HOA yearly required fianancial audits

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!

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.

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.