New Jersey State Legislature Office of Legislative Services Office of the State Auditor Judiciary Administrative Office of the Courts Superior Court of New Jersey Passaic Vicinage July 1, 1997 to February 28, 1999 Richard L. Fair State Auditor
LEGISLATIVE SERVICES COMMISSION SENATOR DONALD T. DiFRANCESCO Chairman ASSEMBLYMAN JACK COLLINS Vice-Chairman SENATE BYRON M. BAER JOHN O. BENNETT GERALD CARDINALE RICHARD J. CODEY WYNONA M. LIPMAN ROBERT E. LITTELL JOHN A. LYNCH GENERAL ASSEMBLY JOSEPH CHARLES, JR. PAUL DIGAETANO JOSEPH V. DORIA, JR. NICHOLAS R. FELICE NIA H. GILL LEONARD LANCE LORETTA WEINBERG N e w J e r s e y S t a t e L e g i s l a t u r e OFFICE OF LEGISLATIVE SERVICES OFFICE OF THE STATE AUDITOR 125 SOUTH WARREN STREET PO BOX 067 TRENTON NJ 08625-0067 ALBERT PORRONI Executive Director (609) 292-4625 RICHARD L. FAIR State Auditor (609) 292-3700 FAX (609) 633-0834 The Honorable Deborah T. Poritz Chief Justice of the Supreme Court The Honorable Christine Todd Whitman Governor of New Jersey The Honorable Donald T. DiFrancesco President of the Senate The Honorable Jack Collins Speaker of the General Assembly Mr. Albert Porroni Executive Director Office of Legislative Services Enclosed is our report on the audit of the Judiciary, Administrative Office of the Courts, Superior Court of New Jersey, Passaic Vicinage for the period July 1, 1997 to February 28, 1999. If you would like a personal briefing, please call me at (609) 292-3700. Richard L. Fair State Auditor April 28, 1999
Table of Contents Page Scope... 1 Objectives... 1 Methodology... 1 Conclusions... 2 Findings and Recommendations Discharging Bail... 3 Uncollected Forfeited Bail Bonds... 4 Salaried Court Officers... 5 Monitoring Court Officer s Collections... 6 Probation Fines and Restitutions Account... 8
Judiciary Administrative Office of the Courts Superior Court of New Jersey Passaic Vicinage Scope We have completed an audit of the Judiciary, Administrative Office of the Courts, Superior Court of New Jersey, Passaic Vicinage for the period July 1, 1997 to February 28, 1999. Our audit included financial activities accounted for in the state s General Fund as well as vicinage functions related to the Judiciary-Bail, Child Support, Probation, Special Civil and Superior Court Funds. Annual General Fund appropriated expenditures for the vicinage were $21 million. The prime responsibility of the vicinage is the overall operation of the Civil, Criminal, and Family Courts; the Probation Services Unit; and a Field Operations Section. Vicinage revenues totaled $3 million annually and the major components of revenue were fines and fees collected. The vicinage also collects $41 million annually that is disbursed by other funds. Objectives The objectives of our audit were to determine whether financial transactions were related to the vicinage's programs, were reasonable and were recorded properly in the accounting systems. We also tested for resolution of significant conditions noted in our prior reports which were within our current audit scope. This audit was conducted pursuant to the State Auditor's responsibilities as set forth in Article VII, Section 1, Paragraph 6 of the State Constitution and Title 52 of the New Jersey Statutes. Methodology Our audit was conducted in accordance with Government Auditing Standards, issued by the Comptroller General of the United States. In preparation for our testing, we studied legislation, rules covering the courts of the State of New Jersey, Page 1
administrative code, circular letters promulgated by the State Comptroller, and policies of the vicinage. Provisions that we considered significant were documented and compliance with those requirements was verified by interview and observation and through our samples of financial transactions. We also read the budget message, reviewed financial trends, and interviewed vicinage personnel to obtain an understanding of the programs and the internal control. A nonstatistical sampling approach was used. Our samples of financial transactions were designed to provide conclusions about the validity of transactions as well as internal control and compliance attributes. Samples were selected on a judgmental basis. To ascertain the status of findings included in our prior report, we identified corrective action, if any, taken by the vicinage and walked through the system to determine if the corrective action was effective. Conclusions We found that the financial transactions included in our testing were related to the vicinage s programs, were reasonable and were recorded properly in the accounting systems. In making this determination, we noted internal control weaknesses requiring management s attention. We also found that the vicinage has resolved the significant issues noted in our prior report except for the matters related to the bonding and monitoring of the court officers. These issues have been updated and restated in our current report. We are pleased with your general conclusion that Passaic Vicinage s financial transactions were found to be reasonable and properly recorded in the accounting systems. Note that financial management is being further reinforced, as during the course of the audit the Passaic Vicinage began the task of creating a finance division headed by a financial manager who is responsible and accountable for all financial activities within the vicinage in conjunction with the Administrative Office of the Courts. Page 2
