How Should an Association Prepare for an Inspection If Its Books Are Incomplete?

Inspection, Compliance and Termination

Prepared by: Constantinople

If an association's books are incomplete, the first task is to identify the precise deficiency. The complete absence of a required book, failure to obtain required certification, failure to record a transaction and loss of an archived document are different problems. The accounting basis used, nature of activities and rules for the relevant period are checked. A book's existence does not establish that its entries match supporting documents. An inspection cannot be assessed through page counts alone.

Resolution, membership and accounting records should be gathered alongside bank statements, receipts, invoices, authority documents and earlier inspection letters. Lawful ways to verify missing documents, such as a counterpart's copy or bank record, are investigated. Creating backdated resolutions, adding signatures retrospectively or presenting nonexistent transactions as completed is not a solution. If the administration changed, the handover record and document requests to the former administration are important. The term of office during which the deficiency arose is specified.

The legal duty, evidential position concerning the deficiency and explanation to be given to the inspection authority are considered separately. Where financial records need correction, coordination with a financial specialist is required; a lawyer's review does not replace accounting services. If a document request has a deadline, the service date and periods requested should be preserved. The possibility of a sanction and the need for correction are separate assessments.