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Subject: I'm the treasurer but have no insight into the finances!
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MelissaJ5
(Texas)

Posts:22


07/30/2020 9:17 AM  
I was elected to our board in June and voted into the treasurer position. The previous treasurer was the HOA mgr and the president. Both are gone but we have a new HOA manager and she is essentially the treasurer. I was "trained" by the president before he left but he basically went over how to read financials, which I already knew and was told that if I needed to see anything to just ask the manager and she can get me whatever info or report I needed. If anything went down and money was misappropriated I would be in hot water. I need advice on how to handle this. We use TOPS software and I don't have access but was reassured there is no way to really do anything inappropriate with it based on how the software works. I need to have insight but how much? I think the manager and new president would be pretty open to me having more insight but what is expected and reasonable? I don't need to sign or see every check going out but I need more control and insight. HELP! I feel like I have a meaningless title.
BillH10
(Texas)

Posts:527


07/30/2020 9:38 AM  
You should immediately request the association monthly financial reports for this year through June, and the budget for 2020. If it is not included in the monthly report, you should ask for the collections report to include a list of those accounts on a payment plan and their status.

You should expect to receive a monthly financial report, around or before the 15th of the following month.

Once you have reviewed those, you should understand the assessment income and expenses and will be in a position to ask other questions.

It probably would not be a bad idea to ask for copies of association meeting minutes for the last year.

Since you are new to your position, ask questions and learn before you take or suggest any actions unless the Association is burning through the Reserve Funds to meet operational expenses.

You and the community manager should begin the 2021 budget planning process in August.
JohnC46
(South Carolina)

Posts:9678


07/30/2020 9:58 AM  
Mel

What you want is financial oversight. Our MC handles all our money and pays our bills. They prepare a 25 or so page Monthly Financial Report. We can see every penny coming in, every penny owed, and every penny paid out and to whom paid. The Pres and myself (VP & Treasurer) review/discuss this report and if any questions arise (rarely) we call the MC for clarification.

The bottom line on financials are: Is the income the same as forecasted (Budgeted) and is the outgoing the same as forecasted (Budgeted)? Are we on Budget and if not, how do we get there?

There can be ups and downs when looking at only one month. Maybe more people paid their dues that month thus higher income. Maybe expenses were higher that month thus more outgoing. Look closely at YTD (Year To Date) for an overall look at ones financial health versus get excited by any one or two months financials.

Become familiar with the Yearly Forecasted Budget. Learn it inside and out.
DouglasK1
(Florida)

Posts:1519


07/30/2020 10:07 AM  
Posted By MelissaJ5 on 07/30/2020 9:17 AM
I need to have insight but how much? I think the manager and new president would be pretty open to me having more insight but what is expected and reasonable? I don't need to sign or see every check going out but I need more control and insight. HELP! I feel like I have a meaningless title.


Bill give great advice. You say you don't need to see every check, but I would say you should examine the check register and make sure you understand what each check is for and agree that it is a valid HOA expenditure.

You should also have access to original bank statements or on-line access to the account so you can make sure they match the association records.

While the vast majority of MCs are honest, fraud/embezzlement does occasionally occur and you should be watching for it. Checks made out to phantom vendors are one way that can occur. Another is just stealing from bank account but not showing the withdrawals in the records, make sure the balances on the monthly bank statements match the balances on the financial reports.

Escaped former treasurer and director of a self managed association.
KellyM3
(North Carolina)

Posts:1529


07/30/2020 10:53 AM  
Posted By JohnC46 on 07/30/2020 9:58 AM
Mel

What you want is financial oversight. Our MC handles all our money and pays our bills. They prepare a 25 or so page Monthly Financial Report. We can see every penny coming in, every penny owed, and every penny paid out and to whom paid. The Pres and myself (VP & Treasurer) review/discuss this report and if any questions arise (rarely) we call the MC for clarification.

The bottom line on financials are: Is the income the same as forecasted (Budgeted) and is the outgoing the same as forecasted (Budgeted)? Are we on Budget and if not, how do we get there?

There can be ups and downs when looking at only one month. Maybe more people paid their dues that month thus higher income. Maybe expenses were higher that month thus more outgoing. Look closely at YTD (Year To Date) for an overall look at ones financial health versus get excited by any one or two months financials.

Become familiar with the Yearly Forecasted Budget. Learn it inside and out.




Exactly!
ND
(PA)

Posts:471


07/30/2020 11:31 AM  
You need both of what JohnC46 and DouglasK1 recommended.

You need original bank statements as well as the financial reports prepared by the MC. While in most cases, MC's are totally honest and doing what they are paid to do, the reality of financial reports is they can be made to say whatever the preparer wants them to say. So you also need original bank statements to use for verification of info in financial reports. Important to trust but verify.
ND
(PA)

Posts:471


07/30/2020 11:42 AM  
Personally, I would refuse the title of treasurer, unless I had possession of what I felt I needed to carry out the duties of treasurer. If issues arise, I would certainly expect the treasurer to be called to the carpet. If the response was . . . "well I never saw any financial documents or knew what was going on with the money", then that's unacceptable from any Board Member of Officer, but especially the Treasurer.

That said, I can't really follow who all the players are in your HOA/Management scenario. You need to get a handle on who are the Board Members, Officers (Pres, VP, Treasurer, Secretary, possibly others), and/or Manager/Management Company (MC).

