property management company issue....

Started by JimR24 • 17 replies • 2296 views

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JimR24 (Texas)
Posts: 399

Posted:

Hi, i am a Board member in a small condo association in Texas. We are working with a property management company who refuses to share a backup copy of our original Quickbooks accounting file with us.

Here is some history. This company has been with us for about 14 months now and (when they began their contract) they were supplied with a backup copy of our Quickbooks file. This file contained over 10 years of our historical data. Our concern now is - since we have so much valuable data in this file - that we need to retain our own periodic backup of this file in our possession.

Our Board has requested that we receive a backup; however, the property management company has, so far - refused our request. Also, we are a bit concerned that we - as a Board - could be charged with loss of control of our financial records and possibly threatens our ability to exercise our fiduciary duty.

Their refusal to send us a backup copy of our Quickbooks data file has cause some red flags for all of us. At our last Board meeting, we authorized an audit of our records and are now going about the task of getting the data file transferred to the CPA auditor so he can do his audit job. Am hoping the file can get transferred okay for his work.

Any thoughts on this issue will be helpful. Help! - What do you think?

oljim in texas

Lovin' life with my honey!
and, President of HOA in Texas

LarryB13 (Arizona)
Posts: 4,099

Posted:

Jim,

I there anything in the management contract about who owns the data? Has the management company given any reason for refusing to provide a copy of what is your data? Is this a situation where they give you printed reports but not the data itself?

The Management Company's refusal to provide copies of your data would arouse any reasonable person's suspicions. Since the management company is acting in a suspicious manner and being uncooperative with you -- their client -- it may be time to terminate the contract for cause. Tomorrow morning would not be too soon to start looking for another management company.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Jim,

I take from your posting that the Association provided the only copy of the 10yr data backup (vs.providing a copy of the data). Lesson learned if this is what happened.

You may need to read the contract and see exactly who owns what.

Are you having the MC make the deposits, reconcile the bank statements and pay the bills?

If you are, I strongly suggest that this changes. No one entity (individual or company) should be able to make the deposits, reconcile the books and pay the bills. If they are allowed to do that, there are no checks and balances.

My suggestion is to have the MC collect payments, maintain a ledger for each lot to track the payments and make the deposits (into a bank account owned by the Association). The deposit slips should then be forwarded to the treasurer for the financial reports. The contract should also stipulate that at the end of the fiscal year, the ledgers or ledger data is to be given to the treasurer for the Association records.

The Treasurer should be the one paying the bills, that is maintaining the check book, (we actually have a two signature requirement on all checks - yes I know banks will still accept the check if it's only signed by one person but it provides an internal check and balance) and reconciling the bank statements. If you have the MC include the lot number of the checks on the deposit slips, it is very easy to verify what the MC is reporting and, if need be, recreate ledgers.

Additionally, you should have a financial review done by a CPA at least every other year if not every year.

JimR24 (Texas)
Posts: 399

Posted:

Hi Tim - yes, we are certainly learning lessons from our first entrance into the world of property management companies. As far as i know, the original Quickbooks file with 9 years of data is still on the office computer. I'll try to check to make sure later today. When the management company took over, we provided them with a copy of that file.

So - push comes to shove, i am hoping we still have that file in good state on our office computer.

Our contract states that "the management company is to share the Quickbooks file with the Board upon request" ; however, the company is claiming that they understood that to mean a Quickbooks paper file report, not the actual Quickbooks data file itself. Could it be possible that someone would innocently interpret the words "Quickbooks file" as paper? What do u think?

And yes, unfortunately, all the financial transactions appear to revolve around a single person - who is the owner of the company and the person who keep all their customer's books. Another good lesson for us to learn for the future. I do like your idea about the ledgers.

One of the interesting things about this whole affair is the insistence by our Treasurer that there is nothing wrong with the way things are being handled. This information (about the company refusal to share the Quickbooks file) is out in the community now and is raising even more red flags. Because of this, we passed a motion that we have an audit of everything - and later this week, at a special called meeting, i am hoping that a $$ amount - currently being computed by a local audit firm - will be approved for this audit to take place.

