Donna, Susan, Kirk, Glen Don, George, Mary, etc, etc

I recently went to a Board Meeting and during the Comments by Owners space, I read a short comment questioning the managers editorial comment in his Managers report. I requested that this comment be stricken from his report.
At the end of my statement I requested my statement (gave them a copy) be made part of the minutes and that the board would scrutinize any future report for editorial comments.

The subject here was the failure of our oreganization to provide for yearly certified accounting of the Books and records as defined in our documents. Plain fact is we have never had an audit........pure and simple.

The manager made a comment dealing with the subject of audit.

I hope I can resolve this with the Board, but I want to be sure of what my position should be.

What should I expect the Board to respond to: including my statement in the minutes and my request that the reference to audits in the managers report be stricken. How should they do this.

I feel if my comments were accepted as read with my reading them and giving them a copy and requesting that they be included in the minutes. If there was objection it should have been made at the time I submitted them. I honestly can't see where the big deal is, but we seem to have a way of making a mountain out of a mole hill.

Thanks

Mr. Robert ,

The Board that I deal with the most (I am Docs chair via long distance)has many times dealt with similar situations. When a letter is sent to the Board and read at the meeting or if a resident reads a letter at the meeting, the entire contents of the letter is NOT included in the minutes. A brief, shortened version , basically just a synopsis of the letter so that is officially on record as being addressed. Most letters to Boards are way too wordy and sometimes the content might be rambling and off of the subject so they are not usually published.

What kind of comment did the Manager say? Apparently it was not kind nor addressed your letter? This letter that you wrote and read is something that you want the entire membership to read, I am assuming as it pertains to something that is being ignored like the audit.

The really big problem that you have is that your State does not have any muscle to force the Board to have the audit even tho it is required by your documents. Dr. Gloria should be able to give you some help as this is also her State. DR. GLORIA, WHERE ARE YOU WHEN WE NEED YOU?

Robert

Some observations I have:

1) No one should require that any statement of any report be changed or corrected to suit another person. It's just a report. To quote the new phrase: "It is what it is." The Board had a choice to accept the report or not, as it was presented. Unless there was ACTION on this certain statement, it is just sitting there.

2) to correct a factual error (not an opinion) you could have MOTIONED for the minutes to include the correct fact.

3) The board does not have time for a he said/she said dialogue. If you have issues with an opinion statement by another person, take it outside (of the meeting) Otherwise,you have options to correct factual errors only.

To all,
I gave a 120 word comment to the Board, I gave them a copy and asked it be included in the minutes. If they did not want to include it in the minutes, the President should have denied my request.
I will be glad to discuss this further via e-mails. I make one comment further. [email protected] I have presented many a 3 minu talk before County council. I gave the clerk a copy and that was the end of it, my job was done.
I was not attacking the Board, I was informing the membership of a bad situation. Keep in mind the Board is not the only owners with fiduciary responsibilities. If they decide to put it in the minutes I will object if my remarks are not referenced as to content. But hey folks, it won't be the first battle I lost.

Thank you JeanneK,
I light shines in the forest. Your suggestion is a good one and it also points out the discrepancies in what really happened. I have been an owner here for 19 years and aupported and deviled this association all this time. Things are better because I was here. But, I was never given the platform to be able to editorialize to all members of the assosiation as a group. Now the manager, who is not an owner but an employee has the lattitude granted by the board to present opinions on owner activities. If the question had been posed to him, I have no objection to him responding. Obviously, his remarks about the cost of an audit is uncalled for and bias. He has been here nine years and never mentioned audit once other than to ask for volunteers, now that the topic of audits have been raised. I also think the process of doing an audit is a Board function.

I will add that our board is changing and I have great hope for our future. I support the Board but I will not be Bottle fed.

Robert,

You are correct that if the Board did not want to include your statement with the minutes, it should have been straight and told you so. For that kind of statement, I don't see any reason it should not be included either in the minutes, or attached to the back with a comment that Robert ___ presented a statement to the board. Statement is attached.

Because you are an owner I see no reason to be concerned with vetting what you stated. It isn't like the Board has to agree or disagree with the comment. They would simply pass it along to the members who bother to read the minutes.

