Uptick in Fraud a Wake-Up Call for Condos

Condominium corporations are increasingly becoming targets for fraud due to the large amounts of money they maintain in reserve funds and the lack of extensive education and experience on corporate governance among board directors. Various types of fraud, such as intercepted cheques, unauthorized electronic transfers, and fraudulent investments, pose a threat to condominium corporations. To prevent or reduce the risk of financial crimes, property managers, boards, and financial advisors should implement and consistently follow internal controls. Management should protect vulnerable processes like revenue collection, invoice payments, and reserve fund investments. Financial advisors should ensure compliance with applicable laws, provide written confirmation for each investment, and send monthly statements. The board of directors must oversee processes, enforce controls, review financial statements, and monitor management consistently. Auditors cannot be solely relied upon to detect fraud, so proactive conduct and vigilance throughout the year are crucial in mitigating the damage caused by fraudulent activities.