When You Suspect Fraud in Your HOA, COA, or POA but Can’t Get a Forensic Audit: Practical Steps Owners Can Take

When You Suspect Fraud in Your HOA, COA, or POA but Can’t Get a Forensic Audit: Practical Steps Owners Can Take

If you live in a deed-restricted community, you probably assume your HOA, COA, or POA is handling your money responsibly. But when special assessments spike, contractors appear out of nowhere, or the same board controls everything for years, it’s natural to wonder if something more serious is going on.

Here’s the problem: even if you do suspect fraud, you often can’t hire a forensic accountant without the board’s approval, because the association controls the records and the checkbook.

This article walks through what you can realistically do from a forensic accounting standpoint when you:

  • Suspect financial abuse or waste in your HOA, COA, or POA
  • Can’t get board approval to hire a forensic accountant
  • Still want to protect your community and build a case the right way

It’s written for owners, not accountants or lawyers. Nothing here is legal advice—always confirm your specific rights with a qualified attorney in your state.

Why It’s So Hard to Investigate HOA/COA/POA Fraud

Community associations are perfect environments for financial abuse:

  • High cash flow, low oversight. Associations collect regular assessments, special assessments, and sometimes large reserve balances, but are often run by volunteer boards with limited training. Hovland Forensic & Financial+1
  • Concentrated power. A small group of officers (often the same people for years) may control spending, vendor selection, and access to records.
  • Owners pay but don’t supervise. Most owners just write the annual check and assume it’s fine, which lowers the risk of anyone noticing problems until they’re large.

At the same time, many states give owners clear legal rights to inspect association records, including financials, contracts, and minutes, often within a fixed number of days after a written request. For example, Florida’s HOA statute requires associations to maintain official records for at least 7 years and to make them available for inspection, with timelines and penalties if they don’t comply. LS Carlson Law+3The Florida Senate+3My Florida License+3

The tension is this:

The board controls the money and the files,
but you, as an owner, often still have powerful inspection rights —
if you know how to use them correctly.

You may not be able to “order” a forensic investigation, but you can start building a paper trail and a coalition that makes it much harder for problems to stay buried.

Audit vs. Forensic Investigation: Why Your “Annual Audit” Isn’t Enough

Many boards respond to concerns with:

“We’re already audited every year. If there was fraud, the CPA would have found it.”

From a forensic accounting perspective, that’s very misleading.

What a traditional financial audit does

A financial statement audit is designed to answer a narrow question:

Are the financial statements fairly presented, in all material respects, under GAAP (or similar standards)?

Key points:

  • Auditors test samples, not every transaction.
  • The goal is a high-level opinion, not to build a court-ready fraud case. rockymountainadvisory.com+1
  • Audits assume most people are honest; procedures are not optimized to catch clever schemes, related-party deals, or well-hidden kickbacks. The Bonadio Group

An audit can sometimes stumble across fraud, but it is not the same thing as a targeted investigation.

What a forensic accounting investigation does

A forensic accounting engagement is different in purpose and mindset:

  • Starts with specific concerns or risk areas (e.g., inflated vendor contracts, missing cash, undisclosed related parties). msnforenzix.com+2my-cpe.com+2
  • Uses transaction-level tracing, pattern analysis, and corroborating documents to answer questions like:
    • Who benefited?
    • How was it concealed?
    • What’s the dollar amount of loss?
  • Is designed to produce evidence that can stand up in litigation or regulatory action, including clear schedules and, if needed, expert testimony. Stevenson University+1

Your association’s “annual audit” can be useful, but it does not replace a forensic review. Still, when you can’t get a formal forensic engagement approved, there are several tactical steps you can take.

Step 1 – Clarify What Actually Worries You (and Write It Down)

From a forensic perspective, vague suspicions are less useful than specific, observable facts.

Start a written log (date it) and note:

  • Unusual financial events
    • Sudden or repeated special assessments
    • Large contracts approved without apparent competitive bids
    • Significant reserve transfers or “emergency” spending that never gets fully explained
  • Governance red flags
    • Same core group controlling the board for many years
    • Resistance to owner questions or stonewalling on records
    • Habit of holding “informal” or off-the-record meetings
  • Communication patterns
    • Evasive or inconsistent answers
    • Shifting explanations about the same project or cost
    • Claim that “the auditor already cleared this” without providing the actual report or management letter

Why this matters:

  • Written, dated notes refresh memory later and help you avoid exaggerating.
  • Forensic accountants and attorneys can use this log to prioritize where to look first, if you eventually get them involved.
  • If you ever need to show a regulator or court that your concerns are genuine, contemporaneous notes carry more weight than fresh recollections.

