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, 2017 through June 17, 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.¹ These actions are recorded in the County Clerk’s office when payments are deposited as required by court order. Additionally, in certain circumstances² funds from estates are entrusted to the Treasurer for safekeeping by order of the Surrogate’s Court. Together, the Treasurer, County Clerk and Surrogate’s Court must develop sound procedures and processes which, when implemented properly and consistently, provide a system of internal controls to account for and safeguard these funds.

Key Findings

• Reconciliations were not timely performed among the Treasurer, County Clerk and Surrogate’s Court, notices for each abandoned property were not published annually in the County’s official newspaper, and annual disbursements of interest were not made per court order.
• Upon receiving notification of our impending review of court and trust funds on February 18, 2022, the Treasurer and County Clerk reconciled their records and found that the Treasurer did not receive surplus money from a referee after the sale of foreclosed property on April 1, 2017, totaling $87,849.
• Records maintained by the County Clerk and Surrogate’s Court were up to date and complete.

Key Recommendations

• Perform an annual reconciliation of court and trust funds with the County Clerk and Surrogate’s Court.
• Ensure that all court-ordered funds, including related interest, are received and disbursed properly.
• Ensure that notices are published in the newspaper for each year abandoned property is held.
• Report all court and trust fund transactions annually.

Results
Pursuant to New York State Finance Law Section 184, the Treasurer is required to submit a report
on an annual basis to the State Comptroller accounting for all money, securities and other
properties deposited into a court and ordered into the Treasurer’s custody.
We reviewed the Treasurer’s, County Clerk’s and Surrogate Court’s processes, procedures and
records for the receipt and management of court and trust funds, as well as estates in the Treasurer’s
custody. We found that the Treasurer did not establish adequate procedures that ensured all court
and trust funds were received, accounted for and properly reported. Specifically, we found that
reconciliations were not timely performed among the Treasurer, County Clerk and Surrogate’s
Court, and annual disbursements of interest were not made per court order.
Upon receiving notification of our impending review of court and trust funds on February 18,
2022, the Treasurer and County Clerk reconciled their records and found that the Treasurer did not
receive surplus money from a referee after the sale of foreclosed property on April 1, 2017, totaling
$87,849. After repeated requests to County officials and multiple confirmations sent to the referee
and lien holder, we were able to determine all money from the sale of the foreclosed property
totaling $176,000 was paid directly to the lienholder. However, had the Treasurer performed
timely reconciliations, this discrepancy could have been identified sooner, instead of five years
after the sale occurred.
We also found that the Treasurer did not report all court and trust fund transactions as required.
Specifically, the Treasurer did not report surplus funds received and disbursed during 2017 totaling
$23,461.
Finally, we found the records maintained by the County Clerk and Surrogate’s Court were up to
date and complete.