How to Protect your Condo Association from Theft, Fraud, and Embezzlement

Posted on: May 9, 2019 by Javier iSure

Condo associations and HOAs continue to be victims of theft, fraud, and embezzlement, and in some cases, these issues can last around 18 months to clear up, with some dragging on even longer. For HOAs, this can take time away from tending to a community’s needs as well as finances away from being able to uphold services.

While community association insurance can help condo associations from having to deal with long, drawn-out legal issues, being aware of issues related to theft, embezzlement, and fraud can help to alleviate liabilities and stress among members.

What to Look Out For

There a number of key signs that condo association members can be on the lookout for to stop issues before they start. If certain signs are noticed, they should be investigated further to make sure everything is transparent and everyone is being kept safe.

  • Bank Deposits: If bank deposits are significantly delayed, this is a major red flag. You know when deposits should have been made and processed, so anything out of the ordinary should be checked on. If deposits are regularly late by a day or two, check with the bank if there are any issues on their end. If not, then this should be looked into.
  • Regular Payments to Single-Use Vendors: If there are regular payments being made to a vendor that the condo association used only one time, it’s an easy sign that there’s something odd happening. Someone who is familiar with the vendors that are used on a regular basis by the association should examine bank records.
  • Petty Cash Troubles: Petty cash should be monitored on a regular schedule to make sure there are no discrepancies. If the petty cash fund disappears on a regular basis, this can be troublesome.
  • Paying for Services Not Yet Received: Sometimes associations pay ahead of time for contractors, which is a normal thing. But if a contractor has not come to complete the job, then alarm bells should be ringing.

How to Prevent and Decrease Fraud, Theft, and Embezzlement

While it’s not completely possible to cut out all of these issues, they can be significantly cut down with the right prevention techniques and awareness. By implementing some effective rules and policies, you’ll keep the association’s funds safe and protected.

  • Look Over All Information: It’s not a hard thing to skim over financial data or skip over some sections, especially if it’s routine or easy to pass along. But simple skipping over this information may mean the difference when trying to spot irregularities. Make sure you take the time to slow down and look over every line in every financial record to spot any details that seem out of sorts.
  • Acquire Insurance: As mentioned above, having condo association insurance will help to provide financial protection against any legal issues that can be drawn out. While this isn’t a preventative measure, it adds to a well-rounded, comprehensive approach to handling fraudulent charges and issues with theft.
  • Conduct Financial Audits: Doing this on a regular basis will help to create an environment of responsibility. Keeping financial auditing as a regular act will help to instill a sense of accountability and trust among board members. Also, changing up who signs the checks and who delivers them will help to make sure there are checks and balances in place, literally.

Keeping your condo association safe from fraud and theft issues as well as in-house embezzlement problems may not be completely avoidable, but taking the time to go over everyday tasks will help to cut down the possibility of large-scale problems that can sideline an association for longer than it has to be. It’s important that you monitor where the money is coming and going within your association and be proactive in keeping a lookout on everything related to your expenses.

About iSure Insurance Brokers

iSure Insurance Brokers is a boutique agency dedicated to providing insurance, employee benefits & HR outsourcing solutions for mid to large cap companies as well as affluent individuals & families. Our staff is committed to providing best-in-class products and servicing. We welcome the opportunity to protect what you have worked so hard to build. Please contact us at (305) 223-2533 to learn more about what we can offer you.

Posted in: Blog Commercial Insurance Community Associations