CAI-NJ March 2017

FRAUD... from page 28.

standard pest control services for the association. Recommendation: Review invoice registers and check remittances month- ly, and if anything seems out of sorts or unfamiliar, follow up and request to see actual invoices. “Ensure the Funds are Accounted for” Situation: The association suffered

severe damage which was covered by the insurance policy. The total loss resulted in an insurance claim in excess of $300,000. In order to maintain accurate reporting for the claim the association decided to open a separate bank account to track the project apart from the operating fund of the association. One of the board member’s volunteered to oversee the account and convinced the rest of the board to allow her to be the point person for the claim and all subsequent repairs. There was no oversight on this account and the board member ended up spending some of the money on personal expenses. How the Fraud was Perpetrated: Lack of oversight allowed the board mem- ber to have unabated access to the funds in the insurance account and they ultimately decided to use the funds for personal use. Clue: When we, as auditors, began to reconcile the income and expenses from the claim and there was less cash in the account than the ledger suggested. Overall the bank account wouldn’t reconcile. Detection Method: As part of the audit procedures we confirm and reconcile all cash accounts. The ending cash value did not reconcile to the income and expense originally provided for the insurance account. Further inves- tigation led us to additional disburse- ments without support; ultimately those additional checks were proven to be fraudulently paid. Recommendation: A system of checks and balances should be in place so one person does not have unilateral

were alleging to complete the same service, for example, “May preven- tative spraying”. We identified the situation, presented our findings to the board who indeed confirmed that the second unknown company had never been hired to provide the

The Service You Deserve Taylor Management Company has been managing community associations for decades. We have been recognized

by the Community Associations Institute (CAI) as an Accredited Association Management Company (AAMC) and by the Institute of Real Estate Management (IREM) as an Accredited Management Organization (AMO). These designations are accorded for the highest level of ethics and professional management in the industry. Leaders in Professional Community Management for Decades!

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