Board Approve All Invoices Before Paying

Our self-managed HOA has been very loosely run for many years. The new Board is in the process of writing up Rules of Procedures for all Board Officers and Committees. I'm working on the Treasurer's Rules, although I have no background in finance. My question is this: We have a budget that is approved annually. When bills come in and the Treasurer makes sure that there is sufficient money in the line item to pay that bill (legal fees, for example), does the Board still have to approve each check before it is written? Some people feel that since the Board approved the budget, then they don't need to approve each expenditure as long as there's still money in the budget. I still feel that the Board should approve each expenditure before writing the checks. Appreciate your advise!

If the board already approved spending on an item, just what is to be debated when the bill for that item comes due?

For example: You approve the expense and budget money for someone to mow the lawns. The person mows the lawn and sends you an invoice. Why should this be in front of the board again? Are you going to do this at every meeting?

The only good thing about this idea is that it keeps the board's wheels spinning on old business, limiting its time to screw up other stuff. Come to think of it, yes, this is a really good idea. Do it!

I am the HOA treasurer and act as the watchdog over the management company's bookkeeping. They receive the invoices, they issue the checks, I review all and the checks are signed by me and another board member.

We do not discuss every invoice. If it was considered in the budget (and you must know what was discussed and considered) there is no reason to go over every single item. Every board member gets the Balance Sheet, Income & Expense, Cash Disbursement (with copies of checks), and Bank statements with reconcillaton five days before the meeting. It is easy for them to see what was spent & where.

The line items are for budget planning purposes and to keep us on track throughout the year. But the money is in one big pile, you will go over in one line item and under in another and they will wash each other out.

Mistakes or questions get researched and corrected by me. Anything totally unexpected is always reported to the board via e-mail before the meeting and decisions if needed at the next meeting (if not an emergency). I will never sign a check from reserves on the president’s word (can’t stop him, but I won’t) – Reserves expenditures must have a board vote and verified in the minutes.

Accounts with collection problems are in front of the board with house number and name: and brief status but they are numbered 1, 2, 3 etc and if discussed that number is used as reference. It is our way of not giving the audience a hint of who we are talking about. It is funny to watch the members try to figure it out. But in the minutes the unit number is used without a name. Doesn’t’ change much because it is all official record open for inspection by members.

At the meeting a general report of the status of the operating & reserve accounts is written and read for the audience, including the net uncollected dollars for the fiscal year and cumulative. That is always a shocker. If we are going over budget in a line item it is read. Then the board and members are allowed to ask questions.
Hope this helps.

Babette,

Let the treasurer pay the regular monthly bills and have the board receive a list of the checks that are issued each month as well as an open policy for dues payers. There must be some measure of trust that board members aren't inherently corrupt. You back that up with a yearly audit that's open to dues payer review.

We are not self-managed but our property manager can issue checks for regular monthly payments and repairs up to $500 if urgent or "emergency." Otherwise the board steps in. That covers a pipe leak or other trouble that will cause great damage if not immediately addressed when discovered - meetings aside.

I too see no reason why one would waste time going through EACH expenditure handled through the Board. As Board members we are each provided with a check ledger in our packet each month detailing each check written. And as some have suggested many are routine month to month costs.

We have the MC write out checks and those checks are mailed to the Treasurer with a copy of the invoice. The MC signs the checks and the Treasurer, afer verifying the checks, also signs them and mails them out.
2 signatures required on ALL checks.

The MC, Treasurer, President and VP all have on-line access to our accounts and can review any detail of our banking.

IMO more than enough oversight without taking the time to review, explain, discuss, and approve each check being issued.

Thanks, all, for your responses. Been very helpful. Luckily we already have a lot of the "checks and balances" in place, such as requiring two signatures on checks, and I think with this latest input from the forum I know where to go from here.