Interesting stuff - we weren't expecting this when the management company took over. Seems like a pretty simple request to me; however, maybe i'm missing something. What do u think?

oljim, in texas

Lovin' life with my honey!
and, President of HOA in Texas

JimR24 (Texas)
Posts: 399

Posted:

Larry, thanks for your response. Interesting stuff...huh?

We have asked the question about their feelings about ownership of the data; however, as far as i know - we've received no response. Their behavior is such that it's my impression that they feel that the raw Quickbooks data is theirs now; however, in my opinion, that's gonna be tough hill for them to climb. I believe that most any reasonable person would decide that - under the circumstances - they have no right to claim ownership of our data. What do u think? Am i thinking wrong here?

We are now looking around for alternatives for our bookkeeping and we are finding some. The company appears to be performing most all their other functions pretty good (in my own humble opinion) - so the issue around the financials is perplexing at best. Go figure.

Appreciate everybody's attention to this issue - sure am glad i found this discussion board, so things can be aired out. Am looking forward to participating more!

oljim, in texas

Lovin' life with my honey!
and, President of HOA in Texas

FredS7 (Arizona)
Posts: 927

Posted:

> Our contract states that "the management company is to share the Quickbooks file with the Board upon request"

I think a stern letter from a lawyer is called for. Given what you say about the contract their stand is at least disputable.

Seems to me you might want to contain the issue by switching management companies. Is there a provision for terminating your contract if they breach the contract provisions?

JimR24 (Texas)
Posts: 399

Posted:

Excellent suggestion Fred. So far, we've been a bit stymied by our Treasurer and our President. Our President resigned last week because this issue was causing so much stress in her life...and she made the decision to step out of the picture. I'd support anybody who wants to put themselves in a more healthy stress situation in their life - so my feeling is that she made a good decision. Things have already calmed down, so cooler heads may prevail.

Our Treasurer has now double-downed on the issue and we're not quite sure what to think of that. Tough issue...huh?

At this point in time, we can switch management companies with 30 day notice. There is only one other homeowner management company in our town; however, they did come in second (to the one we chose) when we sent out our RFP's, and appear, as far as i can tell - a viable option. One of the reasons our current management company was chosen was that they were substantially lower in price than all the other bidders...ummmm.

Our choices for homeowners' management companies is limited here in our city - and we are uncertain about contracting with a company who does not have an office in our city. Not sure how that works. Any comments here about working with a company who does not have a local office?

In my way of thinking, this is a obvious breach of contract; however our Treasurer is very insistent that this is not so and things are okay as they are. Go figure.

oljim, in texas

Lovin' life with my honey!
and, President of HOA in Texas

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

If they are refusing to give you a file, that you provided them, and its in your contract, they are obviously hiding something. Any company that would loose a customer over a stupid computer file is up to no good.

Beyond the quickbooks file, you need to check all the bank accounts. Get balances direct from the bank, not the mgmt company.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Kind of amazes me the attitude of some mgmt companies towards their customers. They wont be in business long.

JimR24 (Texas)
Posts: 399

Posted:

Wow, you've got that right Steve!

And yes, it is obvious to most all of us (with the exception of our Treasurer) that something is likely being hidden. We are hopeful that our CPA audit guy can help us figure out what. in the past, we have prided ourselves in being very open and transparent - so this situation does not represent the type of community we want to be.

My guess is that we're gonna figure it our sooner or later. We'll already had one board member, our president, resign because of the stress this is causing. That, in and of itself, means that we've already lost value because of split opinions over this issue.

Just doesn't make sense...does it?

Sure do appreciate this discussion board where i can air things out and get some other opinions on issues. Sometimes things get a bit lonely out here in association land...lol..

Sure am looking forward to participating here....looks like a real comfortable place to be.

oljim, in texas

Lovin' life with my honey!
and, President of HOA in Texas

CarolR11 (Colorado)
Posts: 2,563

Posted:

If your treasurer continues to be uncooperative, your governing documents, probably your bylaws, most likely give the Board the authority to remove the treasurer from that office (but not from the Board) and the Board can then elect a different person to be treasurer.

