Hi,
Most HOA boards assume they’d notice if money was being stolen. They wouldn’t – because in most associations, one person controls the money and nobody independently ever checks their work. That single gap is how a trusted treasurer or manager can quietly drain accounts for a year or more before anyone catches on.
This isn’t about distrust or about your people being dishonest. It’s about structure. If any of this describes your association, the door is already open:
- One person writes the checks, records them, and reconciles the bank account
- Nobody outside that person reviews the bank statements each month
- Vendor invoices get paid without a second set of eyes
- You’ve never independently verified the management company’s numbers
- No one compares budget to actual spending and asks about the gaps
Here is what the data actually shows:
- Most HOA fraud is low-tech – fake or inflated vendor invoices, checks written to a phony company, small amounts skimmed from dues, “borrowed” funds that never come back
- More than half of all fraud traces to weak internal controls or someone overriding them – exactly the setup most HOAs run on
- It hides for a long time – the typical scheme runs undetected for a year or more, and small associations tend to lose the most because oversight is thinnest
- 93% of the people who do it are first-time offenders – so “we trust them, they’d never” is not a control. It’s the vulnerability
- When it surfaces, the money is usually gone, and it often forces a special assessment to make the association whole
None of this needs a bigger budget to fix – it needs the duties split so no one can move money unnoticed.
That is what we set up: bank statements reconciled monthly and reviewed by someone independent, checks and vendor invoices given a second set of eyes, budget-to-actual watched, and the management company’s numbers verified rather than trusted. Controls that clear your honest people automatically and close the door on everyone else.
Reply to this email by Friday and we will set up a free 15-minute call with one of our senior audit professionals to walk through where your association’s controls are strong and where the gaps are. No filing required.
Sincerely,
—
George Dimov, CPA
Licensed and Insured
(833) 829-1120 toll free
(212) 994-8081 Fax
www.dimovtax.com