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Audit Objective

Determine whether the Board of Directors (Board) ensured that cash disbursements were properly approved, accurately recorded, had adequate supporting documentation and were for Association purposes.

Key Findings

The Board did not ensure that cash disbursements were properly approved, accurately recorded, had adequate supporting documentation and were for Association purposes. As a result, the Association had a significant risk that disbursements could be made for non-Association purposes. We found that:

• 138 disbursements (28 percent) totaling $39,929 did not have an itemized invoice or receipt (or other such documentation) and a documented, specific Association purpose.
• Five disbursements totaling $1,308 were not recorded in the accounting records.

In addition, the Board did not:

• Adopt adequate bylaws or written policies or enforce compliance with the limited bylaws and policies that it adopted.
• Establish adequate controls over disbursements, such as auditing all claims and reviewing bank statements and canceled check images.

Key Recommendations

• Amend the bylaws and written disbursement policies and enforce compliance with the bylaws and policies.
• Review bank statements and canceled check images.
• Audit all claims and ensure they have documented approvals, adequate supporting documentation and are for appropriate Association purposes.

Association officials agreed with our recommendations and indicated that they initiated corrective action. Appendix B includes our comment on the Association’s response letter.