November 13, 2009

"The same person shouldn't decide which invoices get paid, write the checks, and reconcile the bank account," says Robert Galvin, a partner at Davis, Malm & D'Agostine PC in Boston who specializes in representing condos and co-ops. "It's very important that those duties be split up. In addition, there are various ways people steal, but one of the most popular ways is the fictitious payee. A dishonest manager will make out a check to John's Landscaping Service that looks legitimate. The check is then sent to a P.O. box actually controlled to the dishonest manager. So be very careful that you look at each check so that there's an actual invoice attached to it so you can tell it's not being sent to a phony payee."

Also store blank and unused checks in a secure location, and require that at least one person—or two in a more secure arrangement—signs checks. Employees who sign checks should always stamp or indicate in another obvious way on an original invoice that it has been paid. Finally, ask your bank to deliver duplicate statements to several different employees.

To get five additional ways to prevent embezzlement at your HOA or condo association, see our new article. Go there now »

Best regards,
Matt Humphrey
President