How do we get an audit?
Our board president and her minions refuse to have our financial books audited. How do we go about getting this done? Thank you.
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Michele,
Arizona law requires that every association to have either an Audit, Review or Compilation completed on the association finances every year. Those accounting reviews are identified in decreasing rigor. The associations are allowed the choice if the declaration (CC&R’s) do not specify that an audit is required. Many older CC&R’s used the term “audit” generically but those association then lose the option and must do audits annually.
As homeowners you have absolutely no power to force the association to do an audit. If you have reason to question the finances, then you can ask for an audit to be done and provide the board the justification for your concerns. They do not have to comply with your request, but the board does have a fiduciary duty and if a legitimate concern does exist, they are obliged by their duty to the association to investigate the concern and if appropriate have the audit performed. Failure of the board to act reasonably with this issue could result in them being found in breach of duty to the association and its members and could personally be held liable for the consequences. Board liability indemnification and D&O insurance does not cover “breach of Duty” issues.
As for the community if you are not happy with the response of the board you can always circulate a petition for a special meeting of the members to recall the entire board and elect a new board that will start with an audit of all finances and clear the slate and move on.
I will note that even if your remove the board if a subsequent audit proves that the board failed to maintain its fiduciary responsibilities to the association the new board would be free to pursue litigation on the past board based on their actions when in office.
Dennis