discrepencies in association funds

Started by MarieL • 10 replies • 1778 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

MarieL (Illinois)
Posts: 82

Posted:

I live in a common interest community in Illinois.I own a townhouse and started serving on the board again, last year.We have a treasurer but all financial issues are handled by a sole bookkeeper,under the direction of the treasurer who reads the bookkeeper's reports at meetings.
For some time I have felt there were errors in the treasurer's reports and was finally able to get copies of the bank's checking account, where all association funds are held.. Unfortunately, I now have documention of missing assocition funds, not one treasurer's report in 2010 was correct and bamk deposits listed on all the bank statememnts was less money than thatrecorded on treasurer's reports.Not one of them matched anounts...
Now what should I do with this information? It is documnetd and recorded and cannot be denied.There is hard evidencethat there is ongoing irregularites with association funds. How is something like this ahandled? I am very upset over this and just don't know what I should do or if there is something I am lawfully required to do. All I know is I am a bard member and if anyone else learns of these irregularities am I criminally liable for them?
Please any advice will be greatly appreciated.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Before you go off the deep end, discuss it with the bookkeeper, in detail. Bring the reports. They might be stealing, they might be incompetent, or they might have an answer that will solve your question.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Yes, speak to the bookkeeper, but

When is the last time you had an audit, audit review or compilation for all the accounts?

Motion to have one done, if you have questions.

MarieL (Illinois)
Posts: 82

Posted:

Its been 6 or more since there has been an audit, even though it is required annually.A motion to undertake an audit would be turned down by the board.They have no interest in the accuracy of treasurer reports
My field of work was accounting and even though there is a creative computerized bookkeeping system here,one and one is still 2. And balancing a checking account is simple, Our annual income is $44,400 and expenses about $32,000 . Our books do not balance, have not balanced in years and there is more going on than incompetence. I know this to be a fact and have bank evidenceto prove this. I guess I'll just forget about it.There are no solutions.. .

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

My field of work was accounting

Kind of a shame you have all this talent in accounting and your not using it to get to the bottom of a huge discrepancy. Problem is...... now that you know about it, you need to report it to the HOA. Otherwise you could be held liable for knowing about it and withholding that information from your HOA.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Marie:

When you state:

"I know this to be a fact and have bank evidenceto prove this. I guess I'll just forget about it.There are no solutions.. "

You need to bring it to the attention of the other Board members. The BOD has fiduciary duty and obligation of good faith towards homeowners and HOA regarding this money. At this time if you "forget about it" you are potentially the one liable, if you tell rest of BOD and everyone does nothing then you are all liable.

Do you want to be potentially liable alone ... or involve everyone and get the situation fixed. As noted above the first place is probably a in-depth audit because of this situation.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Marie - did you see a Balance Sheet? Did you see an itemized chart of accounts end of year P/L/.

You are making some serious allegations. You need to help your fellow Homeownes insist on some kind of audit.

MarieL (Illinois)
Posts: 82

Posted:

My thanks to all of you who have respomded to my issue. Here is whatI did..
I advised my fellow board members of the diecrepensices of over $1,700.00 lss in what the bookkeeoer reported as income and bank balances shown on statements.I advised them not one deposit he recorded on the 2010 treasurer's reports are the amounts of what was
actually deposirted and told them we need an audit of the books. Our by-laws require annual audiits. This has not been done in years..
I am now waiting for a response grom the prdeident or anyone rlse on the board. However,no one on the board ever seems to answer any association questions from me or any other homeowner here. If they ignore this issue like they do everything else, what would be my next course of action???
Please excuse any error. I am visually impaired and have problems seeing the computer, even enlarged 200% like it is now..

TimB4 (Tennessee)
Posts: 21,059

Posted:

Marie,

If I had the proof and the Board chose not to have an audit, at the next annual meeting of the membership I would inform the membership of the discrepancy (have the proof with you) and the fact that you were out voted to have an audit (make sure it is in the minutes of the Board meeting). I would then encourage the membership to make wise decisions when they cast their votes for the next Board.

Tim

RogerB (Colorado)
Posts: 5,067

Posted:

Quote:

Posted By MarieL on 01/31/2011 11:45 AM
I live in a common interest community in Illinois.I own a townhouse and started serving on the board again, last year.We have a treasurer but all financial issues are handled by a sole bookkeeper,under the direction of the treasurer who reads the bookkeeper's reports at meetings.
For some time I have felt there were errors in the treasurer's reports and was finally able to get copies of the bank's checking account, where all association funds are held.. Unfortunately, I now have documention of missing assocition funds, not one treasurer's report in 2010 was correct and bamk deposits listed on all the bank statememnts was less money than thatrecorded on treasurer's reports.Not one of them matched anounts...
Now what should I do with this information? It is documnetd and recorded and cannot be denied.There is hard evidencethat there is ongoing irregularites with association funds. How is something like this ahandled? I am very upset over this and just don't know what I should do or if there is something I am lawfully required to do. All I know is I am a bard member and if anyone else learns of these irregularities am I criminally liable for them?
Please any advice will be greatly appreciated.

Your HOA needs to establish procedures for monitoring funds (as do many other HOAs). I have outlined those procedures many times on this board. But don't presume there is errors or missing funds until such time as it has been established. For example the discrepencies may simply be related to the accounting method used. You may be using cash basis and the bookkeeper may be using accural basis.

Meanwhile, beware!! At least twice a week we see articles about theft of HOA funds.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Meanwhile, beware!! At least twice a week we see articles about theft of HOA funds.

Yep. The economy is going down the tubes, people are having a hard time paying bills and no one in an HOA wants to volunteer time to watch the finances. Its a perfect recipe for disaster.

Keep an eye on your HOA finances!

Start a committee to go through the finances on a regular basis if you have to. Make sure bids are competitive to ensure your getting the best price and the vendor isn't overcharging and giving kickbacks to the person paying the bills.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here