Condo Act Reform - #2 Financial Management: Fraud
Fraud has been a hot topic in condominiums for the past few years. While incidents with large monetary amounts involved receive plenty of media attention, there are many incidents that receive little or no media attention because of the relatively small amount involved. Not surprisingly, the working group and expert panel reviewed the matter in great detail to determine if further steps are required to discourage fraud in condominiums. They identified the following areas of concern:
- Theft & Embezzlement - large sums of money are kept in many reserve funds and affordable insurance on those sums does not exist;
- Kickbacks - most contracts are reviewed and signed by the board without any input from the owners, which makes it very difficult to prove a kickback; and,
- Frivolous Spending - owners are concerned about the temptation for boards to spend on unnecessary or frivolous projects.