Condominium board To Audit or Not to Audit ?

Started by TonyT • 1 replies • 4735 views

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TonyT (Massachusetts)
Posts: 8

Posted:

I am a member of a new condominium board that was elected back in May 05, the board consists of 5 members, there are no surviving members from the last board. We have our property managed by a management company since 1997, there are 107 units with a yearly budget of approximately $375,000.00. To the best of my knowledge we have never had a audit of the management company, they do hire an accountant for an end of year record of the last years finances, but they do not check supporting documents to the best of my knowledge. to me this is not a true audit as in my eyes all they are doing is checking the management companies arithmetic, and they were not hired or report to the board.I guess my question is should we be auditing the management company ?How often ? and under what parameters ? Thanks allot for any assistance.

Tony
North Andover, MA.

LisaS (Illinois)
Posts: 341

Posted:

There should be an audit very few years. The period is at the discretion of your Association (or state law if applicable) This keeps everyone honest. Any management company should not be afraid if they are acting properly.

If nothing else, your Board should sit down and run through the accounts and supporting documents. It doesn't have to be fancy or formal, so long as it is thorough. ALL the documents should be provided to your association on request. It should not be difficult. ASfterall, you hired the management company to keep your reords and conduct business. Everything should be organized and easy to decipher.

If irregularities appear, contact a CPA to review the records. This is not that expensive, but letting a management company have carte blanche very well can be if it is not a good one.

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