Internal Control for HOA Money

Started by HanhN1 • 8 replies • 1844 views

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HanhN1 (California)
Posts: 64

Posted:

My Assocation's internal control is extremely weak. How to force Board members to have an access online to view all financial activities to be sure all of the withdrawls authorized. In addition, how to force Board members to have all board names on all Association's accounts and property manager only on accounts. My Association let non-homeowners/non-board members on accounts and they also let some people who work for property management on accounts and signed checks. I need your adivse and recommendation. Thank you.

GeraldT4
Posts: 1,022

Posted:

HanhN1 - I don't see more internal control being achieved by providing all board member names on Association accounts. Rather the Treasurer and President should be bank account signatories, not the PM. Basically that access and withdrawal should be centralized.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Hahn,
I agree with Gerald and I think that there are too many people with access to your account. We use President, Vice President and Treasurer only. The P.M. should not ever be authorized to sign any checks. When our P.M needs checks signed for any upcoming bills, she will have them addressed to payee, bring them for the signatures, maybe a couple at a time and then go back to her office and send them out.

JC3
Posts: 290

Posted:

Why is any PM (not just yours) so unwilling to give board members bank information, and have the officers as signers on the account or the checks, rather than the just the management company?
It seems many boards have this problem of the PM wanting total control of all the money and financial information.

GeraldT4
Posts: 1,022

Posted:

JC3 - A PM gets away with what a Board lets it. It's important to remember that a PM is an employee of the Board to act for the association. If a PM does not adhere to the contract or agreed upon requirements than it's the job of the Board to enforce.

HanhN1 (California)
Posts: 64

Posted:

Thank you all for the feedback. Moreover, my management company is very controlling. They always are signing checks without showing the Board invoices and without the Board's approval.

RogerB (Colorado)
Posts: 5,067

Posted:

Hanh, have you requested your Board setup internal controls? You appear to know something about these so why not present a draft of internal controls for their consideration. You could start by requiring a Board member's signature on every check. Access to online viewing of accounts by every Board member, whether a signer on an account or not. Monthly accounting reports emailed to every Board member with an email address. Quarterly bank statements sent to the Treasurer, or else scanned and emailed to all Board members with an email address.

DaneC (California)
Posts: 210

Posted:

Quote:

Posted By DonnaS on 02/11/2008 11:36 AM

Hahn,
I agree with Gerald and I think that there are too many people with access to your account. We use President, Vice President and Treasurer only. The P.M. should not ever be authorized to sign any checks. When our P.M needs checks signed for any upcoming bills, she will have them addressed to payee, bring them for the signatures, maybe a couple at a time and then go back to her office and send them out.

Donna - Unfortunately, there have been unscrupulous PM's, who take the signed checks back to the office, and proceed to alter payee names and amounts.
When the board signs the checks, they should also mail them.

SusanW1 (Michigan)
Posts: 5,202

Posted:

There may be other things going on here. Maybe there's a budgeted amount and the PM is just implementing that fund - landscape for instance.

The PM may be paying the landscape person, according to the budgeted amount. The PM or Treasurer would not bring that check in front of the Board every time the landscaper needed payment.

Too little info here to make blanket statements . . .

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