Step 2 – Use Your Legal Right to Inspect Records

Even if you can’t hire a forensic accountant yet, you can often force transparency by properly requesting records.

Know (or find) your state’s rules

Most states have statutes that spell out:

  • Which HOA/COA/POA records are “official records” (e.g., financial statements, general ledgers, bank statements, invoices, contracts, minutes). The Florida Senate+1
  • How long they must be kept (commonly 7 years for financial documents). My Florida License
  • How and when owners can inspect or request copies, and what fees can be charged. Hoa Management .com+2Becker+2

Your steps:

  1. Look up your governing statute
    • Search for “[your state] HOA records inspection statute” or similar.
    • If you’re in a condo, look for “condominium association records.”
  2. Request records in writing, using the magic words from your statute
    • Use certified mail or another trackable method.
    • Quote the specific statute section if possible.
    • State that you’re an owner and are exercising your statutory right to inspect.
  3. Ask for targeted sets of records, such as:
    • Bank statements and check images for the last 2–3 years
    • General ledger and trial balances
    • Vendor contracts and invoices for big projects (e.g., hurricane cleanup, drainage, paving)
    • Payroll reports and employee listings (if the association has staff)
    • Board minutes and any special assessment resolutions
  4. Follow the process precisely
    • Respect any reasonable rules on time, place, and manner of inspection allowed by statute. The Florida Senate+1
    • Take photos or scans of key documents; keep your own copies.

Done correctly, this does two things:

  • Creates a paper trail showing you tried to exercise your rights.
  • Gives you raw data you can later share with a forensic accountant, even if you can’t get a formal engagement approved by the board.

Step 3 – Make the Most of the Existing Annual Audit

You may be stuck with the association’s existing audit firm—but you can still extract value.

Obtain and read the full audit package

Ask for:

  • The full audited financial statements, not just a summary
  • The independent auditor’s report
  • Any management letter or “letter of recommendations” on internal controls

Look for:

  • References to material weaknesses or significant deficiencies in internal controls
  • Comments about lack of segregation of duties, inadequate documentation, or untimely reconciliations
  • Unusual emphasis-of-matter or going-concern language

These are not proof of fraud, but they are classic risk factors forensic accountants key in on. National Council of Nonprofits+2Office of Justice Programs+2

Ask better questions (in writing)

You or an owner committee can submit written questions to the board or management, such as:

  • “Did the auditor test any disbursements related to [specific project]?”
  • “Were any related-party transactions disclosed or considered?”
  • “Did the auditor review competitive bidding procedures for major contracts?”
  • “Did the auditor note any limitations in access to records or explanations from management?”

Their responses—or refusal to respond—tell you a lot:

  • Honest boards usually welcome the chance to show they followed best practices.
  • Evasive or hostile reactions to reasonable questions are behavioral red flags, even if you can’t prove fraud yet.

Step 4 – Build a Coalition of Reasonable Owners (Not a Mob)

From a forensic standpoint, what you don’t want is:

  • Facebook rumor wars
  • Accusations without evidence
  • Personal attacks or defamation

That kind of noise makes it easier for a questionable board to paint you as a troublemaker and harder for professionals to help you later.

Instead:

  • Find 3–10 owners who:
    • Are articulate and level-headed
    • Will read documents and attend meetings
    • Care about good governance more than personal vendettas
  • Share facts, not conclusions
    • “The special assessment was $X; the invoices we saw total $Y less than that.”
    • “The county offered to assume responsibility for [drainage/roads] but the board declined; we don’t see a clear economic justification in the minutes.”
    • “The board is refusing to provide [required records] within the statutory timeframe.”
  • Frame the issue around governance and fiduciary duty, not just “fraud”
    • “We want competitive bids and clear contracts.”
    • “We want proper segregation of duties and record-keeping.”
    • “We want to protect everyone’s property values and dues.”

