TIPS FOR YOUR HOMEOWNERS ASSOCIATION
Every so often there are stories in the news that highlight corruption in community HOAs. Because of this, Rosie on the House reached out to the Arizona Association of Community Managers (AACM) who, among other things, is the leading information resource for legislators and community managers regarding homeowners association and management issues.
AACM was established to improve the professionalism in the management of Arizona’s communities and is committed to raising the level of community care in Arizona through ongoing education and proactive support. By offering certified training to community managers, as well as enforcing ethics compliance, AACM provides homeowners living in Arizona’s communities with confidence that their property value will be maintained.
Nearly half of Arizona residents live in one of the 9,000 HOA’s here in Arizona. Dues are mandatory and often part of our monthly payment like our insurance coverage. But where are those dues going? Here is AACM’s guide to avoiding HOA management fraud:
1 | Hire a professional management company
Hire a professional management company that is a member of the Arizona Association of Community Managers (AACM). AACM Management Company members abide by the organization’s Code of Ethics which include providing accurate and timely financial information to the HOAs they serve and adherence to all applicable State, Local and Federal laws.
2 | Follow Arizona State Law
Arizona State Law requires all HOAs to have an annual audit, review or compilation by an independent CPA (A.R.S. 33-1810 for Planned Communities; A.R.S. 33-1243 (J)). Recommend a full audit every few years to include much wider range of testing, procedures and bank confirmations to help mitigate opportunities for and/or prevent bank fraud.
3 | Follow-up with bank statements
If the Board suspects an issue with their current management company, have the HOAs bank send bank statements directly to the Board members to compare with copies provided on a monthly basis by their management company.
4 | Demand the receipt of monthly comprehensive financial statements
Make sure to get monthly comprehensive financial statements from the management company to include the balance sheet, income statements for both operating and reserve accounts, general ledger, sub-ledgers, accounts payable reports- a/p check history and aging, accounts receivable reports – receipts and aging, bank statements, bank reconciliations, copies of invoices paid, and utility reports.
5 | HOAs should have their own separate bank accounts
HOAs should have their own separate bank accounts for their operating and reserve accounts. Do not allow the management company to “commingle” your HOAs funds with other associations or with the management company’s bank accounts. The practice of “commingling” is strictly prohibited for AACM management company members and is referenced as such in AACM’s Code of Ethics.
6 | Have access to financial statements
The financial statements are records of the association. If your management company refuses to share or provide these on a monthly basis or refuses to share bank statements, invoices, detailed reports like the general ledger – you should immediately consider (1) having an audit performed, (2) replacing the management company and (3) contacting the authorities.
For More Information:
Visit the Arizona Association of Community Managers (AACM) website at AACM.com