Association Signature Cards
Are Your Association Bank Signature Cards Up to Date?
By Andrew Rand, Director of Association Accounting at CSI Management Services *
What a great time to do some housekeeping on a very important money-related task: ensuring all association bank signature cards are up to date. We are coming into the time of year when associations typically hold their annual meetings. Important business is conducted, such as annual elections and appointment of board directors. Updating the signature cards to the current board members who will be the signers on the association bank accounts is an important and necessary task with all your association financial institutions.
The reason it is so important always to have the correct information on file with the bank is because if a new board member signs an association check but has not been added to the bank signature cards, the bank can deny the processing of the check. The last thing you would want to happen is to have an emergency – such as a windstorm – and not have current signers on the reserve accounts. The checks would not be honored.
Updating signature cards is also necessary because it can prevent fraud. As a board member with a fiduciary responsibility to the association, being educated is the most important tool one has. The Community Association Institute is an important resource and tool to use. We have more than 30,000 members and sponsor many education events throughout the year. Recently, at our local chapter’s Annual Education day held at Gulfstream Racetrack, Vishnu Sharma, CPA, CFE and President of the local chapter, held a class with Lisa Magil, Esq on Fraud, Theft and Embezzlement in Community Associations. Mr. Sharma said, “As for signature cards, from an audit perspective as a matter of good internal controls, which is necessary to prevent fraud from occurring, the updating of signature cards is essential. It removes former board members who would otherwise be able to transact business with the bank on behalf of the association. The bank can only enforce the information they are provided. If the association fails to provide updated information on who the authorized signers are on an account and there is an incident of misappropriation of funds, the association will most likely be responsible for the loss with no recourse for recovery, other than to go after the errant board member. To make the process as easy as possible, all boards should set a policy so the updating of signature cards is done immediately following all elections and for all banking relationships.”
*Mr. Rand is also Chairman of the Education Committee for the CAI