Not everything is included

On top of it all, there may be contracts that have not been included in the receivables and may not have been recorded in the board's minute books.

(In my opinion, the auditor should mention in the notes if there are no minutes showing that contracts were passed by a majority of directors at a duly called board meeting. It should also be noted in the auditor's reports if the board does not hold regularly scheduled board meetings.)

At one townhouse complex, the board and manager arranged for $140,000 worth of driveway paving with no money down. The contractor did the work and then sent the corporation monthly invoices for $10,000 until the work was fully paid.

That way the $140,000 did not show up in the accounts payable and neither the auditor, the owners or any prospective buyers saw this outstanding debt.

This debt is actually an undisclosed loan which is only legal if it is passed by the owners as a loan by-law.

Of course, if a new board gets elected, the contractors may panic and the new board could be flooded with demands for payments from their contractors. (This happened to Alfonso Carcamo when he was part of a new board elected at his condo. He describes it in his self-published book Condo Saga.)

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