MC outside of your town? It seems to me that if the Property Mgr. (PM) lives in your town, it could work out fine. How many hours a week is your PM on your premises? Is your HOA part of the PM's portfolio? In other words, does the PM have more accounts than just yours?

Tell us, for those who didn't read your other post, how many units? What type? Are there many recreational amenities? what are they? Much landscaping? Security personnel?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JimR24 on 06/17/2014 4:57 AM

Our contract states that "the management company is to share the Quickbooks file with the Board upon request" ; however, the company is claiming that they understood that to mean a Quickbooks paper file report, not the actual Quickbooks data file itself. Could it be possible that someone would innocently interpret the words "Quickbooks file" as paper? What do u think?

My interpretation of "the Quickbooks file" is data in an electronically readable format. I would not interpret that phrase to mean only printed reports produced by the Quickbooks program as if that was the intent of the parties that is how it would have been stated. Just my opinion.

JimR24 (Texas)
Posts: 399

Posted:

Appreciate your response Carol. I'm one of five directors in a condo of 113 units with a clubhouse. We are gated, and there are about 30 single-story buildings on our grounds with 5 (and sometimes 4) units per building. My wife and i have lived here for about 7 years and the condominium is about 10 years old. Our Annual budget is about $270K for the year for the 113 units. We don't employ any security personnel.

The person who is assigned as our property manager is onsite in our clubhouse off for 4 hrs per week during the week. We are one of about 10 - 12 or so association properties this company manages.

Our clubhouse is the only amenity we have and our yards are small. My front yard is about 200 square yds in size and my backyard is about half that size. My wife are i are lock-and-leave kinda folks. We can get up in the morning, decide to take off for a week or so - and we're outta here...lol...we love our life - didn't know retirement could be so much fun!

Yes the removal of the Treasurer from office has been discussed. Tough to do in a neighborhood as small and as close as ours...if you know what i mean..[smile]... So far, we're giving her plenty of rope to come back on the homeowner's side...but it's been a mighty tough row to hoe.

Am enjoying chatting with you folks - thanks soo much for taking an interest in this situation.

oljim in texas

Lovin' life with my honey!
and, President of HOA in Texas

JimR24 (Texas)
Posts: 399

Posted:

For sure Larry. In this digital world, it's amazing that anyone would interpret "Quickbooks file" any differently than electronically readable...lol..(but that is what is going on).

Out of my 70 years here on earth, that's certainly one for the books!...[smile]...

oljim in texas

Lovin' life with my honey!
and, President of HOA in Texas

PitA1
Posts: 222

Posted:

JimR24;

? are y'all 55+ ?

make a back-up onto a removable (flash) drive NOW and monthly

also onto a CD if possible (annually)

Best of luck!

JimR24 (Texas)
Posts: 399

Posted:

No PitA1, we are not a +55 community - but it seems like most all of are over that age. I'm 70 and am considered one of the young ones...lol...

And you are right-on about the need. Thanks for checking in with me!

Lovin' life with my honey!
and, President of HOA in Texas

NpS (Pennsylvania)
Posts: 4,216

Posted:

A few thoughts:
1. The data is yours. It makes no difference what any management contract says. They don't own your data. You are paying them to process it, but it's still your data.
2. If you are being treated poorly by your MC now, just wait til you cancel the contract.
3. From a purely practical perspective, the best thing you can do if you have been able to recover your QuickBooks files is to have someone create a shadow system. As soon as you get paper records from the MC, have someone make duplicate entries on the system you are maintaining. It could save you months of disarray.
4. Big question. Do Board members have signing authority on your bank accounts. If not, you will likely be held hostage for your own funds by this MC. Change this now.
Best of luck.

Sikubali jukumu. Read all posts at your own risk.

GlenL (Ohio)
Posts: 5,491

Posted:

Jim once you get your Quickbooks issue resolved, if it were me I might ask the Board to examine just what the MC does for the COA. You might be better off hiring an accountant to collect the fees, pay bills etc and a maintenance company or handyman for the day to day maintenance issues.

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