Financial Committee

Cheryl,

Committees and committee members work at the pleasure of the Board.

There is no statute that specifies a committee has a right to see the records. Therefore, the committee has no law to back them taking the issue to court and may likely lose.

A member does have a legal right to review the books. However, when seeing the ledgers of individual lots, this is typically limited to just your lot. The member should be able to see all the expenses. If the board doesn't allow a member to review the books, then the member may take the issue up in court.

Mind you, most laws support a members right to review the books. Not all States allow members to receive or make copies of those records. You will need to check your own State laws.

As for the committee's issue, if the board doesn't want to share this information with the committee, then the Committee members might try taking the issue to the membership. This will cause division within the membership but can sometimes be beneficial. After all if the entire committee resigns because of lack of disclosure from the board and this reason is provided to the membership, the members will likely draw their own conclusion that the board is trying to hide something. That's a tactic that can be used if the committee things the board is hiding something.

That said, per your post the bookkeeper doesn't properly post the entries and is receiving guidance from the President who doesn't know accounting procedures/principals. Therefore, it doesn't appear to be an issue of malfeasance but of honest mistakes. Therefore, it might be better to review the info as it's provided in order to identify the mistakes rather than take the issue of honest mistakes before a court of law.

If your own governing docs (bylaws or CC&Rs), Cheryl, permit homeowners to have copies of the financial records write a polite letter to every director requesting that the FC (assuming that they are members of your HOA) have those copies. Request that the board respond to the FC's request in writing. Ask the board to discuss this matter at the next open meeting of the board. Encourage all FC members to attend.

If your own docs are silent or vague about this topic, check your state's statutes as Tim suggests. (Even if your state permits h'owners copies of financials, this probably does not include individual owners' disciplinary records, e.g., fines, late charges, etc.)

Along with John, was this committee approved by the board? Does it have a charter--a list of its duties & purpose? Doesn't your HOA have a treasurer? What size is your HOA? The board? The FC?

If your own governing docs (bylaws or CC&Rs), Cheryl, permit homeowners to have copies of the financial records write a polite letter to every director requesting that the FC (assuming that they are members of your HOA) have those copies. Request that the board respond to the FC's request in writing. Ask the board to discuss this matter at the next open meeting of the board. Encourage all FC members to attend.

If your own docs are silent or vague about this topic, check your state's statutes as Tim suggests. (Even if your state permits h'owners copies of financials, this probably does not include individual owners' disciplinary records, e.g., fines, late charges, etc.)

Along with John, was this committee approved by the board? Does it have a charter--a list of its duties & purpose? Doesn't your HOA have a treasurer? What size is your HOA? The board? The FC?

It says in our by-laws: The books, records and papers of the Associations shall at all times, during reasonable business hours, be subject to inspection by any Member.

We are not asking to look at anyone's personal information. We want to see bank statements, bills that were paid, debit charges, etc. We have a Secretary who is also the Treasurer.

Yes our committee was approved by the board. We did give them a letter asking for this information and letting them know we wanted to address internal weaknesses and audit concerns.

The problem: The HOA paid over $1000 for the Vice-President to take the HOA attorney to the magistrate regarding HIS property. Should he have paid it himself? Absolutely

We lost our secretary 15 months ago and the Vice-President took the books and "recreated" (as he called it)
the accounts. He said the reason was the previous secretary made a mess of the books.

We paid the Vice-Presidents wife $7000 to supposedly do the books until we found another secretary (they never put it out to anyone else). The Vice-Presidents wife is a preschool teacher. She knows nothing about bookkeeping.

The board consists of 9 members. 6 members are "friends". There has been a vacancy but when someone tries
to fill the vacancy they vote against them so the vacancy has been open for 5 months. It says in our by-laws the vacancy is to be filled at the next monthly meeting but it also says in our by-laws that the board votes
on the person.

The finance committee consists of 4 HOA members. (CPA, accountant, 2 members of the HOA)

The Former President had his yard landscaped, a fence put in, a parking pad put in and told us that the by-laws were a joke and he could wipe his a-- with them.

I could go on and on. We are just trying to get this community back to where it should be.
We have 520 homes and unfortunately most people do not want to get involved. (They are afraid because
some of the board members are so mean!)

I really appreciate all the help I get from this website. You are all so knowledgeable!
I hope you can help us with this.

THANK YOU!

Ah, Michelle, I see I was wiring my reply to you when you posts yours. Thanks. More later.

Yes, the board approved the formation of the FC (I am sure they thought we would not carry through with it!)

And yes this approval is recorded in the minutes of a board meeting.

Well yes, the President is "calling the shots" along with 5 of his friends who are on the board. There are 2 board members supporting us and we have 1 vacancy on the board. The 6 board members keep voting against people so no one can fill it!

