RogerB (Colorado)
Posts: 5,067
Posts: 5,067
Posted:
Today there is another article on the homepage about another HOA theft by management and insufficient insurance to cover it.
Link is: http://www.broomfieldenterprise.com/ci_14174110.
I continue to harp on these thefts because they seem to happen somewhere almost every day. There are ways to protect against theft which we recommend to all of our clients, as is stated in the DARCO ad.
Does an audit guarantee against theft or of discovering theft? This one did not.
How much theft insurance is needed? In this case the fidelity insurance was woefully insufficient.
Do you let your management company sign checks? Bad idea! We prepare checks for signature and provide them with the invoices.
In the above case apparently the MA arranged with some vendors to pad their bill and kickback. We have noticed unusually high previous expenses when we take over an HOA. One example was to recommend changing to a better insurance company with a reduction in premiums of over 400% after adding fidelity insurance which they did not have!
How can theft be discovered? A thorough audit, not the type used by many HOAs - which at best is only a fancial review. We took over an HOA which supposedly just had an audit. The accounting records were in bad shape and our accountant considered it not to be an audit; plus the CPS's report was not up to our standards.
One of our recommendations for handling money is for the HOA Board set up procedures to verify expenditures on at least a quarterly basis and to verify any unusual check each month. Also, have all incoming checks made out only to the HOA.
Link is: http://www.broomfieldenterprise.com/ci_14174110.
I continue to harp on these thefts because they seem to happen somewhere almost every day. There are ways to protect against theft which we recommend to all of our clients, as is stated in the DARCO ad.
Does an audit guarantee against theft or of discovering theft? This one did not.
How much theft insurance is needed? In this case the fidelity insurance was woefully insufficient.
Do you let your management company sign checks? Bad idea! We prepare checks for signature and provide them with the invoices.
In the above case apparently the MA arranged with some vendors to pad their bill and kickback. We have noticed unusually high previous expenses when we take over an HOA. One example was to recommend changing to a better insurance company with a reduction in premiums of over 400% after adding fidelity insurance which they did not have!
How can theft be discovered? A thorough audit, not the type used by many HOAs - which at best is only a fancial review. We took over an HOA which supposedly just had an audit. The accounting records were in bad shape and our accountant considered it not to be an audit; plus the CPS's report was not up to our standards.
One of our recommendations for handling money is for the HOA Board set up procedures to verify expenditures on at least a quarterly basis and to verify any unusual check each month. Also, have all incoming checks made out only to the HOA.
