CAI-NJ March 2022

Best Practices for a SUCCESSFUL BOARD By Michael Mezzo, CPA WilkinGuttenplan

“Those who volunteer their time to serve their communities must maintain a sound moral compass to fulfill their fiduciary responsibi lity...”

A-Digit/Digital Vision Vectors/Getty Images

L iving within a community association requires trust. Owners and residents must rely on their elected board members to manage the financial business and operations of the association. Proper management of the association directly impacts general aesthetics, home values, and fluctuations in the monthly mainte- nance fees and/or special assessments. Those who vol- unteer their time to serve their communities must maintain a sound moral compass to fulfill their fiduciary responsi- bility to the owners and residents. Within this article, we will focus on some “best practices” for boards to serve their associations in the best manner possible. One of the first areas where boards can focus is cash. As the old saying goes, cash is king. Regardless of what type of business you are running, cash is always an area of high importance. Board members hold the responsi- bility of not only maintaining adequate cash balances

to operate the site but are also responsible for ensuring that cash is “safe” and not susceptible to theft. In order to do this, board members should ensure that sufficient controls are in place over the use and management of cash. These controls can be thought of as a system of checks and balances. Common controls over cash include segregation of duties, requiring all accounts to be reconciled on a monthly basis, maintaining an active list of authorized signers, and setting a disbursement threshold requiring multiple approvals from the board. When utilizing a management company, boards should inquire as to the controls in place at the management company level to help ensure that sufficient safeguards are in place to thwart any opportunities for fraud. In addition to the controls discussed above, boards should also work with their professionals to create a formal investment policy. Over time, many associations

CONT I NUE S ON PAGE 30

28

M A R C H 2 0 2 2