HOAleader.com - Tip of the Week - November 13, 2009
Published: Fri, 11/13/09
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HOAs and Embezzlement:
Divide and Duplicate Tasks to Identify--and Prevent--Fraud.
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"The same person shouldn't decide which invoices get paid, write
the checks, and reconcile the bank account," says Robert Galvin,
a partner at Davis, Malm & D'Agostine PC in Boston who
specializes in representing condos and co-ops. "It's very
important that those duties be split up. In addition, there are
various ways people steal, but one of the most popular ways is
the fictitious payee. A dishonest manager will make out a check
to John's Landscaping Service that looks legitimate. The check
is then sent to a P.O. box actually controlled to the dishonest
manager. So be very careful that you look at each check so that
there's an actual invoice attached to it so you can tell it's
not being sent to a phony payee."
Also store blank and unused checks in a secure location, and
require that at least one person--or two in a more secure
arrangement--signs checks. Employees who sign checks should
always stamp or indicate in another obvious way on an original
invoice that it has been paid. Finally, ask your bank to
deliver duplicate statements to several different employees.
To get five additional ways to prevent embezzlement at your HOA
or condo association, see our new article:
http://www.hoaleader.com/members/360.cfm
Best regards,
Matt Humphrey
President
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