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| Wednesday, January 07, 2009
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| IHG Insurance (National Insurance Provider) |
| Providing Community Association Insurance for over 25 years: D&O Liability, Crime Products, Umbrella Coverage and Property Manager's Errors & Omissions Liability. |
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| Author |
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EstherM
(Texas)
Posts:5
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| 12/04/2005 6:01 AM |
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Our SHOA president and treasurer have broken several by-laws but the one that we are most concerned with is that they were supposed to have an annual audit as specified in the by-laws and in Chapter 82 our Texas state regs. requiring this item. However, they have 3 documents that state "Annual Audit" on the cover sheet then there is a disclaimer that this is not an audit according to the (generally accepted accounting practices-gaap), but rather that it is a review. But our by-laws specifically call for a full blown audit and this has not been done for 4 years now. Also, I found this on the difference between an audit and a review-
Full blown audit will look at the following a review does not---
Lack of signing authorization for HOA board authority
No audit of whether or not there is a failure to add or update board member signing authorization form with Accounts Payable.
Inadequate segregation of duties, i.e. one employee responsible for all aspects of a specific type of activity resulting in a higher risk that errors or omissions remain undetected.
Deposits not made in a timely manner.
Expenditures or disbursements not fully supported with adequate documentation.
Expenditures that are not permitted due to restrictions placed on the specific funds used.
No audit of whether there checks and expenditures are being reconciled to the Financial Reporting System on a regular basis.
Computer data files not backed up sufficiently
Electronic backups not stored in a secure location remote from the original data files.
Sharing of access IDs and passwords amongst board members.
Is anyone else having this problem?? I think the board is hiding something seriously wrong!
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RogerB
(Colorado)
Posts:3724
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| 12/05/2005 1:07 PM |
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EstherM, most HOA Boards and managing Agents have no concept of what a real audit entails. Most, at best, do a limited financial review. I have even seen a so called audit done by a CPA which simply restated an inaccurate annual financial summary done by a managing Agent. And a review of that Agent's monthly financial statements showed that none were accurate and never conformed with GAAP.
Are you sure Texas statues require an annual audit? This could be extremely expensive for HOA's with limited revenue. Most Declarations and Bylaws I have seen require either an audit or a financial review annually. Starting 1/1/06, Colorado statue 38-33.3-209.5 requires GAAP accounting and statute 38-33.3-303(4)requires an audit every two years for annual revenues or expenditures of at least $250,000 or when an audit is requested by the owners of at least one-third of the units represented by the association.
Roger |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150 
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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EstherM
(Texas)
Posts:5
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| 12/06/2005 4:36 AM |
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Hi Roger: Yes, our Texas state regs require an annual audit-- thank God, because the Texas legislature recognized that we had a high level of misdeeds by condo associations and tried to address this issue legally. Here is a link to the actual state reg. in Chapter 82 which was adopted at our HOA and this reg is incorporated into our by-laws. I see a potential "violation of fiduciary duty" here by our illustrious illegal board members.
http://www.capitol.state.tx.us/statutes/pr.toc.htm
Go to Chapter 82- page 42 Sec. 82.114. Association Records.
What do you think? We have not had an annual audit since the illegal ones took over 4 years ago. |
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RogerB
(Colorado)
Posts:3724
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| 12/06/2005 7:39 AM |
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> What do you think? We have not had an annual audit since the illegal ones took over 4 years ago.
I think you should advise your Board in writting that they are required by law to have an audit every year. Provide the link, http://www.capitol.state.tx.us/statutes/pr.toc.htm. Once they are made aware in writting, if they don't have an audit they will not operating in good faith and can be held personally liable. They would place themselves in jeopardy. It would be foolish for them not to have an audit. If they won't then I would arrange to have a membership vote to require an audit.
EstherM, thanks for the link, it has a wealth of information.
Roger |
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Roger Borcherding
Official HOATalk.com Sponsor
DARCO Property Management (Colorado)
(303) 925-0150
*See legal notice below (end of page) or go to www.hoatalk.com/legal |
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LuciusD
(Colorado)
Posts:139
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| 12/29/2005 10:59 AM |
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| I would bet there are lots of associations with almost the same problem. But you are fortunate there have been at least reviews and that you have access to the documentation. For example, I know of an association whose bylaws have required an annual audit for over 20 years and there is no evidence of an audit or review ever being done. Good luck and more power to you. |
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