Regular Financial Audits Are Needed

Full Text of Audit Proposal

Please find below the full audit proposal presented to the Board at the June 2023 meeting. You will note that we asked the Board to include the proposal in the minutes and to engage the community in discussion regarding the proposal. Neither has happened.


We urge the Board and the membership to consider engaging an independent firm to conduct an operational audit. An operational audit examines the finances and operations:
1) to determine compliance with GA Law, the Georgia Properties Association Act (ACT), the Covenants, the Articles of Incorporation, and the By-laws,
2) to evaluate the adequacy of internal controls, and
3) to identify opportunities to improve efficiency and effectiveness.
The end result will be a report that identifies corrective actions and makes recommendations. The report could be used to develop a policy and procedures manual.
Why do we need this? First, we have never had an audit of any type. Second, over the past 20 years there have been varying degrees of continuity in management. In the absence of a policies and procedures manual, each new Board must define their own procedures. The result has been 1) to make volunteers’ job more difficult than necessary and 2) to create what appears to be chaos. This apparent chaos has eroded the community's trust in the governance of TIPOA and is dividing our community.
To demonstrate what we can expect from an audit, we have attached a sampling of the type of questions that would be raised during an operational audit of the written record. The attached questions are primarily related to compliance with Governing Documents and Laws—that is, the minimum the Board must do. An operational audit could also be used to identify ways to improve the operational effectiveness and the community outreach/communications efforts of TIPOA (i.e., getting competitive bids on “all” contracts, videotaping Board meetings, including an open forum at the end of Board meetings with a formal record of the discussion, maintaining an ARB policies and procedures manual, publishing a monthly newsletter from the ARB, etc.). Simply put, an operational audit could be used to develop a set of policies and procedures that add consistency to the Board’s actions. This consistency would inspire confidence in our governance and promote cohesiveness in our community.
We strongly encourage Board Members and Community members review this proposal in its entirety before deciding if this is a worthwhile endeavor. Should the Board and Community decide to go forward with this endeavor, the procedure for the audit, should be as follows:
1. An audit committee shall be formed for the purpose of:
a. Setting the scope of the Audit, and
b. Selecting no less than 3 firms (if possible) to provide bids.
2. The Audit committee shall NOT include any person who has served on the Board or the ARB over the past 5 years.
3. The Audit committee shall submit a full report and recommendation(s). The recommendation shall be included in the packet for the next annual meeting and presented as a ballot item for the membership to vote on. Insofar as the vote does not involve an amendment to the covenants, the vote threshold should be a simple majority of those present or with proxies. Quite simply, the decision must be made by the membership not the Board.
4. There shall be NO special assessment or dues increase to pay for the audit. Either the funds shall come from the budgeted addition to the reserve fund and/or one or more of the other budgeted categories.
The above procedure has been carefully crafted to avoid the appearance of bias or conflicts of interest. We respectfully, request that the board place this item on the agenda for the next scheduled meeting. Furthermore, should the board decide to alter the procedure, the Board shall include meeting attendees in a full discussion and debate with respect to changes proposed by the Board. For this endeavor to have the desired effect, the membership “must” own it.
We respectfully request that the Board include this proposal as an attachment to the meeting minutes so the entire community may review it. 

