The WestEnd2000 Home Owners Association Board members just learned the hard way about the risk if each of them don’t keep an eye on the HOA’s money. Their Board President has been charged with stealing $35,000, leaving 24 homeowners high and dry. This New Rochelle New York Association did not have a best practice of maintaining bank statements in a place for Board members to watch their homeowners’ money. The President took advantage of the Board members and stole money from the account. Had the Board members been reviewing the checking account statement, they would have been able to stop the thief early on.
This happens more than you may think. A manager of the San Mateo homeowners association embezzled $2.8 million from the HOA. Same problem. The Board members were not reviewing the bank statements because they did not have access to the statements.
When an entity has an Office of the Board, a document management system is automatically set up for the entity with required folders and descriptions of the legal requirements for that type of entity. In Board Documents for an HOA in New York like WestEnd2000 HOA, there would have been a Financial Records folder in Official Records, with a subfolder for Bank Statements. The Board could have dragged and dropped an electronic copy of the bank statements right into their Office of the Board.
To make it effortless for Board members to satisfy their oversight responsibilities, the Board members could have set a watch on the Bank Statements subfolder so that any time the subfolder was consulted or modified, the Board member would receive a watch alert so that the Board member could log into the Office of the Board and review the bank statement that was added.
If anyone tried to modify, delete, move, etc. a file in Board Documents (like a bank statement), there would be a systematic audit log of the action so that the permitted Board member could keep an eye on things.
Five Board members eye’s on the bank statements whenever and wherever convenient for them – priceless.