It’s 2016 and we’ve sent people to the moon, carry computers in our pockets and are thisclose to making driverless cars a reality, yet, we’re still losing millions of dollars annually to small and large scale acts of theft in the community association industry.
You don’t have to search far to find examples of the unfortunate issues that have plagued association management for decades. A simple Google search will return pages upon pages of stories about communities that have experienced fraud by those trusted with their assets, including individuals employed directly by the association, management company representatives, vendors, and even board or committee members.
Let’s look at the innocent, all-to-common, yet very risky practices that lay the foundation for association industry fraud to occur.
It’s common for HOA boards and association management companies to manage their finances collectively. You’d think that giving several people access to community association funds would provide the proper checks and balances necessary to ward off theft. After all, if everyone can monitor each other’s activity, you’re covered, right?
Manual account management means that you must rely on the manual record-keeping of each person who has access to the account to record information and then share the updates with the team. Managers stamp the invoice, then fill in the codes of where the dollars are to be placed on the income and expense statement when the Accounts Payable department processed and cut the check.
Depending on the number of people with access to your association’s dollars, this can get really risky, really quickly, especially if you factor in human error. Think about it, with several people responsible for managing finances manually with the old stamp and code method, it’s hard to track the status of payments coming in and out of an association’s account.
The combination of collective and manual community association fund management creates the perfect environment for your association’s funds to be at risk. Usually by the time someone realizes fraud has occurred, it’s been going on for years.
So, how do you stop it?
The key to ending fraud in the community management industry is rethinking how we do things and evolving to provide solutions. For Associa, this means using an online system with checks and balances as opposed to the old stamp and code process that provides little oversight or accountability.
Because of this, you’ll notice that the way we manage accounts is different from the process you’ll find at other management companies.
And, it’s working. We are the only management firm in this industry that has the level of internal audit and segregation of duties requirements and today we process payables faster than we did in our pre-transformation model, with more protection of funds and broader transparency than anyone else in our industry. And, because we believe in our new method, we offer our clients peace of mind with a $6 million dollar fidelity bond.
Associa has invested heavily in our accounts payable transformation to create the industry’s only state-of-the-art payables process because we are committed to providing unsurpassed service to our thousands of HOA and Condominium clients and protecting you from the dangers of poor controls.
Associa protects community associations from fraud using an innovative approach through our Client Shared Services Center. Click the button below to learn about how communities across the world benefit from Associa's Shared Services Center or click here to request a proposal.