How To Bulletproof Your Association’s Biggest Asset: The Money (Pt. 1)

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If you are elected treasurer of your community association and accept the challenge, there are many policies and procedures you will need to learn before you start planning budgets, collecting assessments, and signing checks.

Board members and officers of all community associations in America should read the 35-point list of financial procedures detailed in “Escaping Condo Jail“, and consider it a survival manual.

 

It is divided into four segments:

 

  • Inheriting Old Books
  • Guarding and Vigilance
  • Cyberbanking Procedures
  • Efficiency Maximization and Return

 

In this post, we will discuss the first segment, The Takeover: Inheriting Old Books.

 

  1. Incoming treasurers or accounting managers should never accept the recording of financial books or accounts of a previous money manager. In order to be sure there is a clear line between the actions of the prior money manager and the current, a new bank account should be opened and the funds transferred to the account. The new account helps to draw the line of accountability. Liability is also reduced by the new account, since any old checks that may be lying around will then be invalid.
  2. Immediately notify the bank when officers change. Bank signature cards must always be brought current immediately following the annual election. All officers should go to the bank together to provide identification and verify signatures.
  3. For incoming treasurers or accounting managers, a “transition document” stating all association account balances— including a statement as to the purpose of the reserve account, all contracts (including the vendors’ names and the expiration dates), and any outstanding payments due for services rendered or received – should be provided to the new money manager.
  4. Destroy all old checks and deposit slips. Use a cross shredder or a document destruction company.
  5. Keep new checks under lock and guard the keys.
  6. If a board treasurer or management company refuses to give up the bank accounts (it has happened), send the person or company a certified letter demanding the rightful return of all association property – including the checkbooks. Include a deadline in the letter (i.e., “must be received by [insert date]”). Demand the records be sent within the deadline specified in your state and bylaw governance. If the records are not returned within the time period specified, immediately call the police. Report the checkbooks as stolen property.

 

In our next post, we’ll discuss, Avoiding the Sting: Guarding and Vigilance.

Until then, check our new website and feel free to live chat one of our operators about your association today!

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