Thursday, December 3, 2009

More financial questions your board should be asking.

One of an elected board's most significant responsibilities is the handling of the members' money. Every director should understand that being a good steward of the common funds is paramount to the job. Part of that job is spending common funds in accordance with the statutes and the association's governing documents and the other part of the equation is ensuring that there is a system of checks and balances in place to detect and prevent possible fraud.

Here are some more questions your board and association manager need to be discussing:

1. Are all supporting documents properly canceled at the time checks are signed to prevent duplicate payment?

2. Is signing blank checks prohibited?

3. Are dual signatures required on checks and must a member of the board serve as one of those dual signatories if a manager can sign checks?

4. If check signing machines are used, are facsimile signature plates adequately safeguarded, used in the presence of the custodian and controlled by using numbering devices?

5. Is custody of checks after signature and before mailing handled by an employee independent of all payable, disbursing, cash, receiving and general ledger functions?

6. Are bank accounts reconciled within a timely specified period after the end of each month?

7. Are reconciliations made by someone other than persons who receive or disburse cash?

8. Does the President, Secretary or Treasurer receive the bank statements unopened from the banks?

9. Are checks that are outstanding for more than 90 days investigated and payment stopped?

10. Does the Treasurer or other director periodically compare actual cash receipts and disbursements to budgeted cash receipts and disbursements and investigate further when there are significant variances?

If you sit on a board of directors and you have never asked or been asked any of the questions outlined in today's blog and yesterday's, it's time to find out who is minding the store.

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