President spending without limit or oversight

TerriS6 (California)
Posts: 3,284

Posted:

Our bylaws say the Treasurer/CFO makes disbursements. They say the president can only sign documents prepared by the board. They say the president can perform certain duties after advice from the board. Does anyone have experience where the president is the sole approver of invoices and has no limits to his spending with a debit card? There are no written internal financial controls.

JackS20 (North Carolina)
Posts: 271

Posted:

you need your board to pass a financial resolution so everyone is on the same page. However most volunteers do not like doing finances, so good luck.
When I personally tried to get this passed with one other board member and one MIA, the other board member wasted 3hrs over meetings arguing about it and refused to vote on it.
then when I spent $70 to plant some grass seed, she blasted me on FAcebook post which I ignored.
put the financial resolution as part of the bylaws changes which passed and she resigned.
I dont' mind seat warmers, but those that actively work against getting stuff done and make my job harder, are free to leave.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By TerriS6 on 11/09/2024 5:23 AM
Our bylaws say the Treasurer/CFO makes disbursements. They say the president can only sign documents prepared by the board. They say the president can perform certain duties after advice from the board. Does anyone have experience where the president is the sole approver of invoices and has no limits to his spending with a debit card? There are no written internal financial controls.

The first issue is the debit card. There is zero reason for any board member to have a debit or credit card.

TerriS6 (California)
Posts: 3,284

Posted:

I agree completely!

SheliaH (Indiana)
Posts: 6,964

Posted:

What Jack and Dean said.

This is common sense - you don't say what certain duties are defined in the bylaws that can be done by the preside, but I'm sure spending money without any oversight isn't one of them. What does the board think "after advice from the board is supposed to mean?

This should be a relatively simple fix, starting with dropping the debit card, or at least putting a spending limit on it. All debit card transactions must have a corresponding invoice or receipt (no plain sheets of paper), define when the card should be used, and the BOARD must approve all purchases and contr a cts during an open board meeting. The president is only one vote and if he doesn't want to give up that control, he's welcome to turn over the position to someone else.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

But...iscn't the problem that the rest of the Board doesn't care that the prez has this power, Terri?

Say, will you please exactly cite the President's duties from your Bylaws?

With only your HOA's roads as common area, what the heck is the $$$ being spent on?

TerriS6 (California)
Posts: 3,284

Posted:

Section 6.01. Election. At the first meeting of the Board immediately following the first
annual meeting of the Members, the Board shall elect one of its Members to act as President,
Section 6.02. Duties. The President shall:
(a) Preside over all meetings of the Members and of the Board.
(b) Sign as President all deeds, contracts, and other written instruments that have
been approved by the Board, unless the Board, by duly adopted resolution, authorizes the signature of a lesser Officer.
(c) Call meetings of the Board whenever he or she deems it necessary, in
accordance with any rules and notice requirements imposed by the Board and the Governing Instruments. The notice period shall not be less than three days except in the case of emergencies.
(d) Have, subject to the advice of the Board, general supervision, direction, and
control of the affairs of the Association.
(e) Discharge any other duties required of him or her by the Board.

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By KerryL1 on 11/09/2024 7:09 PM
But...iscn't the problem that the rest of the Board doesn't care that the prez has this power, Terri?

Say, will you please exactly cite the President's duties from your Bylaws?

With only your HOA's roads as common area, what the heck is the $$$ being spent on?

Kerry, that is what I will be finding out. Does the board even know who has power or are they falling in line?

TerriS6 (California)
Posts: 3,284

Posted:

And the Treasurer

FINANCIAL OFFICER Section9.0L Election. At the first meeting of the Board immediately following the first annual meeting of the Members, the Board shall elect one of it,; Members to act as a Chief Financial Officer, Section 9.02" }lutjes. The Chief Financial Officer shall: {a) Receive and deposit all of the funds of the Association in any bank or banks selected by the Board; (b) Be responsible for ~nd supervise the mainten~nce of books and records to account for Association funds and pther Association assets; · (c) Disburse and withdraw Association funds in the manner specified by the Board; and (d) Prepare and distribute the financiid statements for the Association required by the Declaration.

