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Subject: check sent ot attorneys grandmother
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NancyM2
(California)

Posts:249


07/12/2006 7:04 AM  
Dear Roger, and readers
In reference to a posting I made 7/05/06 (California Ombudsman) 8th posting down. I wrote to our MC asking why we sent a check ($1,399.50) to our "in house" attorneys grandmother. to date I have not recieved an answer. However it was discussed at our General meeting last evening that my husband attended. I was unable to attend.

They claim that the grandmother of our attorney had some work done on her house, and by mistake the bill was sent to our Mgmt Co. (and paid) My question would be what kind of systems and procedures would allow a bogus bill to be paid.

They claimed they were so grateful to me for finding it, as it had gone unnoticed. (give me a break) they certainly must have noticed it when it was redacted from my copy of the financial's. They forgot to redact the address where the check was sent though.

where do I go from here

Nancy M.
RogerB
(Colorado)

Posts:5067


07/12/2006 8:19 AM  
Nancy, your diligence may have uncovered wrongdoing but it may be difficult to prove. Your example illustrates why every HOA should sign their own checks and set up a financial review process to catch errors, theft, and/or fraud. We use the following procedures.

Our management company receives all invoices and prepares all checks. We will not sign checks or have direct access to any HOA's funds. Checks are signed by at least one authorized representative of the Board (for large checks two signatures are often required). After checks are signed we distribute them.

A computer generated record of all checks is filed with the invoices each month. Monthly financial statements are emailed to all Board members and some HOA's ask us to provide them to all owners with email. Plus quarterly bank statements are scanned and emailed to provide a independent financial confirmation. All financial files are always available to any owner.
WilliamT
(Arizona)

Posts:489


07/12/2006 8:48 AM  
Posted By RogerB on 07/12/2006 8:19 AM


Our management company receives all invoices and prepares all checks. We will not sign checks or have direct access to any HOA's funds. Checks are signed by at least one authorized representative of the Board (for large checks two signatures are often required). After checks are signed we distribute them.



Roger,

I like your procedure, and it brings up a couple of questions:

1.Who approves the invoices?

2. What is the maximum dollar amount for only one signature?

3. For maintenance and repair invoices, is the work inspected by the person who approves the invoices, prior to giving approval?

4. We have quarterly board meetings. Our MC contract calls for the MC to provide a monthly financial statement to the "board". They do not do this. They only send it to the Secretary. I questioned this and quoted the MC contract. The MC said that sending it to the Treasurer constitutes sending it to the board. As far as I know the Treasurer does nothing with that financial statement as it is never mentioned.

I disagree. Am I correct?

5. As a consequence, the board only approves the financial statement that is presented at the quartely board meeting. That means only 4 of 12 monthly financial statements are approved by the board (in addition to the annual statement).

Am I correct in stating that the board should approve every monthly financial statement? It is nor covered in our bylaws.

Thanks,

Bill
RogerB
(Colorado)

Posts:5067


07/12/2006 10:41 AM  
Bill, here are answers to your questions.
1. DARCO after establishing the invoice is valid and work has been satisfactorily completed. The invoice is attached to the check so the Board member signing the check can also check the invoice.

2. Most checks under $1000 require one signature. If the payment is for an unusual situation, not a contractural obligation, then a second signature may be sought. The Treasurer can have a difficult time finding someone home for a second signature; plus the bank only looks for one signature so there is no safeguard from theft by requiring a second signature. The method we use of having two independent parties provides a better safeguard IMO. However, it does not prevent a authorized signee from using a blank withdrawal form at the bank. But we would catch this within 30 days and advise the Board immediately as to who signed for the money.

3. Yes that is part of our management contract.

4. I could interpret this either way. But when you raised the question the Management Company should have immediately agreed to send copies to all Board members.

5. I have no Boards that approve every monthly financial statement. If a Board member has a question on any financial statement they call and we discuss it with them. An accountant can produce anything they want on a piece of paper; so independent confirmation, such as bank statements, are necessary before any financial approval or review can be completed.
WilliamT
(Arizona)

Posts:489


07/12/2006 11:50 AM  
Roger,

I appreciate your answers to the questions.

Bill
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