B.L. from New Jersey writes:
Dear Mister Condo,
How can a condo owner in New Jersey legally initiate an audit of a community budget and expenses? Annual budget is given to condo owners but numbers are never verified and HOA has its own attorney-auditor, not homeowners.
Mister Condo replies:
B.L., as a homeowner, you can request an external audit of your association’s finances. However, it would be at your own expense and that would be a significant investment. The typical model for an audit is that the association would hire an independent third party auditor (usually a CPA) to come in and review the books. There are several levels of audit and each has its own purpose. In New Jersey, there are two laws that come into play. The New Jersey Condominium Act requires that the association keep accurate records and that those records are made reasonably available to any unit owner. The Non-Profit Corporation Act, which encompasses most condominium associations, requires that an independent third party auditor perform an annual audit of the association’s records. That is why the association has it’s own auditor; that’s the law in New Jersey.
Of course, the reason to have any type of audit is to make sure that association funds are not missing or being misappropriated. Do you have reason to believe that your association’s money is being mishandled? If so, you may wish to take a look at the records on your own. In my unqualified, non-legal opinion, it would seem that with an annual audit being conducted by an independent third party, there shouldn’t be too much wrongful activity going on. Perhaps you need to review the auditor’s finding and determine if further investigation is merited. Alternatively, you may wish to seek a seat on the Board to get hands on with your association’s financial management. Seeing the budget as a unit owner is one thing; being a part of the team that makes the decisions on how and when the money is spent is quite another. Good luck!