Accounting firm offers list to avoid management abuses.

An 18-point checklist created to minimize fraud involving management of coops and condominiums was released recently by Moore Stephens, a leading international accounting firm.

"The checklist is designed to assist any co-op board concerned about the proper management of its building," said Alan Fitter, a Moore Stephens partner, whose firm audits co-ops in the New York metropolitan area. "This list combines common sense with internal control procedures developed during the performance of our audits, " Fitter said.

For example, Fitter recommends that co-op boards review vendor lists twice a year to insure that only arms-length relationships exist. "That includes all friends or relatives of board members or building managers," he said. "Our guide is a useful tool to aid management in the efficient operation of co-ops and condominiums."

No list will cover every conceivable situation, and Fitter suggests that any concerned co-op board seek the advice of an outside accounting firm familiar with the intricacies of the industry.

Moore Stephens' "Guidelines to Responsible Operation of Major Co-Op Properties" are:

* Co-op board must recognize its responsibility as the oversight body of the co-op's operations;

* Consider term limits for board members (bylaws), both as members and officers;

* No board member should make any unilateral financial decisions above a predetermined amount;

* Consider utilization of "super majority " (simple majority of building's resident owners) in all cases where majority ownership is off premises/passive, and especially when financial decisions will have a possible impact on the reserve fund;

* Review vendor lists semi-annually. They should not include parties related to board members or managing agents;

* Consider rotating some vendors on a bi-annual basis;

* Competitive bids should be mandatory for all work in excess of 10 percent of working capital;

* Order an engineering report on a stated time basis. review report of sponsor's engineer or do full-fledged report, followed by annual "check-ups";

* Service contracts should be for no more than one year;

* Rotate managing agent's representative every five years;

* On a selected basis, job reviews should be done by an outside vendor. Seek competitive prices;

* Only a board member should approve purchases over a pre-determined amount;

* Perform spot inventory check of supplies, and keep all inventory under lock and key;

* Insist on dual signatures on checks over a certain amount. One signature should always be of a board member;

* A board member should carefully review the monthly bank reconciliation;

* A board member should review payroll on a monthly basis;

* Have monthly financials prepared and have your accountant attend board meetings to discuss; also, compare budget to actual expenditures on at least a quarterly basis;

* Compare cost of goods and services to industry standards.