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Purpose of Review

The purpose of our review was to determine whether County officials have established appropriate controls to safeguard and account for court and trust funds for the period January 1, 2018 through September 30, 2021.

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

• The records maintained by the Treasurer were incomplete and outdated. We found two actions totaling $20,663 in the Treasurer’s custody that were not recorded on the Treasurer’s annual report for 2020 that she sent to the State Comptroller’s Office.
• The County Clerk maintained a court and trust register as required, but it was incomplete and outdated. We identified four actions that should have been recorded in the County Clerk’s court and trust register but were missing from the register.
• The Surrogate’s Court Clerk was not maintaining appropriate court and trust fund records. He did not make entries into the surrogate’s register to record money ordered to be paid into a court.

Key Recommendations

1. The Treasurer should ensure that all court-ordered money in her custody is properly accounted for and reported on the annual report to the State Comptroller.
2. The Clerk should maintain an up-to-date court and trust register as required by law.
3. The Surrogate’s Court Clerk should ensure that all court and trust fund actions are entered into the surrogate’s register.