Protecting a Community Against Fraud

As a community association’s volunteer Board member or manager, it is your fiduciary responsibility to protect the association (to the best of your ability) from embezzlement, misappropriation of funds, or fraudulent billing. 

Below are some key strategies to protect the community against fraud and embezzlement.

• Be transparent with your members about income and spending. If members know how much is coming in and going out, it is easier to spot funds going somewhere else.
• Avoid hiring board members or their businesses for the Association. An interest in the Association’s funds increases the likelihood of theft.
• Summaries can be falsified. Reviewing bank statements allows the Board to see the actual record of money going in and out of the accounts.
• Board approval of spending over a certain amount can prevent the emptying of accounts.
• Maintaining proper insurance by both the Association and its vendors at levels to actually reimburse the Association for lost funds if embezzlement actually occurs.

You can read more about protecting your community in Joseph Bucceri’s article for CAI-RMC’s 4^th Common Interests magazine of 2024 (Vol. 42 – No. 4) – Five Steps to Protect a Community Against Fraud & Embezzlement, found here.