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By KerryL1 on 11/09/2024 7:09 PM
But...iscn't the problem that the rest of the Board doesn't care that the prez has this power, Terri?

Say, will you please exactly cite the President's duties from your Bylaws?

With only your HOA's roads as common area, what the heck is the $$$ being spent on?

So far denied access to invoices so I'm not sure but I know about $40,000. went to attorney without board approval.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

self managed hoas deffinetely need a debit card.
just redid bylaws, made it so anything approved in the budget does not require HOA board approval.
I dont' need 3 other board members to appprove spending money on something, when 90% of the members voted to approve it already.

vis ta vie

TerriS6 (California)
Posts: 3,284

Posted:

Our members do not vote on the budget.

MichaelS56 (Minnesota)
Posts: 859

Posted:

The President should not have the power to determine payment of invoices. That person is only one vote unless the other Board members have determined not to do their fiduciary duty. Fortunately, I am not in an association with that issue.

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By MichaelS56 on 11/11/2024 4:46 AM
The President should not have the power to determine payment of invoices. That person is only one vote unless the other Board members have determined not to do their fiduciary duty. Fortunately, I am not in an association with that issue.

And if the other directors have determined not to do their fiduciary duty they ought to know D&O insurance will not cover them.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By WendyM5 on 11/10/2024 6:06 PM
self managed hoas deffinetely need a debit card.
just redid bylaws, made it so anything approved in the budget does not require HOA board approval.
I dont' need 3 other board members to appprove spending money on something, when 90% of the members voted to approve it already.

Were those revised bylaws approved by the homeowners according to your documents? If so, fine, but just because something's in the budget doesn't necessarily mean the board should leave the spending decisions to one person. You said "I don't need board approval to spend money on something the members already approved" - sorry, but part of the board's job is to review expenditures.

You are NOT the entire board - you may be president, but you're not God. If you spend money in a way homeowners don't like because they looked at the details and didn't like what they saw -or not- you do know your colleagues will sit back and let you take the fall, don't you?
For example, lawn care is in the budget - that doesn't mean only YOU get to decide the vendor (how do your neighbors know there isnt a conflict of interest somewhere)?

If someone takes a look at that debit card statement, can they be assured some of that money didn't go to improve the lawn on your property and nowhere else? Will that debit card have a limit on how much can be spent? Will someone else be responsible for auditing those transactions?

I'm not suggesting you're dishonest. If what you’ve said in previous posts are true, you're the only who's trying to make things more cost effective, while your colleagues are little more than potted plants. I've also seen people get indignant when anyone questions them about association affairs because "they are the board and therefore they are" - especially if they are officers.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

Both as an Assoc. member and as a director, you should be able to request a copy of the $40,000 invoice. You know this, Terri. If you haven't seen it, how do you know the president--only--approved the expenditure?

Who wrote this check? How do you know the Board did not vote to approve it? From whom have you requested a copy of the invoice?

Doesn' it involve one of the small claims-court actions you've taken against the Board? If so, is the Association required to give it to you? Or is there some sort of attorney/client privilege involved?

What does you research tell you, Terri?

TerriS6 (California)
Posts: 3,284

Posted:

Quote:

Posted By KerryL1 on 11/12/2024 4:06 PM
Both as an Assoc. member and as a director, you should be able to request a copy of the $40,000 invoice. You know this, Terri. If you haven't seen it, how do you know the president--only--approved the expenditure?

Who wrote this check? How do you know the Board did not vote to approve it? From whom have you requested a copy of the invoice?

Doesn' it involve one of the small claims-court actions you've taken against the Board? If so, is the Association required to give it to you? Or is there some sort of attorney/client privilege involved?

What does you research tell you, Terri?

These are legal fees over four years that were never authorized by the board. Board never had a meeting/executive session about legal action of any kind. Board never voted to approve legal fees. I saw some of the invoices and some of the payments. Point is there is no authorization or oversight from the board.

TerriS6 (California)
Posts: 3,284

Posted:

Kerry, I am being denied access to records; minutes, invoices, bank statements, everything.

TerriS6 (California)
Posts: 3,284

Posted:

Oh, and how do I know the pres alone approved expenditures? I asked what is the invoice approval policy? The answer: treasurer receives the invoices, president approves them, treasurer or president pay them with a check or debit card. Legal invoices are paid with a debit card. This I know from legal invoices I saw last year only after going to court for them.

