MichaelY (Massachusetts)
Posts: 4
Posts: 4
Posted:
I am a new board member, and we have one person on board who signs checks.
should there be some limits on $$ amounts, oversight etc
should there be some limits on $$ amounts, oversight etc
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board oversight on signing checks
Started by MichaelY • 8 replies • 4438 views
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MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
We always had 2 signature requirement plus the accountant. Those signatures were the Officer positions typically. They weren't the general board members. When we paid the routine bills, I picked the accountant signed checks and had to track down the other signaturee. This was usually my Vice-President or the Secretary.
It's a good idea to have a two-signature system and/or proof a decision to spend the funds. (unless it's regular daily bills). You also want to make sure to get rid of any PAST signatures off the account that is no longer valid. I think a 2 signature system instills trust and serves the community well when it comes to spending it's money.
It's a good idea to have a two-signature system and/or proof a decision to spend the funds. (unless it's regular daily bills). You also want to make sure to get rid of any PAST signatures off the account that is no longer valid. I think a 2 signature system instills trust and serves the community well when it comes to spending it's money.
Former HOA President
JanetB2 (Colorado)
Posts: 4,219
Posts: 4,219
Posted:
I am with Melissa … I recommend having two people sign checks and that they are individuals other than whomever handles the bookkeeping. This insures if someone tries to stick their finger in the HOA pocketbook they essentially need to act as a team rather than one individual having said opportunity. It is just a good deterrent to prevent problems.
RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
MichaelY, This depends on your Bylaws and if not in the Bylaws it depends on a resolution or a Rule passed by the BOD. Some Board members feel more comfortable when there are two signatures. But the bank only requires one approved signature. If you are looking to prevent theft there are several other procedures which are better. Don't depend on limits on $$ amount or two signatures because the bank does not go by your HOA's rules.
SusanW1 (Michigan)
Posts: 5,202
Posts: 5,202
Posted:
There should be two or three members who CAN sign checks, but only one signature would be needed at any one time.
Don't count on a bank to monitor your signees.
A finance committee could oversee this, if it is an issue. Depending on the size of your HOA, they cold meet and go over every expenditure, if you are concerned about this.
Don't count on a bank to monitor your signees.
A finance committee could oversee this, if it is an issue. Depending on the size of your HOA, they cold meet and go over every expenditure, if you are concerned about this.
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
Still should have 2 signatures in my opinion. 1 of the check issuer which is the management company and 1 of the approved HOA signaturee. If your bank isn't checking the signatures on the checks then change banks or bring the subject up to them. I know my bank has checked my signature even on private checks. It's been the same with our HOA account as well. I've had calls because they were missing a signature.
It doesn't make sense to have 1 signature regardless if there are 2-3 approved. That's NOT a checks and balance system at all. Where's the proof that someone else saw that check? Plus how you going to hold that one person responsible for signing an unapproved check? I am positive the other signee on the check won't let that slide. That other signee qualifies as a witness or accountable. Plus it's now a punishable crime with proof.
Daily operating expenses that are routine don't need scrutinized unless it's strangely out of the ordinary. Like a higher than average water or utility bill. That needs explained. We had a problem with our pool lady forgetting to come back to turn off the water and kid's playing with the hose. I was able to purchase a timer so that irregardless if anyone forgot it turned off in an hour. If we hadn't kept getting the high water bill we would have never found a solution to reduce that cost. So don't over scrutinize and just assume a high bill is something somebody is doing wrong. There's always a cause and effect going on...
It doesn't make sense to have 1 signature regardless if there are 2-3 approved. That's NOT a checks and balance system at all. Where's the proof that someone else saw that check? Plus how you going to hold that one person responsible for signing an unapproved check? I am positive the other signee on the check won't let that slide. That other signee qualifies as a witness or accountable. Plus it's now a punishable crime with proof.
Daily operating expenses that are routine don't need scrutinized unless it's strangely out of the ordinary. Like a higher than average water or utility bill. That needs explained. We had a problem with our pool lady forgetting to come back to turn off the water and kid's playing with the hose. I was able to purchase a timer so that irregardless if anyone forgot it turned off in an hour. If we hadn't kept getting the high water bill we would have never found a solution to reduce that cost. So don't over scrutinize and just assume a high bill is something somebody is doing wrong. There's always a cause and effect going on...
Former HOA President
JanetB2 (Colorado)
Posts: 4,219
Posts: 4,219
Posted:
I see that there is a division of opinion again on this subject.
I have worked with a lot of various different non-profit organizations and the majority required two signatures on checks. The checks generally are printed with two signature lines and many will have in bold above the signature line “Two Signatures Required”. I also in the past, a few times, have received a call from the bank because a check was accidentally mailed with only one signature to verify if it could be paid. For that particular organization there was a password code utilized and given if called to verify the authorization that it was OK to go ahead and pay.
Check with your bank and what you might find is a smaller bank may not want to handle a two signature required account as they may not have certain equipment, but a larger bank should have a system in place which can handle this type of account. Again, many non-profits require this system as a deterrent so there are banks that do abide and offer these type accounts.
Under the Uniform Commercial Code in my state and which banks are supposed to follow regarding negotiable instruments is the following statute:
4-3-403. Unauthorized signature.
(b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.
Potentially if a bank allows two signature required accounts and do not check the signatures there may be liability on their part. Again, this is just another method that might help protect the HOA money. I respectfully disagree with Roger in that it is not your HOA rules the bank will be abiding by, but instead their own banking account set up rules and other state or federal laws.
I have worked with a lot of various different non-profit organizations and the majority required two signatures on checks. The checks generally are printed with two signature lines and many will have in bold above the signature line “Two Signatures Required”. I also in the past, a few times, have received a call from the bank because a check was accidentally mailed with only one signature to verify if it could be paid. For that particular organization there was a password code utilized and given if called to verify the authorization that it was OK to go ahead and pay.
Check with your bank and what you might find is a smaller bank may not want to handle a two signature required account as they may not have certain equipment, but a larger bank should have a system in place which can handle this type of account. Again, many non-profits require this system as a deterrent so there are banks that do abide and offer these type accounts.
Under the Uniform Commercial Code in my state and which banks are supposed to follow regarding negotiable instruments is the following statute:
4-3-403. Unauthorized signature.
(b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.
Potentially if a bank allows two signature required accounts and do not check the signatures there may be liability on their part. Again, this is just another method that might help protect the HOA money. I respectfully disagree with Roger in that it is not your HOA rules the bank will be abiding by, but instead their own banking account set up rules and other state or federal laws.
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
I would like to add that the supplies for two-signature checks are more expensive than normal checks. Our ledger supplies cost about $500. This came to a shock for me when we had to reorder supplies. However, these type checks aren't like the ones you keep in your purse/wallet. They are physically different. They are larger and have multiple signature areas. I tried to make sure the comments area was filled out for what they went out for as well.
It's a good idea to know how checks are issued in your HOA. It's where the rubber meets the road...
It's a good idea to know how checks are issued in your HOA. It's where the rubber meets the road...
Former HOA President
SusanB25 (Florida)
Posts: 1
Posts: 1
Posted:
You should also check you POA Bylaws to see if they specifically address this issue. The Bylaws in our POA specifically state that "the signatures of two(2) board members are necessary for all checks issued by the association. Last year's board let the Treasurer sign all checks under $500.00 by herself, and the bank did not catch it. This year, when the new board members authorized to sign checks, filed their signatures with the bank, the bank made a notation on the account that 2 signatures are required.
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