Luckily, it doesn’t happen often, but we have all heard horror stories about dishonest managers or board members absconding with association money, funded through assessments paid by owners in the community.  It is always a devastating situation and it leaves board members asking if there were steps that could have been taken to avoid such a situation in the first place.  The following are some tips to help you safeguard your association’s funds and protect your community from theft.
  • Require at least two signatures on all checks or withdrawals. 
  • Separate invoice approval responsibilities from check writing responsibilities.
  • Write all checks to the payee and never to “cash”.
  • Insist that all payments to the association are made out in the name of the association – not the manager, managing agent, or a board member.
  • Deposit checks directly into the association’s account on a daily basis or store in a fire-proof safe until deposited.
  • Pay all employees and vendors with checks to minimize cash transactions.
  • Compare banking information with the summary information maintained by the association or its manager.
  • Insist that invoices or statements be provided to the board for review prior to issuing any checks from the association’s account.
  • Board members should familiarize themselves with all of the association’s vendors and contractors, as well as the terms of the contracts made with those parties.
  • Make sure that all Board members understand how the association’s funds are handled and that all Board members have access to all the association’s financial information of the association.
  • Ensure that the association’s management company maintains fidelity bond coverage for its employees.
  • Conduct an annual audit, review or compilation.
  • Reconcile bank statements at least quarterly.
  • Request monthly or quarterly financial statements from the association’s management company or accountant.
  • Ensure the board of directors has control of reserve transactions and require at least two signatures for any check or withdrawal for reserve expenses.
  • Do not commingle the association’s funds with that of any other organization or person.
  • Require disclosure of conflicts of interest prior to the association hiring any contractor or vendor.
  • Make sure the association maintains a fidelity insurance policy in the minimum amount of two months of assessments plus everything in reserves.  If you are condominium community that is currently, or would like to become, FHA certified, make sure you carry a fidelity policy covering at least three months of assessments plus everything in reserves—this is required by FHA.
If you have questions about options for safeguarding association funds, please contact a Altitude Community Law attorney at 303.432.9999.
Author
Trisha K. Harris, Esq.
Social Media Auto Publish Powered By : XYZScripts.com