Adverse Audit Report

Hello Members,
Our HOA is currently having an Audit performed for year ending 2013. Also, we are having a compilation for the previous 2 years 2012 and 2011. I know that there is an entire year of records missing in 2011 as well as many missing documents for the other 2 years. When the Audit is complete and lets just assume the opinion of the Auditor is not favorable, where do we take this information for further investigation? The BOD's have been there for at least 5 years and dont seem to care that many financial records are missing. Also, the treasures brother was getting paid to do the accounting and in charge of the safe keeping of the records. He is a CPA.

Thanks,

It may seem the board doesn't care about this, but I suspect they're trying to hide the fact that they didn't do their job regarding due diligence and are scared shitless this will all fall back on them. As well they should be - the Board is ultimately responsible for ensuring the Association's assets are being used appropriately and if they haven't kept records of where the money's coming and going, this can get them into trouble with a lot of people and yes, they can be held PERSONALLY liable, especially if there's an indication money has been stolen.

However this ends, everyone on that board should resign. Even if they do it now, that won't stop them from being held responsible, so they may as well put on their big boy/girl pants and clean up after themselves because that's what grown men and women are supposed to do.

I'd start with talking to the auditor and Association attorney to get their recommendation on what to do next. Then, tell the treasurer and his/her brother they have some explaining to do - in fact, have your attorney in on that meeting. Do you have a property manager? If so, they may also have some explaining to do, which may or may not end with your association giving them the boot and hiring someone else.

Assuming you're on the board (or even if you're not), someone needs to tell the others that they are ultimately responsible for the Association's finances (whether or not they served as treasurer). If there's an indication that money has been stolen, they might be held personally liable. Since the brother is a CPA, you should also contact the state licensing agency in your area, whether he cooperates or not.

Between your auditor and attorney - and perhaps your association master policy insurance carrier (if you have D & O insurance that may or may not come into play), you need to get some policies and procedures in place immediately to make sure this doesn't happen again. Good luck!

I'm not sure there is enough information to suggest this action.

Would you fire the person who discovered the problem and took steps to fix it?

Perhaps this is a new Board who discovered the issue and ordered the audit and compilation to try and fix or see if a financial problem actually exists. The point is, we don't know who was on the Board previously and who is serving on the Board now. To make such a strong suggestion without this information just isn't right.

It's difficult to assess what this means. Are you talking about a couple thousand dollars? Or tens of thousands of dollars? Or hundreds of thousands of dollars?

Also, were these payments reasonable considering the work performed?

If your answer is that you will need to wait for the Auditor's report to find out, then wait for the Auditor's report to find out. You do know where these people live.

Another thought. If you are that concerned that the problem is not only in the past but also ongoing, then you might want to get a sufficient number of signatures on a petition to demand the formation of an audit committee (if you don't have one already), and to demand that the audit committee include non-board members.