Discharging Bail he bail unit re- Ttained old, unclaimed cash deposits totaling $750,000. The Passaic Bail Unit collects $1 million in cash receipts and processes 1,400 bail recognizances annually. These bail cases are posted to the Central Automated Bail System (CABS), a statewide system used by the bail units to account for cash receipts, revenues and contingent receivables. As of the end of 1998, there were over 4,000 open bail cases more than one year old. Of these, over 1,000 are cash bails totaling $750,000. The vicinage has a fiduciary responsibility to discharge and return bails when the cases are concluded. The past practice, however, was not to discharge a bail until the surety made the request. As a result of this refunding practice, unclaimed bail funds have been allowed to accumulate. The longer funds go unclaimed the more difficult and costly it becomes to locate the sureties. In addition, other audits of CABS performed by our office found the system has internal control weaknesses that subject older, unclaimed bail funds to higher risks of misappropriation. Beginning in January 1999, the bail unit initiated proactive procedures through the review of the criminal case system (Promis Gavel) for discharging bails as their cases are adjudicated. Effective action, however, has not been taken on past open bail cases. Recommendation The bail unit should review the Promis Gavel criminal case system to determine the status of all open bail cases. For those completely adjudicated, proper discharging and refunding procedures should be initiated. Contrary to your recommendation to review PROMIS GAVEL for open bail cases, we note that the Judiciary Comprehensive Automated Bail System (CABS) is the appropriate source for open bail accounting and reports. Effective January, 1999 the bail fiscal unit began discharging and refunding bail within one week of case disposition. A special task force has been working since January to address the 4,000 old open bail cases cited. Page 3
It is anticipated that these old cases will be discharged over the next six months. ¾ Uncollected Forfeited Bail Bonds orfeited surety bonds Fof $2.4 million have gone uncollected for more than one year. When a defendant fails to appear and the judge orders a bail forfeiture, the Administrative Office of the Courts (AOC) forfeiture procedures grant the surety 45 days to return the defendant to custody, file an objection to the forfeiture order or pay the forfeiture amount. As of December 31, 1998, the vicinage bail reports stated that there were 88 forfeited bail cases, totaling $2.4 million in uncollected corporate surety bonds, that were more than one year old. In the past, the bail unit did not follow up on forfeitures after the surety was notified of the forfeiture order and the allowance period had expired. As a result, the County Counsel was not informed to file an Entry of Judgement motion with the court and collect the bond amount from the surety. Because of the bail unit s ineffective enforcement of forfeiture procedures, past due bond forfeitures have been allowed to go uncollected. In addition, corporate sureties are not encouraged to assure their clients are present for all required court appearances. Beginning in January 1999, the bail unit has initiated procedures to notify County Counsel of all new forfeiture cases requiring their filing and collection efforts. Effective action, however, has not been taken on past bail forfeiture cases. Recommendation Management should take the necessary action to collect and discharge the backlog of past due bail forfeiture cases. Specifically, the vicinage should renotify the sureties of the intent to collect on these forfeitures, schedule court time, and obtain information the County Counsel will need to secure an Entry of Judgement motion. Page 4
On September 1, 1998 the Supreme Court revised New Jersey R. 3:26-6. This rule now provides for default judgment in 45 days, thus providing automatic referral to county counsel to move forfeitures to judgment for collection. Passaic Vicinage has prepared a list of the past due forfeitures and will forward it to county counsel for disposition. ¾ Salaried Court Officers he AOC should re- Tevaluate Directive 2-84. Three of the vicinage s five court officers are paid a salary in addition to receiving post judgment award commissions. Although these officers serve as court aides in the courtroom for nine hours each pay period, their salaries are commensurate to the salaries paid to full-time aides. In addition, they receive post judgment award commissions commensurate to nonsalaried court officers. As a result of AOC Directive 2-84, which required that court officers be nonsalaried, there are only five court officers statewide which are still paid a salary in addition to their commissions. These remaining salaried court officers were hired prior to the issuance of the directive on February 3, 1983. The nonsalary restriction only applied to newly appointed officers, so these court officers have remained on the vicinage s payroll. Recommendation The AOC should reevaluate Directive 2-84 and the status of the court officers who receive both salaries and commissions. The salaried court officers were grandfathered with the adoption of Directive 2-82 in February 1983. The Judiciary, through its Committee on Special Civil Part Supervising Judges and other committees, will reevaluate the status of the few remaining court officers who receive both salaries and commissions, including our legal and statutory obligations to them. ¾ Page 5
