Preventing, Recognizing and Dealing with Condo Fraud

Condo fraud is a common issue that can harm condo owners, destroy trust among the board, management, and residents, and lead to increased condo fees or special assessments. Condo corporations are susceptible to fraud due to large cash balances, which attract people with criminal intentions. There are different types of fraud, including kickback schemes, comingling of bank accounts, and creation of fictitious vendors or employees. Prevention is crucial, and it includes implementing procedures that limit risk and establishing processes and procedures that become natural checks and balances for the condo corporation. Some necessary controls include separating custody of assets from record-keeping, not accepting cash, having cheques signed by two individuals and matched against invoices, and utilizing purchase orders. Additionally, directors should review all financial data provided to them, view actual invoices and bank statements, and adopt a zero-tolerance policy against fraudulent activities.