Oftentimes, individual Board Members also serve in the Officer roles, but that's not always the case and not always required. Further, while it's typical that all Board Members must also be HOA Members, it's possible that some Officer positions do not need to be HOA Members. It gets a bit confusing and often people confuse Board Members and Officers. But it should be spelled out clearly in your docs and it's important that your HOA is operating IAW them.

Manager/MC may do the accounting; however, there is also the Officer position of Treasurer that has similar and additional responsibilities.
GenoS
(Florida)

Posts:3925


07/30/2020 11:49 AM  
Posted By DouglasK1 on 07/30/2020 10:07 AM
... You say you don't need to see every check, but I would say you should examine the check register and make sure you understand what each check is for and agree that it is a valid HOA expenditure.

This was my first reaction, too. You DO need to see every check going out. Or, at least, a record of every check that went out, how much it was for, who it was made out to, etc. Sometimes outgoing payments aren't actually physical checks, but electronic transfers. Those you should be aware of as well. If there's ever money "disappearing" or going missing, it's the record of checks and electronic payments where the problem can be spotted first.
JohnC46
(South Carolina)

Posts:9678


07/30/2020 12:03 PM  
Our MC uses a bank lock box system. Our dues are monthly and paid to the bank in several ways:

1. Electronic transfer with the bank notifying owners (Email) about 3 days before the withdrawal will be made. This is how I pay.

2. Credit card charge paid to the bank. There is a $5.00 service charge for this.

3. Via personal check with a payment book we send to all owners the first of every year. Not even sure where my payment book is. Still have a few old timers that pay this way.

All dues payments are forwarded to the MC. Our Monthly Financial report show dues amounts paid and paid by whom and each transfer to the MC. Our Monthly Financials also show a check register which shows check#, amount, date paid, and who paid to.

The Pres and I (VP & Tres.) have a "code" we can use to stop all bank payments to the MC.

The MC can make deposits to our Reserve Funds (two funds, each in a different bank) but they cannot withdraw any money from the funds. Only the Pres and I (VP & Tres.) can withdraw and it takes us both being there and signing to do so.

There is no full proof way to prevent a cheater. Cheaters cheat.

Getting back to the OP. The main function of a Treasure is to assure the income covers the out go and adjust if necessary. Also to keep an eye on all financial transactions. Trust but verify.
MarkM19
(Texas)

Posts:623


07/30/2020 5:07 PM  
Melissa,
All of this advice seems great but I hope it is not scaring you out of being a Key part of the Board. You really are not expected to be a Financial Advisor to be the Treasurer of your HOA. IMO what you need to do is have your eyes wide open and ask questions as others have mentioned. Challenge when you see things that do not look normal. We are all volunteers and we need to do our level best to fill Board positions to the best of our abilities.

I spent my first 4 years serving as Treasurer and we had a Part time manager (Portfolio Account) they do all the heavy lifting and should give you any extra data you request to help you do your supervision.
BenA2
(Texas)

Posts:758


07/30/2020 5:45 PM  
I would, at minimum, ask for monthly reports and a yearly audit. I think you should also have access to the software. That should obviously be limited to a few people but you are the treasurer and need to be able to do anything the manager normally does.

You probably know this already but the statement, "there is no way to really do anything inappropriate..." is not true with any system or software. Any good software will make fraud difficult to hide as long as your have adequate and oversight and audits.
BillH10
(Texas)

Posts:527


07/31/2020 6:57 AM  
Melissa, a point of clarification as you used the term HOA in your original post (as opposed to condominium).

While condominium associations in Texas are required to have an annual audit, there is no such requirement for HOAs other than as described in the Bylaws or Declaration of the Association.

Ben's suggestion is a good one but if you are told there has been no audit, it may be because it was not required. Perhaps not the best way to conduct business, but not necessarily a red flag either.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:36 PM  
It does say in our covenants that we are to conduct yearly audits.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:38 PM  
It is overwhelming but I appreciate the advice. I really do feel like the community puts a lot of pressure on us board members and I think at times it's a bit unrealistic. I just want to do a good job...that is of course after I really understand exactly what it is I am supposed to do! Thank you for your reassuring words. I really appreciate it.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:39 PM  
I absolutely agree that if there's a will there's a way. People find ways to embezzle millions of dollars and don't get caught for decades. At the very least, I will request access to our software just to have an extra set of eyes on it.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:40 PM  
Yes, you are absolutely right. I will talk to our HOA manager about giving me access.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:42 PM  
You are so right. I will definitely have a meeting with our HOA manager and discuss this. It is very concerning that I am in the dark right now. I should be able to see everything. Thank you for the advice.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:47 PM  
Thank you for this advice! I do have access to minutes from last year and can see our monthly financial reports. This forum has been super helpful as I have had no idea where to even begin. Like I mentioned in my OP, the previous president basically said here's the financial report, here's how you read it. Let the HOA manager know if you have any questions or need any other reports. That's great but let's take a few steps back and talk about why this report shows this amount here, etc. I can't do that after the fact! So yes, I will be meeting with our HOA manager asap.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:49 PM  
Thank you for all of the great advice. This forum has been so helpful and I at least now know what I need to ask and look for.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:50 PM  
That sounds reasonable and I will request this from here on out. Thank you!
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:51 PM  
Thank you! I will request this info going forward.
MelissaJ5
(Texas)

Posts:22


08/04/2020 8:53 PM  
This is very helpful. Thank you!
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