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Subject: Forensic Account
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Author Messages
KellyR6
(California)

Posts:21


03/26/2021 12:24 PM  
We have financial abuse in our HOA community. When an accounting employee noticed the discrepancy she politely made a suggestion to the GM, we need to seek the services of a forensic accountant. She was fired, monitored and walked to the door.

Any suggestion on what actions we might take, or your experiences.

We're under Davis-Stirling California.
KerryL1
(California)

Posts:7949


03/26/2021 12:38 PM  
Are you on the Board, Kelly? If so, perhaps the Board should approve hiring a forensic accountant.

You wrote "accounting employee." So you're saying that your HOA has such a person as a direct employee? The person did not work for a firm that provides your HOA these services? If so, I doubt the GM has the authority to fire the person. But you can fid out by reading he contract between the GM & HOA.

How do you know the"employee" "politely" made a suggestion to the GM? Were you present?

What is the nature of this "financial abuse?"

Our HOA did hire a budget specialist called a CCIM several years ago to figure out if our complicated budget was being correctly implemented. Look up that specialty to see if such an expert can help you.
CathyA3
(Ohio)

Posts:1746


03/26/2021 12:57 PM  
Do your bylaws require the books to be audited? If so, has this been done?

If not, the Davis-Stirling Act requires at least a "review" of the finances for any fiscal year in which the association's gross income exceeds $75,000): https://www.davis-stirling.com/HOME/Audit-Review.

Forensic accountants aren't cheap, so I would suggest seeing what an audit turns up before going that route.

However, it does not look good if an employee (of the PM's company?) was fired for suggesting the need for such, if that is what happened. I suspect there's a lot more to the story, though.

(FWIW, when I was on the board I welcomed audits - we want homeowners to have confidence in the process.)


KellyR6
(California)

Posts:21


03/26/2021 12:59 PM  
We do not have a management company. We have a board of directors, (9) who choose the GM. Our HOA has had problems for years with financial mismanagement. I've been a committee member for several years.

We're under a 501(C6) designated as a social club. I've had conversations with board members on the issues. Those who want financial transparency are outvoted by the majority.

I do know the woman who was fired and she is trustworthy. Our current GM was an office worker prior to moving into the position of GM. The board's desire is to have a GM in place who will take direction from them.

I appreciate your reply and continue to wonder if we are simply in a position of living with this situation.
KellyR6
(California)

Posts:21


03/26/2021 1:20 PM  
And there is more to the story. Touching on a few items, stolen property, retreats with monies hidden, increase in employees, nearly double, without an increase in services. We're on an earthquake fault with a designated high fire risk. And a board who will not answer questions when asked about our financial liability.

Thank you again Cathy. I'm going to suggest several people I know join HOA talks.
LetA
(Nevada)

Posts:1123


03/26/2021 2:17 PM  
As an owner you are entitled to review the books as they say. You would have to pay reasonable expenses for copies made to you. You should be allowed to schedule an appointment with the board treasurer or designated agent. I am not too familiar with Davis Sterling, but you should be able to bring with you your own forensic accountant.
JohnC46
(South Carolina)

Posts:10817


03/26/2021 2:19 PM  
I suggest people look at what a Forensic Accountant does. It is time consuming and very, very costly.
TimB4
(Virginia)

Posts:17531


03/26/2021 2:39 PM  
Your friend should bring their findings directly to the board.
MichaelS56
(Minnesota)

Posts:161


03/26/2021 2:58 PM  
Another example why a Board of Directors need an excellent Board treasurer. Many times a Board has to manage the Management company and the financial portion of the contract.
MarkM19
(Texas)

Posts:775


03/26/2021 4:23 PM  
Our HOA in Ca did a Forensic Audit 7 years ago and if my memory serves me correctly it was around $3800. Our annual budget was just under 1 million a year. Kelly it sounds like yours must be considerable larger than that if you have that much paid staff. Whatever it cost is what it costs to get to the bottom of it. Any board member that objects should have to do it publicly. They are not being true Fiduciaries IMO.

If you can convince the board to get it on the agenda for discussion at the next meeting that would be a start. If I was on the board I would request a Role Call Vote so that anyone voting to not want to get to the bottom of this needs to be voted out next election.
KerryL1
(California)

Posts:7949


03/26/2021 5:10 PM  
What size is your HA, Kelly? is is detached homes, condos, or?

You're saying your GM is an independent contractor is employed by the HOA, right? Does s/he have property management credentials? How many other direct employees does your HOA have? Does you HOA also hire vendors or contractors for some services like landscaping?

When you say the Board won't answer questions about "financial liability," What do you mean? Liability for what?

You Board is correct is wanting a GM who takes direction form the Board. that's how it's supposed to be.

I still think you need to review the contract with this GM & your HOA.

MaxB4
(Maine)

Posts:74


03/26/2021 5:32 PM  
Posted By KellyR6 on 03/26/2021 12:24 PM
We have financial abuse in our HOA community. When an accounting employee noticed the discrepancy she politely made a suggestion to the GM, we need to seek the services of a forensic accountant. She was fired, monitored and walked to the door.

Any suggestion on what actions we might take, or your experiences.

We're under Davis-Stirling California.



Based on experience, you have a potential problem. I would find out from the former employee what happened. If hat can't be done, contact the Department of Justice, State Attorney's office. This may be the start of embezzlement, either on behalf of the Board or the GM, or a combination of both.

Office of the Attorney General
California Department of Justice
Attn: Public Inquiry Unit
P.O. Box 944255
Sacramento, CA 94244-2550
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