treasurer and bookkeeper the same person

Started by MichelleR5 • 3 replies • 3291 views

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MichelleR5 (California)
Posts: 1

Posted:

I believe that it is a conflict of interest for the paid bookkeeper also be the treasurer on the BOD. Is there a legal civil code that touches on this issue?

Any information would be greatly appreciated.

DanielH1 (California)
Posts: 482

Posted:

Yes, it is a conflict of interest but read on.

I did a little research on conflicts-of-interest a while back.

First, it is not illegal to have a conflict-of-interest. A conflict-of-interest is like a yellow caution light, not a red stop light. People can work in jobs where they have a conflict of interest.

Second, from what I could find, there are only two legal requirements and they are only required in some cases. You might want to check the laws in your state, though, specific to HOAs. The two legal requirements (which are not always required) are: (1) the person discloses/announces that they have a conflict-of-interest and (2) that the person abstains from voting in matters in which he has a conflict-of-interest.

In your case, disclosure is a non-issue: it is obvious that he is both Treasurer and Bookkeeper. As for abstaining, the Treasurer should (but maybe isn't required to) abstain from the vote to approve his contract.

I've seen this situation before so it isn't uncommon.

People tend to exaggerate what must be done about conflicts-of-interest. You don't need to do sealed bids or a bunch of other crazy, bureaucratic procedures or out-right bans. If you want to do that, hey, feel free but don't think that it is a legal requirement.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Michelle,

OK, so you have a paid bookkeeper and the BOD has decided to let him/her assume the position of treasurer. Does that mean that your bylaws allow non-members to be members of the board? And, if so, if that happens does that non-member board member have a board vote? If not, then there wouldn't be a conflict of interest because the "treasurer" wouldn't be voting on any issues concerning the paid bookkeeper.

I suggest you check out your state's nonprofit corp statutes for one dealing with conflict of interest. In many cases this only occurs when there is a monetary gain to the person with the conflict. Also, in many cases when the person with the conflict informs the board and the board decides to accept it then the conflict of interest rule has not been broken.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I believe that the main question is, who came first?

If the person was the bookkeeper first, it's a simple conflict of interest.

If the person was the treasurer first, it sounds like a round about way for the treasurer to be compensated for their work. This may or may not be a violation of your governing documents (i.e. can board members be paid).

That's my take on it.

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