Monitoring Court Officer s Collections here is no disposition Tof unclaimed court award settlements collected by court officers. Administrative Office of the Courts (AOC) Directive 4-84 requires surety bonding of court officers and semiannual audits of their records. These audits are to be used as a tool to monitor the proper handling of post judgment awards collected by the officers. The bonding is the court s insurance of their proper handling. Our review found that the amount of the surety bond coverage of two of the five court officers was below three times the average monthly receipts required by the directive. Review of the semiannual audit reports of the court officers also showed that three court officers retained more than the final month s cash receipts in their bank accounts. This indicates a delay in remitting post judgment awards to the court-directed recipients. According to the vicinage, the retention of funds by the officers is caused by their inability to locate and deliver old awards. There were no procedures directing the court officers in the proper handling or escheatment of these undeliverable funds. In addition to the funds being held by the court officers, the vicinage s special civil unit also maintains an unauthorized savings account containing accumulated unclaimed funds and interest of $23,000. Some of these funds were deposited in the account more than ten years ago and the vicinage is unable to identify or forward these funds to the proper recipients. A recent statewide audit of the court officers conducted by our office disclosed that AOC procedures monitoring the district court officers do not provide assurance that court awarded settlements always reach the proper recipients in a timely manner. In that report, however, we identified the procedures in place at three vicinages where court officer monitoring problems have been avoided. At these vicinages the officers continue to serve papers but do not collect or disburse funds. The monies are sent to the courts, which then assumes the responsibility of disbursing them to the court-ordered recipient. Page 6
We recommended these procedures be adopted statewide. Recommendation The AOC should adopt the procedures utilized by the three vicinages which have taken over the post judgment clerical, collection and disbursement functions. Adoption of these procedures will enhance both the timely disbursement of awards and notification of future undeliverable monies. The undeliverable funds currently being held by the court officers and the vicinage should be remitted to the Judiciary - Special Civil Fund until the proper recipient is identified or the funds escheated to the State Treasurer as unclaimed. The Judiciary continues to maintain the position presented in the August 1998 audit report on the Officers of the Special Civil Part, Law Division, Superior Court. That is, while we are committed to assuring compliance with established policy and procedure, we do not concur that transfer of these functions from the Officers to Trial Court staff is appropriate at this time. The Committee of Special Civil Part Supervising Judges and other related committees have been reviewing Court Directives administering Court Officers with the intent of strengthening the directives, regarding monitoring and auditing of Court Officers accounts, bonding practices, and escheat of unclaimed funds, and ensuring compliance. ¼½ Page 7
Probation Fines and Restitutions Account he vicinage needs an Teffective policy to follow up on old outstanding checks. Recommendation The vicinage probation unit is responsible for disbursing the fines and restitutions they collect from probationers to the proper recipients. As of December 31, 1998, the bank account used for this purpose included about 675 outstanding checks totaling over $50,000. These checks were more than 12 months old. The probation unit does not have an effective policy to follow up on the disposition of uncashed checks. As a result, the probation unit is not assuring that the rightful recipients are getting these funds. The probation unit should initiate procedures that purge old outstanding checks and make follow-up attempts in disbursing these funds to the proper recipients. The vicinage will institute a follow up process to make reasonable efforts to contact payees of checks outstanding over ninety (90) days. Any checks that continue to remain uncashed will be voided and the appropriate funds will be remitted to the Judiciary Probation Agency Fund and a supporting listing will be drawn up and maintained by the vicinage. Unidentified funds will be subsequently be escheated to the State Treasurer in accordance with N.J.S.A. 46:30B-1 et seq. ¾ Page 8