February 2023

HOW SECURE... from page 21.

materials. It will help account for all purchases and will help to deter theft. 5. Liability Protection: Although controls can help prevent exposure to risk, it does not eliminate risk. Therefore, boards should carry appropriate insurance to provide reimbursement coverage in the event of a theft. While developing and implementing these controls can seem overwhelming, relying on a management company help to alleviate the burden, but will also allow boards to leverage the experience and knowledge of the man agement company. Many management companies have fully staffed accounting departments with separate groups responsible for payables, billings, financial reporting, etc. Understanding the controls in place at your specific man agement company is essential. The absence of an effective set of internal controls raises the fraud risk for your associa tion. As with most things in life, knowledge is power! Feel free to ask questions, and more importantly, ask questions when something may seem off. Something as simple as an unexpected variance or stale check can indicate a more significant issue. n

4. Physical Safeguards: a. Credit & Debit Cards: For those associations utiliz ing credit/debit cards, it is vital to have a set of well-defined guidelines in place to govern the use of the card. Examples include keeping the card in a secure location (locked drawer or office), requiring a “vendor approval” process to be completed before the card can be distributed for use, and ensuring that all members of the board receive and approve the monthly statements. b. Supplies and Materials: Associations should keep an inventory listing to track the purchase and use of

“Understanding the controls in place at your specific management company is essential.”

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