Embezzlement

Embezzlement cases point up the need for board directors to be hyper-vigilant about the money entrusted to them. They need to use a magnifying glass to study association financial reports – and to understand what they’re reading. Likewise, homeowners should insist on having negative budget variances reviewed at board meetings and a monthly financial budget performance report available for their review. Board members should openly review budget performance with the Finance Committee. Transparency is often problematic in planned communities and this creates a hospitable environment for fraud.

Associations nationwide have been plagued by embezzlement: by community managers, by accountants, and by board treasurers.  Associations control hundreds of billions of dollars in cash comprising assessments, interest, transfer fees and other dollars collected from homeowners. Embezzlement occurs largely because there are so few controls over association money. Whoever has a pen, the bank account numbers and PIN can too easily drain the accounts.

Read more about Director fraud on this website at http://wp.me/P2b6dW-tN and Management fraud at http://wp.me/P2b6dW-tC.

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