Examples of types of Questions that Might Arise based upon written record
• On 9/12/2013 Attorney Smith filed an amendment to the covenants for the purpose of opting into the Act. The amended covenants were not made available to the membership. Is this a violation of the covenants? Based upon the fact that a motion was made during the March 2023 Board meeting to spend $2,200 to redo the amendment, it seems that the current Board was not aware that we are committed adhere to the Act. This fact would lead the auditor to ask the following: 1) Has TIPOA incurred unnecessary costs for filing liens? 2) Has TIPOA foregone the ability to collect monies due after the sales of TIPOA member properties? If so, can TIPOA still recover some of the monies due? 3) Has the TIPOA taken actions which violate the Act?
• In 2015, the Board solicited votes on an amendment to the covenants that deleted the gated community requirement. A year later, the Board acquired the required 67% of votes and disabled the gates. This amendment was never uploaded to the Web Site. Is this a violation of the covenants? Was the amendment filed at the courthouse? Was the amendment necessary?
• Prior to 2022, all meetings of the Board (Work Sessions and Board Meetings) were announced and open to the community. At the Jan. 2022 Board meeting, the Board stated that Work Sessions would not be open to the membership thus, the work session schedule would not be published. Is this a violation of By Laws requirement that “all” meetings be open to the community?
• During 2022, the board reported several actions (i.e. contracting Keystone Association Managers, cancelling the contract with our Accountant, approving the mailing of a letter to all 261 members for the purpose of addressing misinformation, approving a new voting procedure, and appointing new ARB members). Are these actions that require a vote? If so, were these actions taken during closed Board work sessions? Does the failure to capture these actions in minutes constitute a violation of the Bylaws and the Act? If these actions were not taken at a work session, does the failure to document these actions as an action taken without a meeting violate the Bylaws?
• During 2023, the board canceled the Keystone Association Mangers contract and agreed to engage the TIPOA attorney to start the process of amending section 10.15 of the covenants. Are these actions that require a vote? As such do these actions require documentation as action taken without a meeting? If these actions were taken during a meeting, do the Bylaws and the Act, require that the vote be documented by minutes of the meeting? If these actions were taken during a meeting, do the Bylaws require that the meeting at which business was conducted be open to the community?
• During 2023, the board held 2 special meetings. Do the Bylaws require Special Meetings be open to community members?
• In 2018 the Board has dismissed one ARB and appointed members to the new ARB. During 2022, the Board appointed a replacement to the Board. Do these actions that require a vote?
• In 2013, the Board filed 4 rules as resolutions at the courthouse. Subsequently 2 of the rules filed as resolutions at the courthouse were changed. These new rules were not filed at the courthouse. How does this fact impact the new rules? Is there anything in the governing documents or the Act that requires the board to file rules as resolutions at the courthouse?
• In 2018 the Board approved resolutions to form several committees. Do resolutions need to be filed at the courthouse? Since 2018 the number of committees has changed. Did the Board write a resolution to effect these changes? If so, were the resolutions filed at the courthouse?

A solid understanding of the Covenants and Bylaws helps answer some of these questions. Furthermore, an operational audit is necessary when these questions cannot be answered within the record and especially when a volunteer board is not transparent and its leadership lacks the executive skills and professional experience necessary to successfully manage a POA/HOA...which is not unlike a small business. There are those pseudo leaders that are simply not adequately skilled, yet seek power unto themselves. You must elect leaders that are dedicated and sufficiently professionally skilled in serving the best interest of its members, not their own self-serving interests. If the leadership is not truly interested in serving its members openly and effectively, as demonstrated by their leadership actions, then it's time to elect new leaders that will serve its members and create a effective community that has confidence in their elected community leaders....full stop!

Why we need an operational audit and policies and procedures?

• On Aug. 11 I requested a copy of the Aug. 2022 ARB Guidelines. I was told the President of the Board did not have a copy.
• On Aug. 14 As per the By-Laws, I made a formal request for the Aug. 2022 ARB Guidelines. I was told the President did not have access to the electronic location of files removed from the web site. The President stated that the document would be made available when the member managing the web site returned from vacation.
• On Sept. 9 I asked about the status of my request. The President told me she did not have an electronic copy of previous ARB Guidelines. Furthermore, the President told me they are no longer pertinent to builds within this community.

1. Aside from the minutes, financial records and current CRS's, what documents is the Board responsible to preserve?
   
2. Is the denial of the above request a violation of the 6.4 of the By-laws?
   

1. There should be more than one electronic copy. That copy should be retained by the board with all other required documents (i.e. minute books, etc.).
   
2. The website pages should all include a section labeled “archives”. This section would contain outdated documents. In the case of the currently updated ARB page, it would contain old guidelines and correspondence from “all” past ARBs. In this manner the board would only infrequently be required to respond to requests for information.
   

Historical ARB documentation is useful to current ARB members/Community members in the present and moving forward. Censorship is a non-Community-minded approach and NEEDS to be eradicated. Knowledge is key. An educated consumer is our best customer, as the ad espoused.

I know for certain that the Board prior to 2017 kept all records. I am not so sure the Board that followed has done so.

I think probably financial but I am concerned other records, past arb guidelines, correspondence, mailing packets for annual meetings, attempts to amend governing documents, etc. And I am glad the web site cleanup ended with governing documents because I hate to see what the current board would do to make the minutes section easier to navigate and understand.