Are you a New Condo Board Member? Here are some Great Tips to Avoid Getting Taken for a Ride.
Thu, Feb 19 2015 at 12:25pm
Q: I understand that any business can be subject to fraud, and condominiums are not an exception. Being a new director, I want to ensure that I am prepared. How can we prevent fraud in our condo corporation and what action can we take if we do suspect any wrongdoing?
A: Although such incidents seem isolated, all corporations should take measures to protect themselves. The act of fraud takes motivation and opportunity. Board members must implement sound accounting principles to help eliminate opportunity. For instance, they should thoroughly review monthly financial statements, compare cheque book reconciliations to bank statements, confirm all cheques are signed by at least two board members, refuse to sign any blank cheques, monitor the petty cash fund and not accept any handwritten receipts for reimbursement. The system of internal control of cheques, cash and balances is what either keeps the fraud from taking place or allows it to happen.
All accounts should be under the name of the condo corporation. Otherwise the corporation does not own it and someone else has control of it and can take it. One of the key players there to protect the owners is the condo auditor. He/she will audit the corporation financial statements yearly. Unit owners appoint the auditor through a voting process at the annual general meeting.
These are just a few tips to help prevent theft. If anyone suspects mismanagement or fraud, the first step is to obtain the necessary information in order to provide proof. Any condominium unit owner or his or her agent appointed in writing is entitled to review the condominium records. If rock-solid evidence is discovered regarding fraud, the board should contact the police.