 million was collected for bail funds, but the department actually has $50.6 million in the bank ― $3.3 million more than the ledger.

The audit recommends that the department:

  • Implement an updated integrated computer system that maintains, while fully and accurately accounting for, individual account balances for court, trust and bail funds;
  • Monitor existing discrepancies to ensure they do not substantially change, and immediately investigate to isolate and correct problems that arise; and
  • Develop a strategy for resolving the existing discrepancies prior to conversion to a new system.

Department officials told auditors that they do not perform a reconciliation to resolve the discrepancies because the system used to calculate the ledger account is antiquated, unreliable and inaccurate. The department agreed with the audit findings and is implementing plans to replace the system in January 2009.

Click here for a copy of the audit.


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