Adding a line item on the income statement, and that line does not show anywhere on the GL

We had a vote in October 2008 to remove funds from the reserves as per FL720. These moneys were to reduce our quarterly assessment. It was approved. Our Treasurer left at the end of the year with a newly elected person. He, and the new T and the majority of the BOD elected not to move that money. They also did not actually move money from the operating to the reserves as per 720 and our documents.

We know the legalities of this. A BOD member discovered all of this when he learned that the BOD had spent money from a special assessment. There is no doubt about this also. The special assessment was comingled with the operating account, not put in a special assess account. We had a very large check due which was our special assess. and we could not send this check out. Our Treasurer moved Money from the reserve account to fund the operating. This amount made the check whole and we have additional money. We know this is illegal also.

There are a few of us that understand financials. We have the GL and we have been trying to follow the debits and credits. It is atrocious. We have spoken to the management company and they agree with everything we say. We have tried to approch the the other board members. They are now spreading rumors about us not knowing what we are talking about. This is OK. my opinion..

Last night an account was called to my attention about one of the line item accounts in the Income Statement. It has no actual income and it was not on our budget amount at the beginning of the year. it is increasing our income every month. This account is not anywhere on the GL. What do you think!!!!!!!!!!1

Mary,
I agree the mgmt company has some culpability here but when the CPA, the district manager and the VP of one of the fortune 500 mgnt companys says "this is the most convoluted and improper financial I have ever seen" you know we have a problem.They have a paper trail that they provided us with. The Treasurer and President authorized them to do what they did. They are the least of our problem at this point. Our Treasurer and someone from our finance committee are CPA's. So what is happening they are telling everyone we don't know what we are talking about. I don.t care what they say but the BOD member who came to me to explain the financials wants to go to the AG. I am looking at these financials and I see a Ponzi scheme. No money is missing but they are moving funds in and out on the 1st and 31st of every month. This is happening in to many accts. This involves paper only. They are JE's.

The acct that I said is not in the GL is not in the GL. I have had 3 different people look at it and they also cannotfind it. I understand the bottom line but they have created a few accts that correlate with this acct and they have debts and credits all over them. This acct hasto be manually entered but they are offsetting it with the other accouts.

I was the previous Treasurer for 3 years. I am not an accountant buy I understand accounting proceedures. I was responbible for over 40 HOA's, condo etc before I retired. I qualify myself because over a year ago I was the one who worked with the mgmt when we changed over to them last year. They have a very sophisticated acct program. I worked with them for 3 months to transfer everything over.

I have told the BOD member to go to our previous accountants and let them look at a few accts that we know there are immpropriates in. Forget the legal aspect it's the financial I want to deal with. I told him let the acct look at these accts if he does not see anything fine. But if he does and this HOA does not want to do anything about it then he can go to the AG. He is not to blame.

Am I right?

There

Susan,

The Bod is still in control so an audit is not possible. I have sent the Bod member who is disputing these figures to our former acct firm. I worked with them for 3 years. I want them to look at 2 or 3 accounts. If they see what I think they are going to see, then he is going to go to the AG.

Your wrong about the AG. First off they have adjusted the financials, that is evident by the account that is not on the GL. They have other accounts that offset it to balance each month. It is all over the place.

Legally they have broken just about ever financial law that FLS720 wrote. They took money out of the reserve accts without a vote of 2/3 of the HOA. We had a vote last year to reduce the quartly payment. It was to be applied 12/31/08 or 1/1/09 books. It was not applied to either. They have not funded the reserve as we included in the budget,not for 9 months now

The vote we took last year we were to remove 5M from Prior interest and 5M from current interest (now both past). The way the vote read there were 2 accts in the reserve that were in the negative. These accts were to be brought up to a feww dollars each, again on 12/31/08 balances. They took out $15M out of the current year 2009 interest acct and applied the funds to the negative accounts. The accts were funded back with April 2009 balances ($950.) less than was voted. They put a special assessment in the operating account and when the money came due last week we did not have enough in the operating to cover the check. So they removed 50M to cover it.

It's the apathy I cannot stand. We called about 10 very well respected people in the community together and showed them the documents (e-ails, financials and backup). Everyone was crazed. The money is not missing and we accuse no one of theft, it is total mismanagement. The person these 10 citizens elected to lead them just backed out. I will talk to him and I know others will also. He knows these people on the BOD. We wanted to keep this internal but if these individuals do not protest then the BOD member will go to the state.

I am very friendly with the ex-AG. I spoke with him today and faxed him a few papers. His advise to me was sell my house before he goes to the state because they are going to put this HOA into receivership. He did it plenty of times when he was AG he said for less than he saw on the docs I sent him.

This is a very serious situation. The current BOD keeps coming up with crazy excuses. Last week they blamed everyone else, even the BOD member who found out about it all. Now they are saying we don't know what we are talking about. People want to believe what they want to believe. You can lie about numbers but numbers don't lie.

Nancy,

I'm still a little confused as to why the Treas is preparing financials when you have a mgmt co. Normally the mgmt co performs this duty. One other thing that seems strange is: why are they doing this if there isn't any money missing. What's the point?

As for the AG getting into this; perhaps FL is different but here in AZ and in many other states the AG will not get into resolving any HOA disputes.

Bottom line is that you've got to get enough members to agree that these board members need to go. Make the emphasis on the violation of state laws. After a new board is in place an audit can be conducted. If there are any missing funds uncovered then the new board can go after the old board legally, adding the violation of state law to the lawsuit, too.

Nancy.
I have no advise about your financial doings or misdoings. But from reading your posts, I would like to know what we can do for you? If there is really discrepancies as you have attested or the the possibility of them as you are attesting, what could we do? I doubt you could or would you want to put the hard records out for some of us to examine, let alone cast doubt on their authenticity. Reading what you are saying, it is certainly clear you have cause for concern. I think that is enough. It appears what you are doing is what you need to do to satisfy yourself. You don't have to satisfy us.

Generally, I would advice to move slowly and build support in the community. Single whistle blowing you read about, homeowners justifiable questioning of the Board management is probably more successful.

Personally, I wish you luck and hope you get satisfied, just be careful and keep complete and accurate records,

It's obvious your assn has a cash flow problem, which does not mean there's a shortage. This is can happen when assessments are collected quarterly instead of monthly. At our monthly board meeting last night, our PM spoke of the same problem that confronts her usually at the end of the quarter. Our assn is very sound financially and we have a 100% fully funded reserve. Sometimes there is a cash flow problem than cannot be helped but it really has nothing to do with faulty accounting.

According to what you've said, the new mgmt co & their new accounting sys took over almost 18 months ago. I cannot believe all the kinks haven't been worked out by now. And you say they should be doing most of the accounting with little daily input from the treas but you blame the treas for all these inconsistencies in the financial statements. If the mgmt co is using a computerized accounting system that would mean the treas cannot be doing any of the write-up work but yet you blame her for the inconsistencies with the general ledger, etc. I'm still confused. Either the mgmt co is resp for the accounting or the treasurer is. Which is it?