Avoiding Fraud within Residents Associations

A resident association is a legal entity, much like any other business organization, whether for profit or non-profit. While many residents and members of a community organization believe that fraud would never happen in their community, the fact is that they are just as vulnerable as any other legal entity. In some cases, even more so, due to the fact that associations are often run by volunteers who may not be as experienced in identifying fraudulent activities.

Fraudulent tactics used include falsified bank statements or balance sheets, fake invoices to solicit payments to non-existent vendors or excessive payments for unnecessary repairs/amenities. 

Here are a few steps residential associations can take to prevent fraud within their organisation: 

  • Keep financial operations transparent.

Financial records and paperwork should be routinely inspected by one or more people to ensure everything seems legitimate and all directors, committee members and managing agents are held accountable for any financial operations, even something as simple as ordering office supplies.

Situations where it may be beneficial to look over records include;

  • following a change in management,

  • after a committee member leaves or there is a change of director.

  • after a major renovation or project being carried out.

 

February 17, 2020

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