Purpose of Audit
The purpose of our audit was to determine whether County officials have established appropriate controls to safeguard and account for court and trust funds for the period January 1, 2019 through September 7, 2022.
Background
Pursuant to a court order, certain assets may be provided to the court and then delivered to the County Treasurer (Treasurer) for safekeeping. Payments made pursuant to court orders commonly involve surplus money from foreclosures and contract disputes resulting in a mechanic’s lien (i.e., a security interest in property filed to ensure payment for contracted services rendered on the property). These actions are recorded in the County Clerk’s (Clerk) office when payments are deposited as required by court order. Pursuant to New York State Finance Law, county treasurers are required to submit a report on an annual basis to the State Comptroller accounting for all money, securities and other properties deposited to courts and ordered into the courts’ custody. Additionally, when the whereabouts of any person entitled to payment from the estate is unknown, funds from estates are entrusted to the Treasurer for safekeeping by order of the County Surrogate’s Court (Surrogate’s Court). Together, the Treasurer, Clerk and Surrogate’s Court must develop sound procedures and processes that, when implemented properly and consistently, provide a system of internal controls to account for and safeguard these funds.
Key Findings
- We found the records maintained by the Treasurer were generally up to date and complete.
- We also found the Treasurer established adequate procedures, maintained appropriate records and properly reported the condition of court and trust funds to the State Comptroller as prescribed by statute.
- However, we identified funds that improperly remained in the Treasurer’s custody that should have been turned over to the State Comptroller as abandoned property.
- We identified unclaimed funds from two actions totaling $20,050 that were not turned over to the State Comptroller. The Treasurer stated that he was aware the actions should be turned over and is in the process of taking corrective action.
- We found that the County Clerk is not maintaining appropriate court and trust fund records.
- We found that the Surrogate’s Court Clerk (Court Clerk) did not maintain appropriate court and trust fund records. Although the Court Clerk maintained all court orders filed in her office, she did not make entries into a surrogate’s register to record money ordered to be paid into the court.
Key Recommendations
The Treasurer should:
- Ensure that all money deemed abandoned property is paid to the State Comptroller in a timely manner as required.
The County Clerk should:
- Ensure that a court and trust fund register is maintained as required by law.
The Court Clerk should:
- Enter all court and trust fund actions into the surrogate’s register.