Committee Chair Embezzles. Now What?

You want procedures in place to prevent this from happening in the future.

It's fine for committees to have a budget. However, in my opinion, reimbursement should come from the Treasurer after receipts are provided. At that time, if there was a question on an item, the Treasurer can hold off on reimbursement while waiting for an explanation.

Possible new procedure should include:

1) list of items that can be purchased by committees and reimbursed without Board approval (this alone may have stopped the problem you describe)
2) Individual approving reimbursement can not be the same person who purchased items.
3) Credit cards (if used - and I'm against having an Association credit card but understand it sometimes is a necessity) can only be used with prior approval.
4) Association purchases and personal purchases may not be on the same receipt

Those are just a few things I can think of off the top of my head.

The mgmt. co. preparing the checks is A-OK.

ONLY the treasurer + another BOD member should actually sign same and/or be signatories at your bank.

The treasurer can visit the mgmt. co. once a week for 15-20 minutes ~ good idea anyway.

Routine monthly bills payable to major known companies such as electric, cable, phone, insurance may be 'auto-pay'.

To repeat: The Treasurer signs EVERY check (+ another director for internal security).

If anyone has committed a crime contact L.E.

(contact them anyway just to establish 'precedent/intent')

BEST OF LUCK

Kerry

I say step one is the Treasurer send her a list of questionable expenses and ask for an explanation.

If she answers satisfactorily then it is over.

If she was just sloppy/wrong then censure her in Executive Session.

If more severe, then fire her from the committee.

I would want step one in writing before proceeding.

I would say that the explanation requested should be of a specific nature (what was it purchased for? when was it used? where was it used? etc.)

So what you are saying is that the committee's expenses were approved by the Board?

Keep in mind that you, not the PM nor the Treasurer nor the finance committee, identified these expenses as suspicious. Therefore, it appears that the system you currently have in place is allowed this to happen. Failure to make changes to your process may very likely have you dealing with the same issue in the future.

Perhaps, you now need to have an officer or finance committee approve each expenditure now (since it has been taken advantage of).

Well, it turns out I was wrong!! I only mentioned this to our PM & prez, so that was a good thing. Btw, this is a Social Committee. All Dec. purchases are for our annual Holiday Party. Every high rise around us -- about 20 in our urban area has a social committee. Some have really large budgets. So no lectures, please!, on why we should not have a social committee.

The reason this month's expenses caught my attention was that a summer event was almost entirely catered, but cost quite a lot less than this winter event for which committee members prepared all of the food! It was an anomaly and that's what the CFO of our MC had advised us to look for in a seminar for us. I simply don't see how anyone else would have noticed, treasurer or not.

The only way to find out what the $380 in question was spent on, and why, was to have the PM ask the ex-committee chair--they have a close relationship. And, as Tim suggested, the reason I couldn't figure it out for myself is that the receipt in question had about 30 items on it totaling well over $550. The ex chair had only circled the $380 due her, but not the relevant individual items.

She sent a list of the appropriate items to the PM, who forwarded it to me. Over $230 was for 4 items that are ridiculously useless, but do exist, and are in a storage closet used by this committee. I'd looked in the closet previously, saw them and dismissed them as old, unused items and they seemed to match nothing on the receipts. Another $40 item, the ex chair wrote, was broken in transfer to the storage closet. The other four items were less expensive, were not in the storage area when I'd looked previously, but mysteriously reappeared after my request to the PM. There were two candy dishes and two divided relish dishes. I'd attended our crowded Holiday Party but cannot say whether or not the items were used.

So, yes, something sneaky happened and I believe she intended to keep some of the items. I do also still think she was trying to spend the Committee's assigned budget before the end of the year. But wine woulda made more sense! No, she didn't "embezzle." Glad she's off the committee.

I'm taking the lessons learned to the Board this month to tighten the Committee's charter or enforce it better. I'd done that the previous month with the Landscaping Committee, but for different reasons. In that case, they were not giving the Board a monthly written report or meeting minutes. We now require both. We also will require them of the Soc. Comm.

I will see if the Board'll go for a limit each month on non-consumables--this is where the excesses or abuses occurred. And if a receipt says "dinnerware," as many of them did on the receipt in question, the member will need to write "red candy dish," "chocolate fountain." or whatever. Oh, yes, the ex chair bought one, but it was clear on that store's receipt. Success?? No--lotsa leftover angel food cake and strawberries.

Even though the PM said that it's fine if the committee member submits a receipt with a mix of personal & HOA items, that will definitely change. Four other members also made purchases and all turned in clean receipts with no other items on them, just ones that were obviously consumed at the party. This way it'll be difficult to bury non-HOA purchases.

Our PM approves these committee purchases and the checks come from their corporate offices. The PM does know the monthly limit on the Landscape Comm., which actually makes few purchases.

No directors or officers sign these types of checks.

Thank you again to all of you who offered advice!!