I would agree that the Board should respond to what you bring up in the meeting. It sounds like you are trying to be a pro-active member and the Board should appreciate your efforts to be this way. The truth is that most people are not pro-active in the affairs of the HOA.

How long has it been since there has been a audit or audit-review?

What do your bylaws say?

At your "speech" time, you can request that the Board motion to conduct an audit within a certain time (IF they are non-compliant of their own bylaws!)

And that request will be stated in the minutes.

I don't remember that you said that the Manager was giving the Treasurer's report (or speaking during that time.)

Gee, you are going to have to quote this comment that got you so riled up.
Inquiring minds want to know.

I would like to think that the issue here is the absence of an audit, not the inclusion of your statement in the minutes.

There is a tendency (oops! maybe a bad word) to think that minutes are a verbatim transcription of proceedings, such as the Congressional Record. But that is not the case. Fundamentally, minutes are a record of action taken. Most certainly documents can be attached to minutes, but in a legal sense such attachment does not make those documents part of the official proceedings.

After all, it was a meeting of the board of directors, not a meeting of members, even though it was open and members were invited to speak. I would suggest that the closest (not perfect)analogy in Congress would be the times that the House sits as a committee of the whole.

Now on to the audit issue. (Skip the stuff between the lines if you are not interested.)

---

Because audits are seen most commonly in the corporate world for stock companies, we think of audits as being performed annually by a certified public accounting firm with a resulting opinion expressed (the audit letter) by the auditor about the reasonableness of the numbers. The notion is that the auditor is telling outsiders that they can rely on the numbers in the financial reports.

I have to guess that is what a "certified audit" refers to.

It used to be that an audit letter only expressed an opinion as to the conformity of the published statements to "generally accepted accounting principles." An audit was never designed (1) to uncover fraud or other misdeeds, or (2) to evaluate the appropriateness of how funds were managed or spent.

Behind the scenes, in addition to the audit letter expressing a public opinion about the reasonableness of the financial reports, an auditor typically provides a "management letter" that discusses issues uncovered by auditors. These are issues about accounting practices and procedures the auditor believes should be brought to the attention of management (e.g. how cash is handled).

Following Sarbanes-Oxley much has changed for publicly held companies. Certified Public Accountants engaged to do an audit must make a reasonable effort to look for instances of nefarious and other less than legal activities. Under the regulations, corporate management must sign a statement accepting explicit responsibility for the integrity and legitimacy of the data presented to the auditor for review and ultimately to the public.

Accordingly, the cost of audits rose dramatically.

---

With all that said, what makes the most sense for a small to mid-size homeowners association, in my mind, is an annual or biennial review (not audit) of the accounting records (books) by an accountant.

The purpose of such a review (which is considerably less extensive than a full audit) is to provide reasonable assurance that the financial statements provided to members are a fair and reasonable presentation of the financial condition of the organization. In a review, no opinion is expressed by the accountant as to accounting principles. Indeed, it is not even necessary that such a review be conducted by a certified public accountant. A review has no particular legal standing.

Such a review could easily be conducted annually as part of the preparation of the corporation's tax return.

But keep in mind, that a review does not look for fraud. Nor does a review get into the reasonableness of particular expenditures in fulfilling the obligations of the corporation to the members. For instance, a review (and even an audit) will not tell you that you are getting the best deal on landscape maintenance. Nor will it tell you if the landscape company is owned by a relative of a board member. And it may not uncover that the bookkeeper may have a hand in the till.

The integrity of financial reports of the homeowners association are the sole responsibility of the board and its officers.

In many small associations, a review can be conducted by an board-independent member committee. And that can be sufficient to assure the integrity of the financial statements.

Of course, if you suspect fraud or other nefarious activities it may be necessary to conduct a forensic audit to uncover it.

The bylaws of the corporation ought to specify the minimum kind of audit or review required. The board can always do more than that. Unfortunately, most bylaws are so poorly written or vague as to offer guidance. For instance, one set of bylaws state, "...shall be audited annually by qualified auditors."

Finally, I think your experience is but one more example of the incredibly poor governance and leadership provided by homeowners association boards. Most simply don't have a clue what they should be doing or how they should do it. Good intentions and well meaning people are not enough.