A small, credible group can:

  • Support record requests
  • Speak during member comment portions of meetings
  • Run for the board or organize a recall if the governing documents allow it

All of that moves you closer to being able to authorize a proper forensic review if needed.

Step 5 – Consider a Limited-Scope Consult with a Forensic Accountant

Even when the board refuses to “hire” a forensic accountant, individual owners or an informal group may be able to:

  • Privately engage a forensic CPA for:
    • A high-level risk assessment of financial statements and budgets
    • Help designing more precise record-inspection requests
    • Translating what you already obtained into clear red-flag lists
  • Use only owner-accessible data
    • Audit reports
    • Budgets, reserve studies, and annual disclosures
    • Minutes, newsletters, and publicly available contracts
    • Any records you properly obtained through statutory inspection rights

A limited-scope consult is different from a full association engagement:

  • You’re not asking the CPA to issue an opinion on the association’s books.
  • You’re asking for professional pattern recognition and strategy:
    • “Based on what you see, what should we request next?”
    • “What are the biggest internal-control gaps?”
    • “What questions should we be asking at the next meeting?”

This can dramatically improve the signal-to-noise ratio of owner concerns and help you decide whether pushing for a full forensic investigation is warranted.

Step 6 – Work the Political Side: Elections, Recalls, and Messaging

In many communities, the only practical solution is changing who controls the board.

From a practical standpoint:

  • Review your governing documents for:
    • Election procedures
    • Nomination requirements
    • Recall or removal provisions
    • Quorum and voting thresholds
  • Recruit candidates who:
    • Are willing to commit to transparency
    • Will support an independent review of past decisions
    • Understand basic financial literacy or are willing to learn
  • Message it properly to owners
    • “We want clear bids, clean books, and strong internal controls—no witch hunts, just good governance.”
    • “We’re not trying to bankrupt the association with legal fees; we’re trying to avoid bigger losses or lawsuits later by fixing problems now.”

Once a reform-minded majority is in place, that board can:

Step 7 – Know When to Escalate (and Set Realistic Expectations)

Even with a rock-solid forensic case, outcomes vary:

  • Law enforcement thresholds are high. Agencies often prioritize massive losses or cases with broader public impact. Smaller community-association fraud may be treated as a civil dispute. Forensic Accounting Firm | Integrity+1
  • Civil litigation is costly and slow. A forensic report helps, but you still need an attorney, and recovery depends on whether the wrongdoers have assets. The Bonadio Group

That said, escalation may be appropriate when:

  • The board is willfully refusing to provide records required by statute
  • There is strong documentary evidence of self-dealing, undisclosed related-party vendors, or obvious overbilling
  • Large unaccounted-for amounts emerge after a preliminary review

Possible escalation channels (always via a qualified attorney in your state):

  • State agencies that regulate condominiums or community associations
  • Real estate or consumer-protection divisions
  • Demand letters and, if needed, civil lawsuits seeking damages and removal from office

A credible, well-documented record of your efforts—inspection requests, board responses, owner communications, and any professional observations—will make it much easier for counsel or regulators to take you seriously.

Final Thoughts: You’re Not Powerless

Living in a community where you suspect your HOA, COA, or POA board has misused funds is stressful, especially when:

  • The board controls the purse strings and the files
  • The existing audit seems useless for your concerns
  • You’re told you “can’t” hire a forensic accountant

But from a forensic accounting standpoint, you still have meaningful tools:

  • Document specific concerns, not just feelings
  • Exercise your statutory rights to inspect records, correctly and persistently
  • Leverage the existing audit instead of dismissing it entirely
  • Organize reasonable owners and frame the issue around governance and fiduciary duty
  • Use limited-scope forensic consultations to sharpen your strategy
  • Change the board composition when necessary so that a true forensic review can be authorized

You may not be able to flip a switch and order a full forensic investigation today.
But every step you take to gather records, ask precise questions, and build a coalition moves you closer to the truth—whatever that truth turns out to be.

Sources (for reference)

 

Picture of Joey Friedman
Joey Friedman

We Can Handle Emergencies and Quick Turnarounds
Mr. Friedman, as President of Joey Friedman CPA PA, is a practicing Certified Public Accountant, Forensic Accountant, Expert Witness, and Business Valuation Professional.

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