Management company refuses review of books

Doesn't your board review the "books" at least quarterly at as required by CA HOA statues? In other words, are you saying, Charles, that no directors have seen the "books" in quite some time? If so, how does your board, not to mention the homeowners, know where you stand financially?

Meantime, your MC may be in the process of compiliing a lot of records for the transition on 12/14. But, legally, they must permit any Owner to review the financials of the past two years plus this year within 10 days of written request.

Did your CPA director request any specific "books," e.g. disbursements, aging reports, etc.? Or did the CPA just request "all of the books (record)?

What size HOA are you? How many are on the Board?

Below is a citation that may come in handy when the actual transition occurs IH the MC fails to cooperate, including who to report problems to. The website below is very useful for CA HOAs.

"Duty to Return Records. Whenever the services of a management company have been terminated, the company must immediately turn over all association records. Refusal to turn over records is a breach of the professional code of conduct for management companies.

Report Behavior. You can report the company to CAI and CACM as well as the Better Business Bureau. This may help curb the company's abuses against other associations but probably will not get your records any time soon. Suing the company may be the only effective means of recovering your records."

Read more: Duty re Records http://www.davis-stirling.com/tabid/1694/Default.aspx#ixzz3qpqg8ieJ
from Davis-Stirling.com by Adams Stirling PLC.

Maybe I have given some the impression we as a board are not competent.
I submit we have monthly board meetings in which we require financial reports which are reviewed.
Our board is quite diligent in overseeing operations.
My post was the management company we employ is not cooperating with a legal request to audit all of our records.
My post was in the hopes that some others had run into this situation and could inform us of how they came to a resolution, not to be belittled and referred to as incompetent.

I agree. My worry is what are they trying to hide, if anything. Now I too want an audit because their refusal raises questions.

I apologize, Charles, you did make it sound as if no one on the Board had seen the financials in quite a while!

Have they been coming to the board electronically as most of ours do? In that case, you have a lot of what you need. Do you receive hard copies at your board mtgs.? In that case, you have a lot of what you need.

The MC can't be expected to line up auditing firms for you to choose from, and they are not qualified (in general) to conduct an audit.

Your board should seek proposals from auditing firms so you can select one to audit your books the minute your MC is gone. Do you not have an annual audit done (tho' not required)?

As advised above, please go to davis-stirling.com for references. If your MC refuses to comply for rewritten requests from any owner, tka the steps to report them to the agencies noted above.

Charles, why are you assuming they have something cover up, did you call them as the Prez and ask them why they did not honor it?

You are going in with guns ablazing, and since you personally have seen the financials each month, why all of a sudden do you think they are hiding something? That doesn't make sense.

Crystal's question does make sense, Charles. As president go in to see them if on site, or phone them if off site. Ask why they aren't following CA law? Ask if there'a any way you can help?

In addition, perhaps their contract with your HOA states they'll follow CA laws and your HOA's governing docs. If so, you may need to remind them of their contractual obligation. In your contract, btw, there should be a section about how things must be done when they stop working for your HOA.

Another question: why don't they want your account anymore? do you know?

pps.

The member should have requested the 'books' from the BOD as the member has no relationship with the PM who is merely another vendor hired by the HOA, Inc.

This entire issue may merely have been (to quote a famous movie):

"What we have here, is a failure to communicate."

Charles

What many fail to understand is an audit is somewhat like balancing a checkbook. It basically says so much was taken in, so much spent, and this what is left. If the numbers jive, end of the audit. Read the disclaimer that comes with an audit.

It does not account for if it was a legitimate expenditure. As an example it might show $150.00 to Lowe's for paint and might even say for the clubhouse conference room but it does not "catch" that 5 gallons were bought for a 3 gallon job.

It does not account for the fact that the painter was the PM's nephew and there was no bidding on the paint job.

An audit is not simply balancing a checkbook. That can be done by most anyone.
There are many requirements met in auditing including but not limited to the "checkbook". An audit looks at the general health of your business and its viability to proceed which include but is again not limited to your policies and procedures, budget compliance etc.
If you stop and think about it, why would you need a CPA if it was just to balance your checkbook.