write/sign checks from HOA fund

Started by KW3 • 7 replies • 2626 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

KW3 (California)
Posts: 146

Posted:

Hi, Another question about HOA financial operation: who should be the one to write/sign checks from HOA bank accounts to pay its expenses? Right now as to my knowledge, the "manager" of the MC writes/signs all the checks from HOA's opr account to pay the opr expenses; the President of the HOA Board AND another BD sign the checks from reserve account to pay res exp. Before I knew of this from MC, I was told by the president that all checks (have to be) are signed by him (the president) and another BD. Now I grow uncomfortable not only all the opr checks are written/issued by MC, but also it seems the president is not aware of this matter.

Is this a common practice that MC would write/issue opr checks to pay the contractors without BD's signature? (MC's explanation: in a timely manner, it's impractical to get hold on BD for their signatures.)

Thanks for response.

MaryA1 (Arizona)
Posts: 7,043

Posted:

KW,

I wouldn't say it's a common practice for the manager to sign all assn checks; however, I know that some BOD's operate this way. IMO, either the Pres or the Treas should be signing the checks, whether from the operating fund or the reserve fund. BTW, I'm sure the Pres knows the manager is signing the checks from the operating account. For whatever reason, he/she just didn't want to admit that to you. Perhaps the BOD has not agreed to this -- maybe only the Pres has agreed because he/she doesn't want to be inconvenienced????

Know that even if the BOD requires 2 signatures on a check most banks only look for one signature.

KW3 (California)
Posts: 146

Posted:

Quote:

I wouldn't say it's a common practice for the manager to sign all assn checks; however, I know that some BOD's operate this way. IMO, either the Pres or the Treas should be signing the checks, whether from the operating fund or the reserve fund.

Ok, on bottom line, I would like to know what, if exists, is/are the possible negative effects on HOA from this questionable practice?

RogerB (Colorado)
Posts: 5,067

Posted:

Ok, on bottom line, I would like to know what, if exists, is/are the possible negative effects on HOA from this questionable practice? Fraud and/or theft immediately come to mind. I read at least two cases each week about such cases when there are not checks and balances to prevent theft.

KW3 (California)
Posts: 146

Posted:

Quote:

Fraud and/or theft immediately come to mind. I read at least two cases each week about such cases when there are not checks and balances to prevent theft.

Do you mean if the board does not check their bank account balance but lets MC write/issue checks freely, possible theft couldn't be prevented? It makes sense as you have read such cases did happen and still happening. How can board members not consider this kind of fall out? Can "trust" play a role here practically? (i.e., if I bring up the issue, will other board members use "trust" as a backfire to me?)

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Do you mean if the board does not check their bank account balance but lets MC write/issue checks freely, possible theft couldn't be prevented?

It really doesn't matter who signs the checks. The banks don't care and they dont check. If it has a signature, its good. What matters is who has the checks and bank statements. You can trust your MC to write checks, but you need copies of the bank statements to check over his work.

Trust...... but verify.

GlenL (Ohio)
Posts: 5,491

Posted:

Given the ease with today's computers and printers to forge items; if the bank statements are not able to be viewed on-line, the HOA should rent a PO Box and have the statements sent directly to them. They can then copy and forward them to the MC or for a small fee most banks will send duplicate statements to the HOA.

Studies show that 5 out of 4 people have problems with fractions

RogerB (Colorado)
Posts: 5,067

Posted:

The procedures we use.
A/R
Management company receives payment of assessments and other income checks; enters the information into peachtree accounting; independently prepares deposit slips with a carbon copy; deposits checks; staples receipt to cc of deposit ticket; provides monthly accounting reports to all Board members; provides copies of bank statements to all Board members quarterly upon request.

A/P
Management company recieves all invoices and checks for accuracy; prepare 3 part checks for signature by an authorized signer; provides invoices and checks for signature; mails payments; provide check register monthly; provide copies of band statements to all Board members quarterly upon request.

All financial information is filed by month and by year. Financial reviews are recommended on a quarterly basis. The management company provides all records requested for an audit or finanacil review by a CPA.

Our contracts allow transfer of funds between accounts but not to be a signer on any account. As I have stated numerous times on this board "never allow a management company to be a signer on any financial account!"

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here