It’s only natural for someone living in a condominium or homeowner association to assume you can trust your property management company to safeguard your financial wellbeing. And at FirstService Residential, we take that trust to heart. We even address it specifically in our corporate values. So we, too, were troubled by the recent news that an executive at another management company allegedly embezzled millions of dollars from multiple Twin Cities communities. 
 
Fraud can happen with any management company and even in a community that is self-managed.  Although there’s no way to ensure 100-percent protection against such an occurrence, FirstService Residential takes considerable precautions to minimize its likelihood. In addition, we put safeguards in place to mitigate risk and reduce the impact to your association should your community ever become the victim of fraudulent activity. 
 

1. We maintain strong controls.

Controls act as a deterrent to potential perpetrators. They also help to mitigate damages by uncovering fraudulent activity more quickly. Here are some of the key controls that FirstService Residential utilizes:

  • An automated fraud detection system. When your community is managed by FirstService Residential, you gain access to Positive Pay, a fraud detection tool offered by our banking partners. The bank verifies checks presented for payment against a list of authorized checks that your association has issued. If the account number, check number and dollar amount do not match what is on the list, the bank informs your management company and only makes a payment upon further investigation and approval of the management company. 
  • Multi-factor authentication. Electronic transfers and payments can be very convenient, but without proper security they can also be vulnerable to unauthorized access. FirstService Residential requires that anyone attempting to transfer funds to other banks to verify their identity through a separate device or channel (secure tokens, key fobs). 
  • Segregation of duties. FirstService Residential separates employees who handle your association’s money from those who record your transactions. We do this by creating distinct groups within our organization for each financial function: payables/payments, cash collections and record keeping/receipts. This prevents someone who handles your money from fudging receipts.
  • Bank reconciliations. Our automated reconciliation process validates that our internal records match your bank transaction records. If inconsistencies exist, they are brought to senior management’s attention immediately.


2. We have resources that smaller companies don’t have.

As a large company, FirstService Residential is able to invest in enhancements, staff and programs that directly or indirectly protect your association’s financial wellbeing. Examples include:

  • FirstService Residential offers residents the option of paying their assessments electronically, reducing the potential for check fraud.
  • Employing a team of experienced associates and professional leaders to effectively separate financial duties, provide oversight and continuously maintain internal checks and balances
  • Offering training to associates and board members to help increase awareness and reduce financial vulnerabilities
  • Establishing formal protocols for approving invoices, as well as maintaining logs to document who approved each invoice


3. We abide by high standards of transparency, accountability and security.

FirstService Residential is a division of a publicly traded company, FirstService Corporation. As such, our financial activities are governed by strict legal standards, including those contained in the Sarbanes-Oxley Act of 2002. In part, this means that we must:
  • Disclose a wide range of our financial transactions
  • Have our financial statements audited by an independent certified public accountant (CPA) each year
  • Have internal controls to track data access, prevent data tampering and validate financial reports
  • Hold our executive team members individually accountable for financial activities
  • Disclose the effectiveness of these controls and any breaches resulting from fraud or control system flaws to independent auditors
In addition, we perform internal audits to ensure that we are effectively protecting your association’s assets and data and are complying with local laws and regulations.
 

4. We maintain insurance protection against employee crime. 

In the unlikely event that one of our associates engages in fraud, FirstService Residential is covered by a $5-million fidelity policy. This means that your association will be reimbursed for losses that result from criminal activity by our associates. To prevent you from incurring additional hardship, FirstService Residential will usually reimburse your association immediately rather than waiting for the insurance company to process the claim.
 
To find out more about how the leading property management company in the Twin Cities can help protect your association from fraud and theft, contact FirstService Residential today.

Friday September 29, 2017