New Jersey State Legislature Office of Legislative Services Office of the State Auditor

Judiciary Administrative Office of the Courts Superior Court of New Jersey Mercer Vicinage

July 1, 1998 to August 20, 1999

Richard L. Fair State Auditor

LEGISLATIVE SERVICES COMMISSION SENATOR DONALD T. DiFRANCESCO Chairman ASSEMBLYMAN JACK COLLINS Vice-Chairman

New Jersey State Legislature

SENATE

OFFICE OF LEGISLATIVE SERVICES BYRON M. BAER JOHN O. BENNETT GERALD CARDINALE RICHARD J. CODEY ROBERT E. LITTELL JOHN A. LYNCH

OFFICE OF THE STATE AUDITOR 125 SOUTH WARREN STREET PO BOX 067 TRENTON NJ 08625-0067

RICHARD L. FAIR State Auditor (609) 292-3700 FAX (609) 633-0834

GENERAL ASSEMBLY JOSEPH CHARLES, JR. PAUL DIGAETANO JOSEPH V. DORIA, JR. NICHOLAS R. FELICE NIA H. GILL LEONARD LANCE LORETTA WEINBERG

ALBERT PORRONI Executive Director (609) 292-4625

The Honorable Christine Todd Whitman Governor of New Jersey The Honorable Deborah T. Poritz Chief Justice of the Supreme Court 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, Mercer Vicinage for the period July 1, 1998 to August 20, 1999. If you would like a personal briefing, please call me at (609) 292-3700.

Richard L. Fair State Auditor October 7, 1999

JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

Table of Contents Page Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Findings and Recommendations Bail Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Bail Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Bail Filing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

Judiciary Administrative Office of the Courts Superior Court of New Jersey Mercer Vicinage Scope

We have completed an audit of the Judiciary, Administrative Office of the Courts, Superior Court of New Jersey, Mercer Vicinage for the period July 1, 1998 to August 20, 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 appropriations for the vicinage were $10.9 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 $1.5 million annually and the major components of revenue were fines and fees collected. The vicinage also collects $36 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, administrative code, circular letters promulgated by the State Comptroller, and policies of the vicinage. Provi-

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JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

sions 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 reports, 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 issue related to the independent monitoring of the Central Automated Bail System (CABS). This issue has been updated and restated in our current report.

Auditee’s Response

We have reviewed the Mercer Vicinage Audit report and welcome this opportunity to comment on the report. ¼½

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JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

Bail Processing

I

nternal controls over the bail process should be improved.

When criminal cases are concluded and the courts authorize the release of bail, the sureties are entitled to the return of all deposited funds. The CABS authorization to return bail funds to the surety is made by the bail clerks. These clerks are also responsible for notifying the sureties that their funds are available to them and have the ability to change the surety name and address. There is no independent review of surety name and address changes which allows for the possible diversion of bail assets without detection. We also noted that Mercer Vicinage has $71,000 in unclaimed bail funds dating between November 1995 and April 1998, where the surety has not been located for over one year. These unclaimed funds remain on the system due to statutory requirements. Bail refunds unclaimed for more than ten years are presumed abandoned per N.J.S.A. 46:30B-41 and subject to escheat; while funds outside the Superior Court unclaimed for more than one year are presumed abandoned per N.J.S.A. 46:30B-41.2. Unclaimed funds are at a high risk of misappropriation the longer they remain on the CABS system because of the control weaknesses inherent in the CABS system.

Recommendation

We recommend that CABS input controls be strengthened by requiring another level of authorization, independent of the bail unit, prior to allowing any changes to the surety names and addresses. Additionally, the Administrative Office of the Courts (AOC) should seek legislative action to change the escheat statute for unclaimed bail to presume abandonment after one year as opposed to ten years.

Auditee’s Response

Proper internal controls will be established within the Mercer bail unit by requiring the bail unit supervisor to sign off on all changes before they are made in CABS. This will be supplemented by a daily review by the supervisor of all changes recorded on the CABS change report to ensure that no changes were made without supervisor approval. This review will insure

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JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

that at least two people are involved in the change process. Additionally, Mercer has implemented documentation requirements, wherein the party requesting an address change will be required to show proper identification and documentation of identification will be kept in the case file. ¼½

Bail Forfeitures

B

ail forfeitures could be executed sooner.

When an individual fails to meet the conditions of bail, a forfeiture order is executed and the forfeited funds are divided between the state and county. New Jersey Rule 3:26-6 states when a forfeiture is not satisfied upon the expiration of 45 days, a judgment of default may then be executed. In our review of the Cumulative Order for Forfeiture Report, we noted there were 46 instances totaling $416,000 where bonds over 45 days old had not been executed for forfeiture. The bail unit has been unable to process these forfeitures because they have not received a judgment of default by the vicinage judges.

Recommendation

We recommend that the Judiciary change the New Jersey Rule 3:26-6, so a judgment of default is executed automatically for bail forfeiture soon after the 45th day unless extended by a judge.

Auditee’s Response

Although New Jersey Rule 3:26-6 has been amended to provide for the automatic execution of a default judgment after 45 days, the mechanism to carry out the Rule had not been adopted statewide at the time of the audit. An Administrative Directive on the Procedures For Enforcement of Corporate Surety Bail Forfeitures, Judgments and Breach of Recognizance is currently under review for adoption to provide for statewide implementation of automatic execution of default judgment. ¼½

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JUDICIARY ADMINISTRATIVE OFFICE OF THE COURTS SUPERIOR COURT OF NEW JERSEY MERCER VICINAGE

Bail Filing Fees

F

iling fee collection procedures should be changed to maximize revenues.

A criminal bail transaction is set up when an individual has been arrested for an indictable offense. The judge sets the bail amount and the type of bail. The bail type determines what portion the defendant must pay for his/her release until the court hearing. The Mercer Vicinage collects 94 percent of bail funds at the Mercer County Workhouse located in Hopewell Township, 5 percent at municipalities within Mercer County, and 1 percent at the Vicinage Finance Office located in Trenton. All bail transactions create a recognizance filing. N.J.S.A. 22A: 2-29 establishes an $18 filing fee to be charged on all recognizance filings. During fiscal year 1999, Mercer Vicinage collected 1,284 bail filing fees totaling $23,112. In our review, we noted a loss in revenues of $14,000 due to 614 uncollected filing fees for own release (OR) recognizance and 175 uncollected filing fees for recognizance using bonds. These filing fees dated from January 1995 to July 1999. We noticed that these fees are rarely collected because the filing fee is not collected at the initial intake point with the bail filings. The OR recognizance form states that the filing fee should be collected at the Vicinage Finance Office which is a different location than the initial intake point.

Recommendation

We recommend that the vicinage collect the filing fee at the initial intake point and change the OR recognizance form accordingly.

Auditee’s Response

The Finance Division and the Criminal Division will develop protocols to ensure that all collectible fees are collected and that appropriate documentation is maintained in case files when fees must be waived. ¼½

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