Audits for mgt. companies who manage our money

Does anyone know whether any of the property management firms have independent financial audits annually? Our state (SC) seems to have very few laws regarding qualifications or rules of who can be a property manager/management company. They handle millions of dollars for subdivisions and I am bewildered why it doesn't seem to be important to anyone that their property mgt. company have their books audited in total and/or for their own subdivisions? I would like to hear if anyone else has any information about this or how they handle this?
Thanks
Don

DITTO

The Management Co. should NOT be signatories for any HOA account(s).

They may PREPARE the checks for the Treasurer's signature (and second sig. if it's HOA policy/procedure).

They may 'stuff the envelope' and pay the bills.

They may prepare the financial reports.

THEY SHOULD NOT HAVE ACCESS TO ANY ASSOCIATION FUNDS other than record keeping / book-keeping / check PREPARATION.

see, simple, problem solved

It sounds to me like your Board of Directors and the management company need to sit down and discuss financial controls.

I agree with the management company that officers of the association should not have blank checks, and I agree the management company should not have unfettered access to association funds. Using dual signature checks which require an association officer and a management company designee is an excellent control, having two association officers sign is also effective but would not prevent collusion of someone were so inclined.

Officers or others having blank checks is similar to petty cash funds, which we make clear to our clients we will not support. We work with our clients to make as many expenditures on behalf of the associations as possible and then bill back at the end of the month. It greatly facilitates establishing an audit trail for both the association to follow when reviewing the monthly expenditures and for the accountants when performing an audit. Of course we also reimburse an association officer or resident who has made an authorized expenditure on behalf of the association, our target is to issue a check within five working days.

I'm certain you and the management company can find a more effective way to handle reimbursements than having to drive to an office--e-mailing scanned copies receipts for reimbursement is one example. In the association we manage, we also accept copies of credit card statements in some situations. We always prefer a copy of the actual receipt.

Remember, the management company works for the association, not the other way around. However, the management company has a fiduciary responsibility to the client association to ensure proper financial controls are agreed to, established, reviewed, and audited.

You may find it difficult to find a bank that allows for two signature checks. It was explained to my that due to the Patriot Act, they will not take any responsibility for two sig checks, you can have them printed with two lines, but the bank will not "check" to see if both lines are being used. There are many ways to work around this, but it does entail more work for the board, but not much.

We had a PM once and we set the account up with him and then a year later he moved all funds to another account for which we didn't know about, and he was the only name on the account. When we asked him he said he had permission from the board to do so. That was the first and only alarm bell to ring, and we got rid of him immediately.

Don

An audit of your management company and an audit of your association are two different issues.

Your post did make me think. Would one want a company managing their association if that company was in financial trouble? I think not.

Trust. But verify.

If you havent done so already, form an audit committee. Verify everything from bank account balances, work completed by contractors, were multiple quotes completed, lets see them. Etc.