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March 18, 2007
Follow the Money Trail - Part II
Our last posting (way too many days ago) commented on the rash of embezzlements and other financial misappropriation's that had occurred. Since then a few more have surfaced bringing the total to seven in the last month. All were apparently by people who had worked with associations honestly for years. Some were caught by internal processes, some by external. Its really not all that hard to steal money from an association. It is hard to do it over a long period of time or for large amounts. The first time I ran into it was over 30 years ago when a VP and partner in the management company I was working for got caught submitting false invoices to associations for work that wasn't done. He got canned and the money was returned, but they never took criminal action against him, which was too bad, because the next time I saw him he was an Undersecretary at HUD during the Reagan administration - you all remember that scandal - guess who was front and center?
But its not just the management companies - President's and Treasurer's are finding ways to make their lives just a little more comfortable. It happen's the same way it does in hundred of thousands of companies across the U.S. every day. My wife commented the other day about a new employee who had been given a cell phone by the company to use for company purposes. This was clearly spelled out. When her first phone bill came in it was over $500 and when the company billed her $480 for the personal calls, she was the one upset.
Ethics is something that isn't taught in schools, at least in a formal class. Its supposed to be taught at home and in the church. But parents don't teach their kids much anymore, 50% of them aren't around, and even when a kid has both parents often they're both working so much and running so many errands that the only lesson that gets taught is how easy it is to get away with something since few are watching and fewer seem to care.
If I say that there has been a noticable decline in ethics during my lifetime, I start to sound like my Dad. Which means that if both of us are right (and we usually are), we shouldn't be so surprised when the periodic embezzlement pops up, its really just a sign of the times - Enron steals billions, board President steals thousands. I guess that's why I feel a little better when an association management company wins a national business ethics award. Some people are fighting the the tide.
If we see a few more companies or association officers get caught with their hands in the cookie jar, I think you're going to see state versions of Sarbanes-Oxley, with management company CEO's and Association President's having to sign off on annual financial statements swearing to their accuracy.
The formula for safety is simple - pay attention to what you're supposed to and have somebody from the outside look over your shoulder now and then. If you're not going to do it, then have the decency to tell the association so they can get someone who will.
Posted by joewest at March 18, 2007 9:18 PM