How would a typical management company, in its first year for a POA, handle financial statements hiding material expenses

Likely, my POA will hire a management company. If so, that company will assign an account to our subdivision.

If the past year financial statements have large amounts of expenses wrongly categorized with the parts of the same expenses reported in miscellaneous accounts, would a typical management company require that the past year financial statements get re-stated correctly?

Situation:

My POA typical expenses are $20K annually. The last year, expenses were $40K. Three unusually expenses are ~$18K, so they likely account for the difference. They are non-descript accounts, "job supplies", "reimbursable expenses" and "uncategorized expense." None of those expenses have ever been shown on any financial statements of the POA previously. The Treasurer will not explain them, not even to another Board member.

I do not think anyone stole money. Instead based on how the Board has operated (any issue or decision the Board has made over the last year has been sent to an attorney for review), I suspect they have about $15K to $20K in attorney fees and are reporting those expenses in no descript accounts so membership is not alarmed at the high legal fees.

If my hunch is right ($15 to $20K of legal fees reported as miscellaneous expenses), would a competent management company accountant correct the previous year financial statements, or would that accountant ignore years prior?

I don't exactly follow the story but will share my thoughts:

Our property manager has a "check register" report that we can generate. Any board member can generate this report. It shows the dollar amount of every check and the vendor that the check was sent to and the category where the expenses was placed.

As Board president, I want the charges to be correctly charged to each account. Thus, I go through once or twice per year, find all of the checks that were incorrectly charged to the wrong account, and have the accountant fix them. They get annoyed but it is life.

So to answer your question, no the management company does not correct the check register. Rather, the Board directs the management company to make the appropriate changes.

Are you saying you're NOT on the board or you're not going to request the invoices?

If you're not on the board, why haven't you taken your questions to them? If you find you need to look at the invoices, but dont want to, how do you think you'll find out what's going on? Hunches are useless and may result in you jumping to conclusions.

If you want to know, don't guess - Take Augustin 's suggestion or go to the board. You may find they don't know either and look into it further.

I don’t know it to be a universal fact, but I suspect Tim is spot-on. In my humble experience as Treasurer, our PMC could care less about this kind of detail. Every month I get a Financials and AP report and I spend a little time going through them. And pretty much every month there are errors. And I make notes and ask the PMC “what is this?” and “what is that?” and they really seem to hate me for it. But I continue to do it anyway.

BillD