It is said that fraud takes motivation and opportunity. If both are not present, fraud cannot occur. It is hard to affect motivation, but managers and boards can control the opportunity. In today’s economy with foreclosures, tight credit, and job layoffs, diligence in watching and guarding association money is crucial.
Below are some key things you can do to prevent fraud:
- Have an annual CPA review or audit;
- Don’t allow any one individual alone to be responsible for the intake or dispersal of money;
- Consider not accepting cash payments of any kind;
- If you take cash, the person receiving the cash should not be the one signing checks and reconciling the bank account;
- Don’t sign blank checks;
- If you sign a check verify with back up documentation (check number, date, account code, balance should be verified);
- Review bank statements/reconciliation monthly or quarterly;
- Closely monitor for budget-to-actual comparison;
- Make sure financial statements are done regularly and by a certain date;
- Closely review balances in investments, certificates of deposit, treasury bills, savings accounts and checking account(s);
- Have CPA review your internal controls.