The Fraud Triangle

The Fraud Triangle describes three factors that are present in every situation of fraud: Motive, Rationalization and Opportunity. It is used by financial auditors as a litmus test to see if there is a possibility of fraud. The complete opacity of all management activities for our condo and withholding of key financial documents such as footnotes and cash flow statements makes it impossible to make any assertions about unethical behavior, but then again, is also indicative of opportunity for fraud.

Our building manager/president of the condo association proudly proclaims that we have only run a single financial audit in her 15 years as president of the association, and that too when she first came to power. This should be a point of concern, not of pride.

Building management should erase even a chance of an accusation of fraud by making all financial documents available to unit owners who request a copy of them (as stipulated by Illinois condo law), give more visibility into required building maintenance projects and their costs, and by being more forthcoming about lawsuits we are engaged in.

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