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Subject: Missing Money??
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Author Messages
JenniferD8
(Michigan)

Posts:53


05/17/2020 1:42 PM  
Hi,
I was appointed to my condo board last fall. As I'm adjusting to my new role, I'm uncovering some things that are a bit questionable -- board members waiving their HOA fees, etc. The most troubling is that the treasurer supplied the board with an audit that was completed earlier this year. It states that we received $352,420 in association fees in 2019. Our dues are $180 per month and we have 181 units. On top of that 170 units pay an additional $45 per month to the association for cable TV. This just isn't adding up. I plan to speak with the board to seek an explanation. We either have residents not paying or something else. What's your advice?
JohnC46
(South Carolina)

Posts:9569


05/17/2020 1:56 PM  
Have your figures together and presentable, then ask.
GenoS
(Florida)

Posts:3866


05/17/2020 2:05 PM  
Jennifer, double-check the math and ask away. (181 x $180 x 12) + (170 x 45 x 12) = $482,760. Why does the audit show a total of $352,420 in revenue from owner assessments? Where's the other $130,340?

Re-read the auditor's report. I would think an auditor would have something to say regarding that, maybe in the report's notes or footnotes.

Press for an explanation from the Treasurer (or the rest of the board if you're the new Treasurer). Keep in mind there MAY be good reasons for the discrepancy. Keep asking for an explanation until you're satisfied with the answers.

Also, if you would... were you appointed to fill a vacant position on the board or were you elected? Are you also an officer? How many people make up the board? How long has each served? Do all the directors have their assessments waived? Does the audit report mention that anywhere?
JenniferD8
(Michigan)

Posts:53


05/17/2020 2:35 PM  
Hi,
I was appointed, since I was the only person that showed interest in filling the vacant position. Since I've been on the board, two individuals have resigned. Their positions are still vacant. The board should consist of 7 board members. The president and treasurer have been on the board since the mid-to-late 90s. The other board members are relatively new -- within the past three years. I'm not sure who has their association fees waived, since the treasurer won't disclose it. He states that it's a privacy issue. I have been paying my monthly fees, because it seems fishy.
GenoS
(Florida)

Posts:3866


05/17/2020 2:40 PM  
It's very fishy and to claim it's a privacy issue is beyond fishy. You, as a board member, have every right to have that information.
MarkW18


Posts:1185


05/17/2020 2:43 PM  
Geno is calculating the number by using accrual accounting, while Jennifer's numbers may be based on cash accounting.
JenniferD8
(Michigan)

Posts:53


05/17/2020 3:16 PM  
Our treasurer uses cash accounting methods. I also reviewed the monthly treasurer statements that have been provided. They are showing that we aren't receiving the correct amount of monthly fees. The treasurer has stated that no resident is delinquent in paying their fees. It just doesn't add up.
MelissaP1
(Alabama)

Posts:9410


05/17/2020 3:44 PM  
I am confused. Why would the additional money show up under Association dues? Sounds like that is for cable which is a bill for additional services. Find it kind of strange it's added on as an extra charge rather than part of what dues pay for. Unless people decided something like since not everyone wants it then separate it from the dues.

Former HOA President
TimB4
(Virginia)

Posts:16803


05/17/2020 4:23 PM  
Typically, the Board does not have the authority to waive assessments. They may waive late charges, but not the actual assessment.


If the assessments were waived, ask the Treasurer if he issued 1099-Cs as required?
When the say no, ask why not and call for a vote to have such documents issued.

See: About Form 1099-C, Cancellation of Debt

Topic No. 431 Canceled Debt – Is It Taxable or Not?


If the cancellation was to board members for their duties, then ask where the 1099-misc is (as this would be considered payment).

If any assessment was waived, ask to see the meeting minutes where the board approved the waiver.
TimB4
(Virginia)

Posts:16803


05/17/2020 4:38 PM  
In case those links are not working:

https://www.irs.gov/forms-pubs/about-form-1099-c

and

https://www.irs.gov/taxtopics/tc431
MarkW18


Posts:1185


05/17/2020 6:55 PM  
What period does your fiscal year run?
SueW6
(Michigan)

Posts:703


05/18/2020 5:42 AM  
Yes - for what period was the audit done? You may be seeing partial revenues.

The auditor would have left a report. Read that.
BenA2
(Texas)

Posts:732


05/18/2020 2:23 PM  
Nothing here raises red flags without more information. Presumably you are not going to collect all the dues that are owed. The cable TV fees are likely not listed with regular dues if they are paying for an additional service.

You are right to ask questions but I would no approach it with the idea that something must be wrong. I would look at the whole audit before making any assumptions.
ND
(PA)

Posts:457


05/18/2020 5:43 PM  
Posted By BenA2 on 05/18/2020 2:23 PM

You are right to ask questions but I would no approach it with the idea that something must be wrong. I would look at the whole audit before making any assumptions.




I agree with this.

However, if waiving of fees is in fact being done, then this is definitely a red flag item which is most likely improper and inappropriate. Others have already sufficiently detailed this aspect.

But I would tread lightly before coming in and making claims of shenanigans. If you're wrong, then you've very quickly ostracized yourself from the others.

However, it seems you've been a Board Member for about half a year or more. I assume you are getting monthly financial reports and involved in other transactions of approving items for payment and whatnot. Is all of that making sense and accurate, or is money missing? If you have questions, then you should be asking them . . . not in an accusatory way, but in a way where you're trying to understand. And if it still doesn't make sense or add up, then consider how much deeper you want/need to dig.

Definitely read and re-read the audit, ensuring you absolutely understand what it's saying/reporting.
JenniferD8
(Michigan)

Posts:53


05/18/2020 6:53 PM  
Our fiscal year is October thru September.
JenniferD8
(Michigan)

Posts:53


05/18/2020 7:03 PM  
The board only meets April - October each year. I'm trying to expand this to meeting monthly, since it makes more sense. In the off season, we communicate via email if there are any issues. Our in-person meeting in April was cancelled due to COVID-19. At the May meeting, the treasurer provided the financials for the past 6 months. There doesn't seem to be anything out of the ordinary -- just insufficient resident fees being collected/reported. My thought is if a co-owner is late or not making payments, then shouldn't it be brought to the board's attention?
MarkW18


Posts:1185


05/18/2020 9:16 PM  
Who handles the bookkeeping, the treasurer or an outside company. Ifg an outside company, it shouldn't be difficult to obtain more detailed accounting records to pinpoint discrepancies. If the treasurer handles the accounting, good luck.
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