First, at least one board member should be a signatory on all of your building's bank accounts, from operating to reserve to money market accounts. "If something seems to be going wrong," advises Richard Montanye, a certified public accountant (CPA) with Marin & Montanye, "you need to be able to call the bank and say, ‘Don't [pass] any more checks.'" If a board member is not a signatory on the account, the bank won't be able to talk to you about the account's funds.
Many property managers advise that only condo or co-op board members have signatory access to the building's reserve account. Reserves aren't generally used unless there is a large capital project, so it's easy to keep tabs on any funds flowing out of the account.
"It should require signatures of two board members," rather than one, says Montanye, "because generally, two people don't lie at the same time."
Finally, professionals recommend verifying your accountant's independence from your managing agent. Stephen Beer, a CPA with the firm Czarnowski & Beer, says a good rule of thumb is that if an accountant is doing more than 60 or 70 percent of a manager's buildings, you should be concerned. The risk is that if the CPA is beholden to the managing agent in some way, the firm might not be as diligent in monitoring finances.
Adapted from "Taking Charge of the Numbers" by Jennifer V. Hughes (Habitat, May 2014)
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?