Being vigilant toward a management company revolves around one very critical tool: the monthly management report. This becomes the key information transfer tool that allows the board to keep track of what the management company is doing, and helps to deter fraud.
The management report must show:
- the employee list (including what each employee’s job is what s/he is being paid, and any holiday/vacation/overtime pay)
- the monthly bank statement (including every check issued from that account, as well as the invoice attached to each check)
- the monthly statement for any investment accounts
- copies of original documents of any other task the management company is doing for you on a monthly basis
Bank reconciliations must be done before the annual audit can be completed.
Don’t assume that just because you’re paying a management company, everything is being taken care of as it should. Be on top of things.