check signing autority

Started by HeleneN • 12 replies • 3228 views

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HeleneN (Connecticut)
Posts: 84

Posted:

I have just been going through a thread on check singing that has been well discussed and certainly reinforced my own beliefs. Recently I had reason to request a copy of one of our signature documents from the bank and was "floored" at what i saw. The document was signed at a board meeting, requiring 2 out of 3 signatures of board members on all checks. The secretary signed authenticating the signaures. The copy of the bank signaure document that I received had the signature of the property manager and the pres. of the management Co. Additionally, there was a facsmile stamp for the pres. and the property manager. It was apparant that the additional signaures were afixed after the documents left the board meeting and before they were delivered to the bank. When comfronted the property manager said that was pretty routine. I know what i would like to have done about it but found the board to be pretty blase about the situation. One board member even said we should be able to trust the manangement company. Now, I find myself secretary and down the road I will be expected to authenticate board signatures. I probably will refuse unless I can personally mail(the bank is out of state) the documents back to the bank. What would you do?

I think I would like to move to Bruce's condo complex!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The bank is responsible for verifying the signatures on a check and signed by the authorized people. They may allow stamped or fascillime signatures. We had to go to the bank and sign a signature card at the bank to be able to sign the checks. We also had a 2/3 signature system. The accountant wrote and signed the checks. I would pick them up and sign them with another board member on the list. It was either a VP or Secretary. Our accountant was our Treasurer. I would then mail the checks out.

There are routine bills our HOA paid such as insurance, utilities, and operating expenses. No need to vote on these. We just presented the outside type of expenses such as contractors and repair costs. Those were discussed and then relayed to the accounting firm after the meeting. There were situations where checks had to be written before a meeting for emegencies and such but still told and explained. It's nearly impossible to wait until 1 monthly meeting to NOT have to pay a bill or two outside that meeting time. The world doesn't work that way...

Former HOA President

JohnB26 (South Carolina)
Posts: 1,569

Posted:

just what, exactly, would be the duty of the director who is serving as the 'treasurer' ?

in SC the duties of the treasurer are spelled out by SC not-for-profit corporate law

in my HOA, Inc. ... the treasurer must sign every check AND ALSO the president (or the president's designee) .... the property manager could/should make out all checks but the TREASURER will sign them + (in practice) another director

JohnC46 (South Carolina)
Posts: 14,265

Posted:

JOHNB

Where in SC are you located and type of HOA?

I would like to chat privte so if agreeable, contact me at [email protected]

Thanks

HeleneN (Connecticut)
Posts: 84

Posted:

The trea., pres.,and vice pres. have check signing authority. For internal controls we require 2 out of 3 signatures. The bank will only acknowledge one signature. Also, as found in the fine print, the bank is not responsible to differentiate between a live signature and a facsmile. Currently the property manager, who by contract, is suppose to be on the property at least once a week, delivers the the prepared checks and invoices to the treas. who reviews,signs and passes them on to the pres., or vice pres. for same. that's as it should be. What I take issue with is that the property manager, the pres. of the management company and any bookeeper who has access to the facismile stamps also has access to our funds. Just as I believe in preventative maintenance I also believe in preventative controls on our funds. At least I know where the board members live and what they look like. The rest of these people are strangers. I don't want to put any temptations in the hands of people I don 't know. Am I off base??

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By MelissaP1 on 02/13/2012 11:55 AM
The bank is responsible for verifying the signatures on a check and signed by the authorized people.

Sigh!

I wish banks really did this but, sadly, I don't believe they do.

Far too many checks pass through a bank each day to actually check the signatures. Some payees process checks electronically, so there is no way to verify the signatures.

I think that the only time that the bank actually checks signatures is when they are alerted to lost or stolen checks, or the possibility of signature fraud. In fact, I personally know of a case where a check was signed by an unauthorized person and it was cashed by the bank. It was caught only after the cancelled check was returned to the organization with the monthly bank statement and the treasurer noticed it had been signed by a person who was no longer authorized to sign checks.

I have a friend who is a bank branch manager whom I usually run into each week. Maybe I'll ask her how checks are handled when I see her this week.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By BruceF1 on 02/13/2012 4:08 PM

Posted By MelissaP1 on 02/13/2012 11:55 AM
The bank is responsible for verifying the signatures on a check and signed by the authorized people.

I believe you are correct. To prove this point to my wife once, I signed several business checks to pay vendors with off the wall names like George Washington, Stupid Fool, etc. They all made it "through" the system.

Did have one returned one time as there was no signature...my bad...LOL

HeleneN (Connecticut)
Posts: 84

Posted:

I already know how banks process checks and yes, even a check signed by Mickey Mouse will clear and sometimes even checks not signed at all will clear. The bank will not take any responsibility unless you can prove you took a loss because of their negligence.

The point is, I think check signing should be restricted to board members.

CarolR11 (Colorado)
Posts: 2,563

Posted:

Four of our seven directors have check-signing authority. Our on-site Property Manager has the authority to sign checks for routine regularly scheduled services, e.g., the pool service, pest control service that don't exceed a certain amount.

Directors sign checks for large regular bills, e.g., the management company, security firm, engineer firm and custodial services. We directors also sign checks for reserve accounts and emergency expenses that exceed a certain amount.

I don't think anyone would want to serve on our board if we personally had to sign all checks.

I think the key is to closely examine the monthly financials reports including bank reconciliation statements. Our Finance Committee does this. If our HOA were less complex, the treasurer would.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By HeleneN on 02/13/2012 5:47 PM

The point is, I think check signing should be restricted to board members.

I agree.

That said, many do provide check issuing authority to their management companies.

Funny thing is, I don't think any board member would give the same authority for their personal accounts but have no problem providing access to the Associations account.

JohnB26 (South Carolina)
Posts: 1,569

Posted:

Quote:

Posted By TimB4 on 02/13/2012 6:13 PM

Posted By HeleneN on 02/13/2012 5:47 PM

The point is, I think check signing should be restricted to board members.

most 'articles of incorporation' and / or 'by-laws' would specify that the treasurer must actually sign the checks

many HOAs give the mgmt co the power to WRITE the checks, but, w/o treasurer control ??

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By JohnB26 on 02/14/2012 6:59 PM

many HOAs give the mgmt co the power to WRITE the checks, but, w/o treasurer control ??

That's my understanding.

JoanneD1 (Arizona)
Posts: 447

Posted:

Check you CC&R's and Bylaws deal with board of director responsibilities. We once removed a treasurer as he was suppose to be providing the second required signature and he was not. Trusting a management company without any checks and balances is asking for trouble. Some docs will permit the PM to sign checks under a given amount in the case of emergencies, but why not just have the treasurer and the PM be the signers. Too many cooks spoil the broth. Only my opinion. Be sure you are doing annual audits/reviews....those are mandated in the state of AZ.

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