Financial crime is an all too common problem in homeowners associations. Care must be taken to protect financial assets and fulfill the HOA’s obligations to the community.

Financial Crime in Your HOA

Many HOAs rely on volunteer labor with very little oversight. Security and HOA crime insurance are not always high priorities. Your HOA may be at risk of crime by volunteers, including:

• Falsified invoices
• Invoice padding
• Check and wire fraud
• Theft

Fortunately, there are steps you can take to protect your organization from financial losses.

Security and Protection for Your HOA

There are several ways you can protect your HOA from financial crime.

1. Vigilance

If you notice a sudden increase in unreconciled bank statements or changes in a volunteer’s behavior, these may be warning signs that embezzlement is occurring.

2. Shared Responsibilities

In volunteer organizations, it is common for one person to be solely responsible for the finances. This increases the risk of fraud. Financial duties should be shared to encourage accountability and make dishonesty easier to detect.

3. Routine Audits

You should audit financial documents regularly. Discrepancies may have an innocent explanation, but they must be caught quickly to avoid further issues.

4. Crime Insurance

Despite these precautions, you may still encounter dishonesty within your organization. HOA crime insurance is essential to protect the association from financial loss.

Homeowners associations perform important functions in their communities. You must protect your HOA’s assets from financial crime to continue serving your residents.