How To Have Accountability For Your Maintenance Fees,
Best Practice Tips From Maryland
August 22, 2012 George Gombossy
Thanks to the Maryland Homeowners Association – a volunteer group similar to the Connecticut
Condo Owners Coalition, except they have been in operation for more than 10 years:
To strengthen good governance in your community, MHA recommends that your board
put in place a number of best practices designed to provide greater administrative
transparency and accountability over daily operations. When such services are contracted
via a management company, the Board remains the legal entity that ultimately is held
responsible for fiscal mismanagement, such as accounting lapses and/or poor bookkeeping.
Board members should be diligent about the following:
Require the Board Treasurer to hold the management company accountable for the
daily business operations of the association. A treasurer’s report to the Board
should include the specifics of income, expenditures, contractual bids and services
rendered. Financial transparency is increased when Board and association
members review and/or modify the terms and provisions of the management
Since e-accounts now have images of the actual checks written, a board member
should view these checks electronically and compare them against the figures in the
Board Treasurer’s monthly reports. Verify if the required dual signatures policy
(presumably the signatures of a manager and a board member), for any expenditure
of association funds is indeed being followed.
No one person should have sole control of association funds. Checking accounts,
certificates of deposit and reserve funds need to have built-in safeguards, for
example, rules for the processing of transfers and withdrawals. If co-signing checks
is inconvenient, one or more board members should have electronic read-only access
to all association accounts.
Require the bank to send a duplicate monthly statement directly from the bank to
the Board Treasurer so that the treasurer can compare the bank’s figures against
those in the monthly report from the management company.
Require a Board member, other than the Treasurer, to periodically compare
invoices against checks paid.
Before submitting Income Tax returns, consult an independent Certified Public
Accountant (CPA), and get a yearly audit report. The association board should
select the CPA rather than have the management company make the selection.
Require the CPA/Auditors to submit audit report findings directly to the Board.
It’s hard to believe that a neighbor or professional manager could mismanage association
funds but it does happen. Installing safeguards can add to the financial stability of your
community. Tracking transactions, reviewing reports and examining contracts rank high
on the best practices list.