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Subject: internal controls to prevent theft

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JC3

Posts:288

05/18/2008 4:26 PM
RogerB has posted: The solution is for the Board to: 1) establish internal controls which prevent the opportunity for theft; 2) monitor all financial reports monthly to catch problems promptly; and 3) always carry theft insurance. What are the internal controls to prevent the opportunity for theft? English, please, I am not an accountant...

SusanW1
(Michigan)

Posts:1533

05/18/2008 4:33 PM
Have lots of eyes on the bookkeeping. I think it can be as simple as: 1)Don't let the treasurer reconcile the checking account. 2) Make sure that receipts are provided for EVERY expenditure. 3) Make sure that checks are not made out to board members without strict documentation for reimbursement. 4) Always have 2 people count the money.

PatrickH
(California)

Posts:191

05/19/2008 8:02 AM
Hi JC, At our HOA, we have the financials set up so that: The property manager holds the checkbook, not a Board member. All bills and invoices are sent to the property manager. The property manager makes out the checks and attaches the invoices to them. The property manager brings the checks and invoices to the Board meeting. The Board reviews the checks and invoices to make sure they are correct. TWO Board members must sign each check for it to be valid. This system works well for us because we have Board meetings every month. If your Board meets less often, you may to go with some other set up. Good luck.

RogerB
(Colorado)

Posts:3625

05/19/2008 8:44 AM
JC3, our internal controls for checks include: 1) Incoming checks are aways made payable to the HOA 2) For outgoing checks we maintain the checkbook and prepare all checks after verification of accuracy of invoices. The checks and with attached invoices are reviewed and signed by a designated Board member. When required by the Board a second signature is obtained. Two signatures can provide a feeling of security however banks in Colorado do not require a second signature and do not know the signature requirements of the organization. 3) All contractor checks include the attached mechanics' lien stamp.
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Forums > Homeowner Association > HOA Discussions > internal controls to prevent theft

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