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#19071
WIDE OPEN FOR FRAUD but Texas Board resists FRAUD EXAMINER's desperate recommendations 2020/05/10 09:09  
The Forum at giant U.S. condo & HOA site HOATALK.com hears from a Texas C.F.E. certified fraud examiner.

She invites suggestions from experienced commenters after facing a virtual stonewall from the Texas HOA homeowner association Board of Directors which she has recently joined.

Driving her to join were now-confirmed suspicions ( see below ) as a C.F.E. Certified Fraud Examiner. Says it's a + 600 lot Texas shared ownership community.

( Everything's of course anonymous at that Forum & not directly capable of specific verification, unlike most of what I respectfully try to contribute at CAFCOR's Forums here. )

Given the other Directors' apparent fullest confidence as to the community's arms-length PMC property management company, to the topic poster's knowledge NO EXTERNAL AUDIT has ever been conducted at this Texas HOA !

Nor is there ANY ACTUAL nor VIRTUAL COUNTER-SIGNATURE Of outgoing payments nor cheques issued . . .

( Bear in mind that the lack of even such elementary security requirement, preceded covid-19. And possibly also the advent of virtual signatures & online banking albeit subject here to rigid PMC control of course. )

AND WHAT ABOUT THE TREASURER / "Treasurer function" current or previous which her suspicions have now been personally confirmed ? :

"The treasurer was in title only. They couldn’t even read financials and never even spot checked the registers. The quarterly financials were approved by the board after a quick skim. Part of the big reason I took the position. " - unquote

After massive persuasion & blood on the floor, this isolated Director has been finally able to get her fellow Directors to commission its first arms-length EXTERNAL AUDIT. .

But in perspective she comments as a C.F.E. that some research shows that as little as a mere FOUR PER CENT of detected frauds are typically detected purely by an external audit . . .

At least her fellow Directors also but reluctantly agreed to set up an Audit Committee. But no other Director wanted to even second her Motion for such . . .

SO her fellow Directors are listening first & foremost to the arms-length PMC management company, ostensibly wanting to avoid workflow complications . . .

AND SO the HOATalk.com Forum commenters try in their tattered ways to address circumstances almost WIDE OPEN FOR FRAUD ! Some commenters speculate that there MAY ( ? ) BE much that some resisting Directors REALLY want hidden . . .

What they have not so far been able to address - under Texas law - is also whether as a C.F.E. she could herself as a professional become ADDITIONALLY implicated by remaining a Director if this Board's stonewalling eventually hits a major fraud or malfeasance with her still on the Board. Would the same low level of Directoral performance be imposed on her as on her stubborn fellow Directors ? Should she get out if the stonewalling continues ?

Generally volunteer Boards CAN BE extremely resistant to anything that looks like rocking the boat. And particularly from a 'newbie' or from any source that dares to question their comfortable assumptions.

For outcomes of this resistance one doesn't need to look far in the condo universes eg years of massive reserve under-funding. Or even an approaching expiration of restrictive covenants on Building Scheme titles. Or critical easements needing revitalization of priority under Ontario's Land Titles system. . . .

AND SO virtually ignoring GLARING fraud opportunities, ain't such a great stretch EVEN WHEN THE VULNERABILITY IS BEING ALERTED BY A CERTIFIED FRAUD EXAMINER ALSO ON THE BOARD ITSELF . . .

She gets the final word : "If I could come up with foolproof internal controls, I'd be a very rich woman."

May 6/20 “Fraud Prevention - need opinion” at HOATalk.com Forum topic “
https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/284451/view/topic/Default.aspx
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