Monthly Review of Financials


Te bill also requires board members to review financial statements monthly rather than quarterly. Directors do not have to meet monthly, but managers (or whoever prepares the financials) will need to prepare and send financials monthly. Te financials include:


 a current reconciliation of the oper- ating accounts,


 a current reconciliation of the reserve accounts,


 the current year’s actual reserve rev- enues and expenses compared to the current year’s budget,


 the latest bank statements for operat- ing and reserve accounts,


 an income and expense statement for the association’s operating and reserve accounts, and


 the check register, monthly general ledger, and delinquent assessment receivable reports.


Missed Meetings - Some boards only meet quarterly or miss monthly meet- ings because of holidays or other reasons, thereby making it difficult to meet the statutory requirement to review financial records monthly. Fortunately, the law al- lows the review requirements to be met


when every member of the board OR a subcommittee of the board consisting of the treasurer and at least one other direc- tor reviews the financials independent of a board meeting and then ratifies them at a subsequent board meeting. Te rati- fication must be reflected in the minutes of the board’s meeting.


Wrapping Up


AB 2912 will not completely eradicate fraud and embezzlement in community associations. And it is not a substitute for other sound internal controls or the exercise of diligent oversight of asso- ciation finances. However, it should go a long way in deterring fraud and em- bezzlement and will provide a backstop


This bill takes im- portant steps in preventing


fraud and pro- tecting com-


munity asso- ciations.


Nathan R. McGuire is a partner with Adams | Stir- ling, PLC, in charge of the firm’s Northern California


offices, and currently serving as Chair of CAI- CLAC. You can reach Nate at nmcguire@ad- amsstirling.com or (800) 464-2817.


(in the form of insurance) for associa- tions in the event fraud does occur. CAI- CLAC is collecting information regard- ing the benefits and challenges related to AB 2912 for consideration of potential future legislation and welcomes your feedback through office@caiclac.com or www.caiclac.com.


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