Condo Media - February 2017 - 24
INDUSTRY
BY NENA GROSKIND
PERSPECTIVE
HOW ARE BOARDS INCREASING THEIR VULNERABILITY TO FRAUD?
"W
hat happened to the money?" If you're listing the things no one
wants to hear, this question would rank near the top for condominium board members, right up there with "oops" for patients
undergoing surgery and "Mom, I think I've lost..." (the keys, the car, the credit cards
or God knows what else) from a teenager. Financial fraud isn't widespread in the
condominium world, but it isn't unknown either. And you don't have to go very far
in distance or time to find its victims. You can find several of them here in New England, including a group of associations that discovered their management company
had been billing them for maintenance work it didn't do and overcharging them for
tasks it performed. Estimated losses for the four associations totaled more than
$100,000.
We've often discussed what associations should do to reduce their fraud risks. For
this "Industry Perspective," we decided to consider what boards actually do, or fail
to do, that increases their vulnerability. And we asked an association manager and a
CPA to address this question.
Robert McBride, CMCA, AMS, PCAM,
President of The Dartmouth Group, an Associa Company
They don't select their management company carefully. The billing
fraud described in the introduction illustrates what can happen, McBride
says, when boards hire "lowest-bidder" management companies, without
scrutinizing the services they are offering, and especially without considering their
management experience and expertise. "Some of these companies are just maintenance companies pretending to do property management," he says. "They make their
money by finding maintenance work to do."
That isn't true of all companies providing in-house maintenance services, he
emphasizes, but boards need to understand the details: Is the use of the company's
maintenance services mandatory? How will the services be provided? Who will approve maintenance assignments? Will board approval be required for tasks priced
above a specified amount? Will competitive bidding be required for major projects?
It should be, McBride says. "Boards should set clear guidelines in this area." The
24
CONDOMEDIA
Condo Media - February 2017
Table of Contents for the Digital Edition of Condo Media - February 2017
Table Of Contents
Condo Media - February 2017 - Intro
Condo Media - February 2017 - BB1
Condo Media - February 2017 - BB2
Condo Media - February 2017 - Cover1
Condo Media - February 2017 - Cover2
Condo Media - February 2017 - Table Of Contents
Condo Media - February 2017 - 2
Condo Media - February 2017 - 3
Condo Media - February 2017 - 4
Condo Media - February 2017 - 5
Condo Media - February 2017 - 6
Condo Media - February 2017 - 7
Condo Media - February 2017 - 8
Condo Media - February 2017 - 9
Condo Media - February 2017 - 10
Condo Media - February 2017 - 11
Condo Media - February 2017 - 12
Condo Media - February 2017 - 13
Condo Media - February 2017 - 14
Condo Media - February 2017 - 15
Condo Media - February 2017 - 16
Condo Media - February 2017 - 17
Condo Media - February 2017 - 18
Condo Media - February 2017 - 19
Condo Media - February 2017 - 20
Condo Media - February 2017 - 21
Condo Media - February 2017 - 22
Condo Media - February 2017 - 23
Condo Media - February 2017 - 24
Condo Media - February 2017 - 25
Condo Media - February 2017 - 26
Condo Media - February 2017 - 27
Condo Media - February 2017 - 28
Condo Media - February 2017 - 29
Condo Media - February 2017 - 30
Condo Media - February 2017 - 31
Condo Media - February 2017 - 32
Condo Media - February 2017 - 33
Condo Media - February 2017 - 34
Condo Media - February 2017 - 35
Condo Media - February 2017 - 36
Condo Media - February 2017 - 37
Condo Media - February 2017 - 38
Condo Media - February 2017 - 39
Condo Media - February 2017 - 40
Condo Media - February 2017 - 41
Condo Media - February 2017 - 42
Condo Media - February 2017 - 43
Condo Media - February 2017 - 44
Condo Media - February 2017 - 45
Condo Media - February 2017 - 46
Condo Media - February 2017 - 47
Condo Media - February 2017 - 48
Condo Media - February 2017 - 49
Condo Media - February 2017 - 50
Condo Media - February 2017 - 51
Condo Media - February 2017 - 52
Condo Media - February 2017 - 53
Condo Media - February 2017 - 54
Condo Media - February 2017 - 55
Condo Media - February 2017 - 56
Condo Media - February 2017 - 57
Condo Media - February 2017 - 58
Condo Media - February 2017 - 59
Condo Media - February 2017 - 60
Condo Media - February 2017 - 61
Condo Media - February 2017 - 62
Condo Media - February 2017 - 63
Condo Media - February 2017 - 64
Condo Media - February 2017 - Cover3
Condo Media - February 2017 - Cover4
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