Wessel Forensic Accounting
Does your Homeowners association need a forensic audit?
Homeowners Association Reviews and Investigations
An HOA forensic audit can help you
- detect and prevent fraud,
- maintain the HOA’s reputation,
- ensure legal compliance, and
- provide peace of mind for board members and residents.
What can you do on an on-going basis?
There is no Homeowners Association “watchdog” in South Carolina and many other states. There are some general laws but no one is checking for compliance. It is up to the HOA members to monitor the actions of whoever is managing the property and the money, whether it’s a property management firm or internally by the HOA Board. If your HOA is paying for an annual financial statement review, it is unlikely that an evaluation of internal control and compliance procedures is included.
How can you monitor management activity?
- Read and familiarize yourself with your HOAs, by-laws, covenants, management and other vendor contracts.
- Review financial statements that are provided by the board or management company for reasonableness. If you don’t receive financial information on a regular basis, request that it be distributed starting immediately.
- Ask questions if you see something you don’t understand.
- Ask for supporting documentation for financial statement information that looks unusual.
- Set limited terms for Board Members.
- Run for a board position.
- Familiarize yourself with the applicable HOA laws in your state (see links below for South Carolina HOA laws).
- Call us if things don’t add up!
WARNING SIGNS OF POSSIBLE MISMANAGEMENT
”Red flags” include questions that don’t get answered satisfactorily, not enough financial information is provided for satisfactory oversight, or financial information that isn’t provided in a timely manner. Other signs include vendor services that are falling behind or not provided, HOA assets in disrepair, and frequent assessments. These and other warning signs (see below) mean it’s probably time for an independent review. Wessel Forensic Accounting has experience with audits, reviews, and investigations of HOAs and their management companies. We offer flat-fee pricing for most HOA forensic audits. These reviews provide a report that spells out noted errors and procedural weaknesses, recommendations for improvement, and a checklist with basic steps to follow for appropriate oversight.
Your HOA may need an audit if:
- The same homeowners sit on the HOA Board year after year;
- The HOA Board (or management company) does not honor requests for financial information;
- If the Board or management company is not responsive to homeowner questions;
- If fee increases are not discussed with and approved by HOA membership;
- Periodic financial statements are not provided to residents;
- Homeowners’ meetings are not held at least annually or are not well-attended;
- Your HOA is operating at a loss.
Call us at 864-905-2850 to schedule a free consultation.
Other resources:
South Carolina Non-Profit Corporation Act
South Carolina Homeowners Association Act
HOA Management Companies
If you own or manage an HOA management company, show your customers and prospects that you are different from the management companies who are in the news for fraud and embezzlement. Wessel Forensic Accounting provides HOA management audit and review services geared more toward establishing good internal controls and procedures, and identifying fraud or mismanagement than what annual financial audits performed by CPA firms provide. What better way is there to establish confidence among your customers and prospects and demonstrating your commitment to protecting their neighborhood and their investment, than by showing them that your company has undergone a voluntary, independent forensic accounting and operational review.
Call us at 864-905-2850 to schedule a free consultation.
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For a free consultation regarding the management or financial and/or operational practices of your hoa, call us at 864-905-2850 or fill out the form below and we’ll contact you.
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Wessel Forensic Accounting
