Audit Report for R&R and W&S Management Audit 2002/2003 - 11/22/02
Introduction: A Management Audit was conducted on 11/22/02 in accordance with the requirements of Association Bylaws. The Audit Host was Kent Christen, Manager with support from Betsy Hackman. The Audit Team consisted of Jim Chisholm (Lead Auditor, R&R) and B.J. Buhrman (Lead Auditor, W&S).
Since last years’ audits were very comprehensive and generated a significant number of non-compliances, the Rules Committee decided to focus this year’s audit on a re-assessment of last years non-compliances, the recommendations of the audit team and the status of progress on the Board’s Action Plans. This audit was conducted as a joint Management Audit since most of the previous audit findings were common to both Associations. The audit findings presented in this report may apply to only one Association (R&R or W&S) or to both Associations depending on the content. The order of items addressed here are by reference to the Management Audit Reports, submitted on 1/8/02 and the Board Action Plans of 2/22/02 and 3/15/02.
1. Documents/Policies – Master List: The
completion date for this nonconformance item for W&S (2/1/03) was after the
audit date so although this strictly applies to R&R, it is also pertinent
to the W&S Action Plan.
Although the Office has made considerable positive progress in the filing, organization and handling of key Association Policies and Documents, it was found that there is still no systematic way for the Manager and Office Staff to identify which is the correct or current version of each key document.
During the audit it was also demonstrated that the Office was unable to systematically identify when specific documents were written and whether they had been approved, or whether they were drafts or obsolete versions.
Last year the audit team recommended that a Master List of Documents, Policies and Forms be used and they actually provided a copy of a Master List developed by the Records and Information Committee. The Board’s Action plan stated that the Master List would be fully completed, updated and installed by 9/1/02 (W&W, 2/1/03). When the Audit Team reviewed the “current version” of the Master List supplied by the Manager they found the following problems:
a.) The Manager presented 2 very different versions of the Master List of Documents and the most recent one was not dated.
b.) There was a 3rd list, called R&R Master List File Directory (also undated and not included on the Master List), which is a valuable document for defining the filing order of hard file storage in the file cabinet but has no utility in defining the correct versions of key documents. Its name caused considerable confusion for the Manager and Staff.
c.) The “latest” version of the Master List, represented to contain all pertinent R&R documents was incomplete. It was missing many of the key Association Policies and Documents, e.g. The Policy for Committees, all of the Job Descriptions for employees, the latest ARC Rules and Regulations, the Rules of Order, the Employee Handbook, etc.) It was also not properly updated, missing the dates that many of the documents had been written or approved by the Board.
d.) Neither the Manager nor the Staff referred to the Master List when asked to produce the most recent version of any key Document.
The Action Plan for this Non-Compliance has not been effectively completed by the date indicated and is therefore still open.
2. Committee Formation and Charters:
The Audit team reviewed Board Meeting Minutes/Motions and the files of
several Committee Charters. They found
that the Committees were properly formed and staffed and that Charters were
available and regular reports had been provided. In the course of auditing committee documentation, three new audit
trails were identified that must be reviewed with the respective Boards. These are:
a.) The Charter for the Recreation Committee does not appear to follow the requirements for Committees per the Policy for Committees and also appears to overlap the social and fund-raising functions of Glacier Gals. [R&R]
b.) There was no evidence that the ARC has a Board
approved Charter, Current set of Rules and Regulations or related Policies
& Procedures. Approval of such
operating documents for the ARC by the Board is a requirement in the R&R
By-laws, Article 10.1.F. [R&R]
c.) The Rules & Regulations Committee (Special
Committee) has been performing functions that are ascribed to the Rules
Committee (Standing Committee) per W&S Bylaws, Article 10.1.A.1 and per the
Rules Committee approved Charter. The relationship and function of these
committees needs to be clarified to prevent confusion and foster proper
This specific Non-compliance
has been closed. The Audit Team, however, will follow up with the respective
Boards on the audit trails that were reported.
3. Key Process Implementation and Documentation:
a.) Road Maintenance/Continuous Safety Inspections – A procedure has been completed but record keeping requirements have not been identified and approved by the Boards by 9/02 as stated in the Action Plans. It is strongly recommended that operators make defined records of safety inspection to demonstrate good faith compliance with the Articles of Inc. and Bylaws (5.1.2.N.2). This item is still open.
b.) Receipt & Handling of Complaints - This process has been defined, documented and
approved by the Boards. A complaint
form has been standardized and effectively used. The audit team verified that complaints have been properly
recorded and filed. The audit team
recommended that all complaint forms be filed in a “complaint file” rather than
scattered by category. The one
exception may be ARC Complaints, since they are regularly accessed by ARC
Committee members, which might compromise confidentiality of the general
complaint process. This item is
c.) Consolidated procedure for invoicing, billing, dues
collection, delinquency, late fees, etc. Although the Billing Policy has been
corrected and improved, contradictory policies still exist in Association
documents, which must be deleted or referred to the Consolidated Policy, e.g.
