Purpose

To determine if New York City Department of Finance accurately accounts for Court, Trust and Bail funds. This audit covered from January 1, 2011 through March 7, 2013.

Background

Section 2601 of the New York State Civil Practice Law and Rules requires that all moneys paid into the New York City courts be forwarded to the City's Department of Finance (Finance). These moneys include bail postings made on behalf of defendants, trust funds from estates controlled by Public Administrators (such estates have no known heirs or no heirs able or willing to administer the estates), and other miscellaneous funds. Finance's Court Assets Department is responsible for the accounting of these moneys and maintaining a computerized accounting ledger for Court, Trust and Bail funds. According to Finance's records, as of December 31, 2012, Finance had a total of $295,394,265 in two accounts.

Key Findings

• Finance's Court Assets Department could not accurately account for Court, Trust and Bail funds. For example, Finance's Court Assets Tracking System (CATS) reported a balance of $296.7 million, while the bank and investment firm that held the money had a balance of $299.1 million. Finance stated that the difference was due to Alternative to Incarceration program fees it withheld, but could not provide the details to support the amount. Finance also could not demonstrate that it applied the full, correct amount of interest to the Court and Trust accounts.
• Bail funds were not accurately accounted for because the computer system did not include fees due the City for certain abandoned accounts.
• Court orders to pay out Bail funds were not always processed timely resulting in underpayments to sureties and to the City and incorrect abandonment of funds to the State.

Key Recommendations

• Investigate the differences between CATS ledgers and the financial institution balances and make appropriate corrections. Maintain the documentation to support each error and the necessary corrections.
• Take appropriate action to determine the causes of unallocated interest and develop a plan to fully distribute interest to the proper accounts.
• Ensure all bail cases are abandoned timely, and that all necessary fees have been withheld before abandonment.
• Review previously abandoned accounts and determine if fees that were not collected can still be recovered.

Other Related Audit/Report of Interest

New York City Department of Finance: Accountability Over Court, Trust and Bail Funds (2007-N-8)