Homeowners all over the country have read alarming news accounts of management companies and board members embezzling funds from community associations—the homeowners’ money. Our association follows a few hard-and-fast rules to protect your money. They include:
- We keep cash transactions to a minimum.
- When a cash transaction is absolutely necessary, we make sure that more than one person handles it.
- We never make out a check to cash, and we don’t make out a check that’s payable to the bank unless it is to pay a bank obligation, like a loan or mortgage.
- We never make a payment to a vendor in cash. Instead, we always write a check.
- We separate responsibilities.
- The person who writes the check is someone other than the person who approves the expenditure.
- The person responsible for recording transactions and balancing and reconciling accounts is someone other than the person who approves the expenditure or the one who writes the checks.
- We don’t co-mingle funds, such as operating accounts and reserves.
We take additional safeguards such as:
- We only accept checks made payable to the association. We never accept a check made out to a board member.
- We deposit incoming checks daily, and we have a lockbox account at the bank for collecting assessments.
- We require two signatures on check deposits, particularly for large amounts. We never use a stamp as a signature on a check.
- We keep blank checks securely locked up at all times. All association checks are numbered and each outgoing check is listed on the check register. If a check is missing, we report it to the bank immediately.
- Check deposits and payments are reconciled with bank statements frequently.
- The bank is notified immediately when authorization for writing checks changes, i.e., when a board member term expires or a new association employee is hired.
- We make sure the association has adequate insurance coverage for embezzlement or fraud.
- When a new staff member is hired or someone new in the association is authorized to handle finances, we check each person’s background and credentials thoroughly.
