WilliamT (Arizona)
Posts: 489
Posts: 489
Posted:
Here is the scenario:
1. A board votes and approves to give the MC rep a bonus at Xmas time.
A couple of months later a check is discovered in the register that was made out to the President for the same amount that was approved for the MC bonus. The check register did not state what the check was for.
On questioning the MC rep about what that check was for, it was revealed that the check was for the MC rep's bonus and was written to the President, who then gave the MC rep cash. The Board was not made aware of this transaction.
Questions:
What would you do if you discovered this type of transaction?
Could this be called an inappropriate collusion, a segregation of duties, and a violation of many basics of a sound accounting/internal control system?
2. In this Association, the MC does the following:
Writes the checks
Signs the checks
Approves the invoices
I know that no one checks to see that work on the property has been perfored properly, and I have gone to check several times and discovered shoddy work. We do not have a maintenance committee or a budget committee.
3. Our Bylaws require an "Audit" and Audits need to be performed by an independent CPA firm. State law says if our bylaws require an Audit, then that is what the law requires. So by not performing an Audit the Board operates in conflict with the Bylaws, and in violation of State law.
When asked about the Audit, the MC rep stated that the MC company provides us with a Certificate which suffices for the Audit. She did not say what type of Certificate; Audit, Review, or Compilation, but she would have to have meant a Compilation. However they have not provided us with a Certificate of Compilation.
My feeling is that a Cert of Compilation is worthless when it comes from the same company who is writing the checks, signing the checks, and approving the invoices, and does not go into any review of documents that would uncover suspicious transactions.
A Compilation also does not substitute for and meet our requirements for an Audit.
Our Bylaws require the Treasure to have the Audit performed. It states: "...shall cause an annual audit of the Association books..."
The duties of the President in the Bylaws are: "...shall see that orders and resolutions of the Board are carried out..."
Questions:
Is it the ultimate duty of the President to see that the Treasurer does his job and has the Audit performed?
What would you do to to rectify this situation as it currently stands, with our current Bylaws requiring an Audit, but it has not been performed, and the President is not interested in doing anything about it?
For the future we can determine if we should amend the Bylaws to require a "Review", providing that we have some more checks and balances by the Board members.
Thanks for your help,
Bill
1. A board votes and approves to give the MC rep a bonus at Xmas time.
A couple of months later a check is discovered in the register that was made out to the President for the same amount that was approved for the MC bonus. The check register did not state what the check was for.
On questioning the MC rep about what that check was for, it was revealed that the check was for the MC rep's bonus and was written to the President, who then gave the MC rep cash. The Board was not made aware of this transaction.
Questions:
What would you do if you discovered this type of transaction?
Could this be called an inappropriate collusion, a segregation of duties, and a violation of many basics of a sound accounting/internal control system?
2. In this Association, the MC does the following:
Writes the checks
Signs the checks
Approves the invoices
I know that no one checks to see that work on the property has been perfored properly, and I have gone to check several times and discovered shoddy work. We do not have a maintenance committee or a budget committee.
3. Our Bylaws require an "Audit" and Audits need to be performed by an independent CPA firm. State law says if our bylaws require an Audit, then that is what the law requires. So by not performing an Audit the Board operates in conflict with the Bylaws, and in violation of State law.
When asked about the Audit, the MC rep stated that the MC company provides us with a Certificate which suffices for the Audit. She did not say what type of Certificate; Audit, Review, or Compilation, but she would have to have meant a Compilation. However they have not provided us with a Certificate of Compilation.
My feeling is that a Cert of Compilation is worthless when it comes from the same company who is writing the checks, signing the checks, and approving the invoices, and does not go into any review of documents that would uncover suspicious transactions.
A Compilation also does not substitute for and meet our requirements for an Audit.
Our Bylaws require the Treasure to have the Audit performed. It states: "...shall cause an annual audit of the Association books..."
The duties of the President in the Bylaws are: "...shall see that orders and resolutions of the Board are carried out..."
Questions:
Is it the ultimate duty of the President to see that the Treasurer does his job and has the Audit performed?
What would you do to to rectify this situation as it currently stands, with our current Bylaws requiring an Audit, but it has not been performed, and the President is not interested in doing anything about it?
For the future we can determine if we should amend the Bylaws to require a "Review", providing that we have some more checks and balances by the Board members.
Thanks for your help,
Bill