A good friend of mine just told me their Board’s Treasurer absconded with most of their Reserve Budget. No one’s sure when the money was first taken and they plan to pursue justice to the full extent of the law, nevertheless, this is going to hurt! Two people were prosecuted in Florida for a similar theft. For your Association, there are many steps to be taken to avoid this kind of theft. From my experience, I can name eight:
1) TRANSPARENCY – Post the bank statements of the Reserve Balances on-line. At the very least, have them available for viewing by Owners requesting to see them. A software solution that allows document storage can accomplish this task.
2) TWO SIGNATURES REQUIRED – On all checks/withdrawals over a certain amount. Whether $200 or $2,000 is your designated limit, this action reduces the ease of one person performing a bad act.
3) MONTHLY BANK STATEMENTS – Should be reviewed by the Board of Directors every month. A management company should have no problem complying. Make sure your Board takes the time to review (at least) the bottom line on every account linked to your Association.
4) VARIANCE REPORTS – Whether done by your Management Company or Board of Directors, create a summary report of where you projected the Association to be financially and where you actually are at the time. This ONE PAGE summary allows many to quickly understand your financial strength.
5) CURRENT BANK SIGNATURES – Keep the bank signature cards updated at all times. Enact transition policies that include immediately changing signatures upon electing new officers. Lack of urgency can leave unauthorized people in a strong position to remove funds.
6) TEXT AND EMAIL ALERTS – When possible, bank where certain officials receive text and/or email alerts when there are transactions above a certain dollar amount. Bad acts can be detected immediately and long drawn out remedies can be avoided.
7) VIEW ONLY STATUS ON BANK ACCOUNTS – Allow Board Members the password access to view the bank accounts on-line. With many sets of eyes potentially looking at all times, one will hesitate to remove any funds.
8) BONDING INSURANCE – Make sure your Management Company or the Board of Directors (if self-managed) is carrying the appropriate insurance to protect against theft. Speak with your Insurance Carriers to understand your best coverage options.
With today’s technology, these best practices are not difficult to put in place. Taking half of these steps should decrease the likelihood of this type of misfortune befalling your community. If you’ve had other successes in deterring theft, let me know. I’d love to hear about it!
Angela Ford
TreeFree Property Management Software