Uniform Schedule of Penalties. Also the
invoice must clearly and unambiguously identify when late fees will be assessed
and how much they will be to avoid improper charges and confusion to
members. This item is still
4. Procedures, Rules for keeping of Association Records (Master List of Records):
The Action Plans require that this non-conformance be addressed and completed by 5/1/03. Although not due at this time, there has been no specific action taken to date and much work to accomplish on this important task. State Statutes and other business/legal requirements mandate keeping, safeguarding and ready access of certain records. The Associations have been burned in the past by this issue and have recently suffered because they were unable to locate records of Building Permit Applications. It is also important to understand the distinction between Documents/Procedures/Policies/Forms (blank forms) and Records. Records are evidences that we are properly carrying out the procedures, policies, duties, legal requirements, etc., of the Association. These include items like: minutes of Board and Association Meetings, records of Board motions, contracts, invoices, permits, permit applications, surveys, safety inspection results, complaints (filled in complaint forms), accidents/injuries, tax forms, budgets, committee reports, financial reports, correspondence, written communications with Association Members, audit reports, purchase orders, bank statements, expense receipts, etc. This item is still open and due for completion by 5/1/03.
5. Minutes to record the election/installation of Officers:
The lack of minutes, to document the election of officers of the Boards, was addressed by a motion to that effect on 2/16/02. Also both Boards properly recorded the election of officers for FY 02/03 at the meeting on 6/29/02. This item is closed.
6. Special Committees and their Charters:
The new R&R and W&S Policy for Committees clarifies the requirements for all committees and covers what should be included in Committee Charters including funding and spending guidelines. A proper charter exists for the only known Special Committees, viz. The Records and Information Committee and the “Rules and Regulations” Committee. The funding/spending questions that were raised for the Recreation Committee (by definition, now a Standing Committee) still continue and have been exacerbated by recent Halloween party issues. This will be addressed as a follow-up audit trail (see 2a above). This non-compliance is closed.
7. Rules of Order:
The prior R&R Board instituted a protocol for proper use of
Goldberg’s Rules of Order at Board Meetings and better-defined Member
Input expectations in order to improve the efficiency of meetings. W&S Meetings have followed the Rules of
Order and have no efficiency issues. This non-compliance is closed.
An issue still exists related to the use of Goldberg’s Rules of Order for Association Meetings. The Bylaws of both Associations require that Annual Meetings be conducted using an “established procedure”, see Article 8.1. Such procedure needs to define the extent to which Goldberg’s applies. This will be addressed with the Boards as a follow-up audit trail.
1. Procedure for use of Association Buildings and Equipment:
The procedure has not been completed to date. The Action Plan specified completion by 9/1/02.
This issue is still open.
2. End of year financial statements: End of year financial statements for year 2001 are available. This item is closed.
3. Consolidated Procedure for billing, collection, etc.
A fully “consolidated” procedure has not been completed. Also see Non-compliance #3c above. The Action Plans specified completion by 6/1/02. This issue is still open.
4. Update of Attachment 1 of the W&S By Laws: Attachment 1 of the W&S By Laws has changed, however, when a copy was requested we received an old copy. No process is in place to update Attachment 1 of the W&S By Laws. This item is still open.
5. Periodic Checkpoints and follow-up on Board Motions:
The Manager could produce no evidence to show that this was a continuing activity as specified in the Action Plan. Some motions that were reviewed as part of the audit, e.g. the motion to change late fees to $15 per month, involved complex changes to several key documents, yet there was no ownership assigned to carry out the complex changes and no follow-up to see that the motion was properly executed in a timely fashion. Also there is no mechanism for the Board to review, check for accuracy, legality, clarity and completeness of motions, which are summarized in the “Motion Books”. This issue is still open.
6. List of Standard Forms:
The standard forms have been listed on the R&R Master List. This item is closed.
Summary: The Audit Team appreciates the efforts of the Manager and Staff for the progress they have made in rectifying these serious issues. The execution of the Board’s Action Plans seem to be the responsibility of Kent and the Staff with minimal participation or follow-up by the R&R and W&S Boards. Several Non-Compliances remain open and both Kent and the Audit Team agreed on the action that needs to be accomplished (subject to Boards approval). This action and the timetable for completion are included in the attached 11/02 Management Audit Action Plan.
Audit trails were also identified that must be addressed with the
R&R and W&S Boards in early December.
Thanks again to Kent Christen for hosting the Audit and to Betsy
Hackman for her support.
Report completed and submitted on 12/8/02 by Jim Chisholm and B.J.
Buhrman, Lead Auditors.