TerriS6 (California)
Posts: 3,284

Posted:

Also...never in 4-5 years was there an open or executive session with litigation on the agenda. Never anything on an agenda related to any of my cases except once there was an item whether or not to appeal a judgment. There have been 2 or 3 at the most noticed executive sessions in the past 6 years. Also the treasurer was in shock when she discovered the legal invoices that had been paid. She had never seen them before so obviously, she hadn't approved them. Someone else was treasurer at that time, she has only been treasurer since Sept 2024. But she had been a director for 2 years and had no knowledge of the invoices.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By TerriS6 on 11/10/2024 7:27 PM
Our members do not vote on the budget.

they should its their money being spent.

vis ta vie

WendyM5 (North Carolina)
Posts: 1,522

Posted:

Quote:

Posted By SheliaH on 11/11/2024 7:47 AM

Posted By WendyM5 on 11/10/2024 6:06 PM
self managed hoas deffinetely need a debit card.
just redid bylaws, made it so anything approved in the budget does not require HOA board approval.
I dont' need 3 other board members to appprove spending money on something, when 90% of the members voted to approve it already.

Were those revised bylaws approved by the homeowners according to your documents? If so, fine, but just because something's in the budget doesn't necessarily mean the board should leave the spending decisions to one person. You said "I don't need board approval to spend money on something the members already approved" - sorry, but part of the board's job is to review expenditures.

You are NOT the entire board - you may be president, but you're not God. If you spend money in a way homeowners don't like because they looked at the details and didn't like what they saw -or not- you do know your colleagues will sit back and let you take the fall, don't you?
For example, lawn care is in the budget - that doesn't mean only YOU get to decide the vendor (how do your neighbors know there isnt a conflict of interest somewhere)?

If someone takes a look at that debit card statement, can they be assured some of that money didn't go to improve the lawn on your property and nowhere else? Will that debit card have a limit on how much can be spent? Will someone else be responsible for auditing those transactions?

I'm not suggesting you're dishonest. If what you’ve said in previous posts are true, you're the only who's trying to make things more cost effective, while your colleagues are little more than potted plants. I've also seen people get indignant when anyone questions them about association affairs because "they are the board and therefore they are" - especially if they are officers.

If lawn care is in the budget and no one else does anything on the board and no one else in the community comes to the meeting, then actually I do decide who the vendor is. Got D&O insurance incase I make an honest mistake, previous 20 years boards didnt' have that to cover thier ass.

vis ta vie

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Wendy

If the BOD presents a budget (and it is accepted/implemented) of say $4K per month to SO and SO Landscaping for 2015 there is no need for additional approval every month. Payment should be automatic.

TerriS6 (California)
Posts: 3,284

Posted:

WendyM5 wrote "If lawn care is in the budget and no one else does anything on the board and no one else in the community comes to the meeting, then actually I do decide who the vendor is. Got D&O insurance incase I make an honest mistake, previous 20 years boards didnt' have that to cover thier ass."

California law requires prior written approval for all transfers from operating and reserve accounts that are 5% of annual assessments or more. Civil Code section 5502. That is in addition to approving the budget.

TerriS6 (California)
Posts: 3,284

Posted:

Victory board says no legal fees incurred without prior board approval.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By TerriS6 on 05/07/2025 8:18 PM
Victory board says no legal fees incurred without prior board approval.

Maybe. Normally the HOAs attorney will require a signature of an officer before performing work. Once a signature is obtained, the HOA is on the hook to pay the invoice and a legal action against the offending HOA officer might be required correct the unapproved payment.

TerriS6 (California)
Posts: 3,284

Posted:

The vote was a victory.

JackS20 (North Carolina)
Posts: 271

Posted:

Quote:

Posted By TerriS6 on 05/09/2025 1:25 PM
The vote was a victory.

what was voted on?

KerryL1 (California)
Posts: 14,550

Posted:

Was this vote at a special meeting of the Board?? Or were other items of business on the agenda?

TerriS6 (California)
Posts: 3,284

Posted:

Regular board meeting with several agenda items.