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Protect Your HOA Board Against Embezzlement

It is essential to know how to protect the funds of your community as a member of an HOA Board of Directors. Here are certain practices that will ensure that the accounts of the members of your HOA Board are protected against embezzlement:

  1. Know the FTI number of the association: All bank accounts should be under the name of the association and its FTI number. Make sure all members know the FTI number so the accounts are manageable if the treasurer is not present. However, the general community should not be given the FTI number.
  2. Necessitate multiple signatures on checks and request a monthly report listing payees, check numbers and amounts. Additionally, request the bank for details of canceled checks and monthly statements.
  3. Independent account for reserves of your association: As reserve funds build, keep them in an isolated account and appoint two members to manage the account.
  4. Keep records up to date: Every time a board member changes, make sure to update the signature cards on file within a day.
  5. Change bookkeepers frequently
  6. Use a safe to keep checks
  7. Contact your vendors to as if they are being paid on time: Outstanding, late or missing payment could be a sign of floating checks. It is important that the board is aware beforehand if a payment is going to be late for the association.
  8. Encourage ACH bank and debit card withdrawals: Promote automatic payment methods for rent and other invoices. Get the money automatically deposited into the bank account of the association and avoid any middlemen, if possible. The opportunity for any kind of fraud or attempt to “float” the incoming payments will decrease significantly if lesser people are entering the property management office and giving money orders to the workforce.
  9. Employ an independent Certified Public and have your accounts and bank balances independently and professionally reviewed and audited periodically.

While individually, none of these measurements may be able to stop or spot embezzlement, combined together, they will be able to put up a tough defense against it.



Author: Andrew Bateman
Articles have been Reprinted with permission from Tri-Sure.

* These articles and related content on this website are provided without warranty of any kind and in no way constitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).