Purpose

To determine if the Department of State’s Division of Cemeteries sufficiently monitors not-forprofit cemetery corporations to ensure fiscal stability and adequate facility maintenance. This audit covers the period of January 1, 2014 to March 31, 2017.

Background

The Department of State’s (Department) Division of Cemeteries (Division) oversees the establishment, maintenance, and preservation of burial grounds for all not-for-profit cemetery corporations (cemeteries) in New York State. As authorized by Article 15 of the Not-for-Profit Corporation Law (Law), and under the supervision of the State’s Cemetery Board (Board), the Division works with cemetery officials on a wide range of issues, including the sale of lots, service fees, and acquisition of lands, to promote public welfare and to prevent cemeteries from falling into disrepair or insolvency. When a not-for-profit cemetery is abandoned, either due to fiscal issues or simply because there are not enough citizens willing or able to take on its corporate duties, responsibility generally falls to the local municipality and can become a financial and/or program burden on the community.

The Law establishes certain requirements for cemeteries to ensure the care, management, and protection of property. For instance, cemeteries must allot a portion of their revenue to two separate funds: a Current Maintenance Fund for current ordinary and necessary expenses, care, and maintenance; and a Permanent Maintenance Fund, the principal of which is to be held in trust for future maintenance and preservation. Cemeteries are required to file annual reports and financial reports with the Division, and must establish reasonable rules and regulations regarding the use, care, management, and protection of the property as well as reasonable charges for services and lot/plot prices. This information, as well as a statement identifying the Board as the regulator and key contact information, must be conspicuously posted and available for visitors. The Division has issued two online manuals to assist cemeteries in meeting these and other requirements.

The Division’s monitoring and oversight is a critical means through which the State seeks to ensure that not-for-profit cemeteries do not become a burden on their local community. The Division is responsible for administering the cemetery provisions of the Law as well as the rules and regulations established by the Board. As of September 2016, the Division operated six regional offices with 17 full-time employees to oversee the 1,745 cemeteries under its jurisdiction. As part of its oversight and monitoring process, the Division strives to conduct a financial audit of each cemetery every three to five years and a physical inspection every five to seven years. The Division uses a mainframe database application (Mainframe) to record audit and inspection data as well as information from cemeteries’ annual reports and financial reports. Staff use quarterly reports generated from the Mainframe to assist in monitoring cemeteries and prioritizing work. The Division has issued three policy and procedure manuals to guide its employees’ monitoring activities.

Key Findings

• As of September 30, 2016, Division records indicate 642 cemeteries (37 percent) had overdue audits and 285 (16 percent) had delinquent annual reports. For 145 cemeteries (8 percent), audits were overdue and annual reports were delinquent as well.
• As of December 1, 2016, 391 cemeteries (22 percent) had not been inspected in over seven years.
• The Division’s Mainframe information system is antiquated and captures only limited data. Weaknesses in data integrity, entry, and access also pose challenges in terms of data reliability and the Mainframe’s usefulness as a risk assessment tool. Due to these data limitations, it is not currently feasible for the Division to broadly and routinely analyze the fiscal health of all 1,745 cemeteries under its jurisdiction. As a result, it cannot use the information to best focus its attention on locations that are in danger of failing and, given its relatively long cycle time between audits and inspections, risks missing key indicators of potential problems until it is too late to effectively intervene or provide assistance.
• Our analysis of the fiscal condition of 64 cemeteries using two measures developed by the Division found Permanent Maintenance Funds at 37 locations to be underfunded by a median of at least $25,500. These same data limitations not only prevent similar analysis for many cemeteries, but also result in significant disparities in the amounts required depending on
  which analysis is used.
• All 71 cemeteries we visited appeared well maintained, but 38 (54 percent) did not have all the proper information posted for visitors, as required.
• The Division has not updated its internal policies and procedures or its manuals for cemeteries to reflect the latest laws and regulations. As such, it has limited assurance that staff are monitoring cemeteries properly and consistently and that cemeteries are aware of, and complying with, the Law and all Board policies, rules, and regulations.

Key Recommendations

• In designing a new data management system, include features that will allow the Division to more readily and accurately identify cemeteries at risk, increase its work planning efficiency, and enable centralized data entry and access.
• Work with each of the 37 cemeteries identified in our analysis of Permanent Maintenance Fund requirements to determine what actions each needs to take to ensure it is sufficiently funded.
• Ensure that all operational manuals used by Division and cemetery staff are up to date with the latest regulations.

Other Related Audits/Reports of Interest

Department of State: Quality of Internal Control Certification (2012-S-50)
Department of State: Disposal of Electronic Devices (2012-S-73)