Treasurer and Excess Funds Spent

I was just installed as a VP in a small 38 member HOA, probably very typical in that Home Owners are not engaged. Of 3 BOD, 2 stepped down, 1 being the treasurer. And now after looking at some financials, I see 8500 spent for landscaping when 5000 was budgeted. Plus another 1800 spent on grounds when 400 was budgeted. What stinks is that it has been suggested that the treasurer hired a landscaping company owned by a relative. Nothing in the minutes to support this excessive expenditure and the President had no clue, suggesting the treasurer suggested they spend a few hundred more than budgeted because of previous year problems. You can imagine I don't want to get into this but I am trying to figure out what my real responsibility (the correct thing to do) in this matter is. It is a Florida HOA that also has excess funds in the accounts (not reserves mind you) that just exist. The BOD never publishes financials showing balances from previous years. It is clear to me the President had no idea about this and in the election meeting he found out there is about a 3000 shortfall from the 2016 expenditures vs income.

To some of the old hands here, what would you recommend I do to fulfill my responsibilities to the members?

If the president is unaware of expenses and whether they've increased or decreased, the first thing your board needs to do is appoint someone else. Personally, I'd probably vote out the president as a board member too, but I'm sure the homeowners have to determine that. If they're not engaged, that explains why the treasurer was able to hire relatives and the association went over budget without barely a peep.

Now, it's time to do a deep dive into the financials and see why you have a $3k shortfall. It may be there were some expenses that turned out to be higher than expected (take a good look at the invoices, contracts, etc. and ask questions). You also need to sit down with the treasurer and have him/her explain the landscaping company hire. Get hold of the financials from the last two-three years and compare line items - what's gone up or down faster than others and why? This is where you may need to take a look at contracts and see if you need to look around for other service providers. If you think there's more funky business going on, it might be worth it to have an accountant conduct an audit. Which is a good idea, even if there are no problems - periodic audits can help identify small problems that need fixing before they become big ones.

After reviewing your findings, present a summary to the homeowners - they may as well know the real state of the finances. As far as excess funds are concerned, it's a good idea to have about 2 or 3 months of operating budget expenses on hand at all times (covers unexpected expenses), with any extra going into reserves. And speaking of reserves - when was the last time your association had a reserves study? If you don't know what that is and/or the last reserve study was over 5 years ago, the Board should seriously consider getting one next year and begin using it to set the budget.
Will all this mean assessment increases? Maybe, but houses and common areas age, just like people - the older you get, the more money you're shelling out on maintenance because prices go up due to inflation.

So, all that's a start - you don't have to do this by yourself; make sure your fellow board members lend a hand. When you get a sense of where the finances are, you can then work on establishing policies that can help prevent this (starting with board members not participating or voting in association issues where they have a conflict of interest). Good luck!

PS - if this is your first go round on a HOA board, I strongly suggest you go to the community associations institute (CAI) website and consider buying some of their education materials on budgeting, rules enforcement and whatever else you aren't comfortable with. In fact, all of the board members can stand some initial and continuing education - see if there's a local chapter you can join.