November 2023

TIGHTENING... from page 26.

If your electronic invoice processing system can generate and pay checks, signatures can typically be added after the invoice-approval process is complet ed, using digital signatures contained on file. In this situation, dual-board mem ber approval should be implemented, requiring two board member approvals on an invoice before payment can be processed. However, it is still a widespread practice for checks to be manually printed and signed before being sent to vendors for payment. One approval on an invoice is fine, but two signatures should be required on each check. This issue has come up the most during my audits in recent years. Some associations have let checks be signed by just one member of management, with no board member involvement. This is a procedure that should be addressed now, whether by reverting to requiring two signatures or requiring dual signatures for the first time. This pro cedure tightens your association’s finan cial controls and reduces risk immensely by sharing responsibility. The board should also update their bank’s signature cards after each election to ensure only current members are signatories on all accounts. One member of management is sufficient as long as there is always an additional board signature on all checks. Two members of management should not be able to sign a check. “One approval on an invoice is fine, but two signatures should be required on each check."

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NOVEMBER 2023