I love this statement-you are absolutely right! (If the FC cannot review the financials, what in the world is its job???)But most of the board doesn't want a FC! There is something going on and they do not want us to find out!

Our Secretary and Treasurer are one person. We have 520 homes, most of which don't want to get involved. Isn't that the way of the world these days!

Thank you for your suggestions!!!

I really cannot understand why an HOA would not open its books to any dues payer or board member, except to inspect an individual's account. It's an HOA, not the holder of state secrets.

So what if you're scrutinized? Okay....I'm out.

You hit the nail on the head. Unless someone had something to hide why would you care?
There have been residents that have asked for information regarding the lawsuit they
engaged the HOA in regarding our pond and they will not give them the information. An
attorney was involved and they still wouldn't give the info to the member. These are not
your normal Board Members!! (and so far our HOA has paid over $100,000 in attorney fees.)

I sometimes get tired of hearing about how someone's HOA won't "show me the money"...Here is the reality for a HOA board and it's members. Do you leave your families check book out in the open at the dining room table? If so, would you let your entire family including your kids to decide how to spend that money before spending it? Plus if you had spent money, who would scrutinize every penney and question your decisions? It is a natural reaction as most people are NOT open with their finances even with their own families/spouses/friends. Put that situation with complete strangers who's only commonality shared is ownership in the same subdivision/building.

It's not that your board is being as "secretive" or hiding information. They most likely know that letting people know they have 1K dollars with no place to go that month that someone will demand it be spent on them. Exposing yet another "questionable" expense the board should or should not have done.

How do you think this would change because of your financial committees involvement? Would you all be so happy to open up the check book too? You may find that it's not so easy. The board is responsible for representing the HOA as a whole on a daily basis. Hence, why they are more like the money earning parents and the general membership like their underaged children. How would you get your parents to open up on their checkbook and would you not have someone asking for an Xbox?

It's got to be a cultural change and understanding of how the finances work in a HOA. Not accusing them of hiding finances as all decisions are up for scrutiny and demand in a HOA. Believe me, you always have someone begging to use the HOA's money for their project once they find out the amount the HOA has on hand. They don't understand that just because there may be money there, it is NOT just theirs. Plus it may be needed for other items in the future. A HOA is a non-profit but it still needs to maintain and save. It could never do that if people kept deciding the way to spend without some kind of control and "secrecy".

Cheryl

You said earlier:

A former president of the association told the board we need to get back to having a financial committee.
She asked the board members if any of them would like to be on the committee and no one responded. So she formed a committee with 4 people. 1 CPA, 1 Accountant, herself and one other member of the association. Truthfully we have
suspected something is not on the up and up with the books and felt this would be a good way to see. The committee was voted on and it is in the minutes.

Guess I am a bit confused. You say a former BOD Member started this committee.

I ask, has the BOD authorized this committee?

Is there any member of the BOD on the committee?

I am getting the feeling this committee was not authorized and the BOD does not recognize it.

Our whole entire meetings revolved around our financial reports. The collection reports were for the Board members only and members referred to as lot numbers when discussed. However, ALL was open and discussed in front of everybody. We were open on what we were doing to collect and why we spent the money we did. Matter of fact, that was printed out in a few copies available to whoever showed up at the meeting. I had to go by the accountants office to pick them up.

So this confuses me as to what your board discusses at meetings so that one does not see financial statements. You can do a rough collections by multiplying dues by the number of members minus the percentage of average non-payers. We usually had about 80 to 90% regular on time payers and about 5% late payers. The rest were non-payers with actions against them. So our budget roughly was 5K a month. Our bills to meet were 5K a month. So we broke even most months. As non-profits should. (Some savings/reserves is okay).

With that said, why is it so hard for you all to figure out how your HOA is spending money? If it is spending too much then your dues are too much and can afford it or your HOA is getting some kind of loans. I can't imagine a HOA being able to run on empty and spending more than it brings in as they don't have credit cards typically.

I just wonder like John if this is not just a "Witch hunt" for witch hunting sake? It shouldn't be that difficult to figure out even without the records if indeed your HOA is spending too much or is collecting too much. It isn't like you are all going to get a refund if they are. It just means your getting more crap than you might want...

Melissa,

Based on the OP there are certainly issues members would question and want answers:

Cheryl

As Tim said:

If the Board doesn't want to provide access to the financials and is ignoring the written requests, the only other options are:

1) Bring it to the membership and recall the board
2) bring it to the membership and vote the bums out at next election (then do an audit)
3) Live with this refusal and move on.
4) Take the Association to court to produce the documents.

I believe this pretty well sums up what you can do.