A Fail-Safe Safeguard

While property management firms typically oversee bank accounts for cooperatives and condominiums, some governing boards are seeking greater transparency by requesting online access. These requests stem from a desire to be more involved in day-to-day operations, says Dawn Dickstein, president and founder the MD Squared Property Group. It's useful for board members to have the ability to view their corporate accounts whenever they have a question. It is, after all, their money.

Traditionally, co-op and condo boards have had such access only to reserve accounts, which are set up to handle unanticipated expenses, says Georgia Lombardo-Barton, president of Barton Management. Operating accounts, which fund day-to-day expenses, have been monitored chiefly by building managers, who make regular reports back to the full board.

"That is changing," Lombardo-Barton says. "If they have access to the reserve, they might as well check out the operating [account]. It’s the co-op's money and the shareholders are part of that organization. I don't see why they would not want that access."

Controlling expenditures
While it makes sense for boards to be able to have full access to reserve accounts, their online access to operating accounts should be "read-only," Dickstein says. This ensures that the board's management company can maintain proper oversight over day-to-day finances.

Having read-only access to operating accounts gives board members the best of both worlds, says Howard Lazarus, managing director of Tudor Realty Services. It gives boards assurance that funds are being spent properly – without offering them the temptation to reach into the till. In a sense, it’s a fail-safe safeguard.

Although co-op and condo boards often authorize their property managers to control both the reserve and operating accounts, Lazarus says it's better for board members to maintain exclusive control over the reserves. This ensures that they will be able to access the money whenever they need it. For example, if a co-op terminates a management company that had sole access to a reserve account, it could be difficult for board members to make a withdrawal. The problem would need to be resolved with the bank – an unwelcome delay if money is needed for, say, an emergency elevator repair.

Richard Montanye, an accountant with Marin & Montanye, adds that, as an added safeguard, at least two board members should be signatories to corporate accounts.

Setting up online account access for board members
In most cases, management companies have the ability to give board members read-only access to the corporation's bank accounts. Often the board members who receive such access also serve as board treasurers.

Granting a board member online access can be as simple as assigning him or her an ID and password, says Kelly Sleece, senior vice president of commercial private banking at BankUnited. "The management company would create their profile and give them access to the account," she explains.

She notes that this procedure varies, depending on individual bank policies. In some cases, board members may be required to fill out paperwork so the bank can verify their identity and their right to view accounts online.

Josh Koppel, president of HSC Management, says granting board members online access to account information has the added advantage of reducing the chance of misunderstandings over how money is being spent. The more board members know, the easier it is for them to provide oversight.

"I want them to know everything I know," Koppel says. "It makes for a much easier relationship."