Academy/Banking, Cash & Internal Controls
Changing signers after elections
A new board takes office. The bank's signature card still says otherwise.
There is no single legal deadline for updating bank signers after an election; no statute or regulator sets one. The general shape is a board resolution naming the new signer, an updated signature card at the bank, and prompt removal of the outgoing officer. Ask your bank what it requires and check your bylaws for any timeline they set.
The gap nobody budgets for
An election changes who the board wants handling money. It does not, by itself, change who the bank will let handle money. Until someone updates the signature card, the outgoing treasurer or president can often still write checks, move funds, or log into online banking, whether or not they still hold the office.
This matters because access without accountability is exactly the gap that internal controls exist to close.
"Segregation of Duties is a system designed to prevent theft and fraud."
Source: Segregation of Duties, Personal MBA
A former officer with lingering signing rights is not a control problem because that person is untrustworthy. It is a control problem because nobody is watching them the way the board would watch a current signer, and because the reconciliation and review habits described elsewhere in this Course assume the people with access are the people the board actually elected.
The general shape of the change
No standard-setter or regulator publishes a required process for swapping signers, so treat the following as the common shape, not a legal checklist:
- The board passes a resolution naming the new signer and, where relevant, removing the old one.
- Someone brings that resolution, or a copy of the meeting minutes, to the bank.
- The bank updates its signature card and issues new access (cards, online banking credentials) for the incoming officer.
- The outgoing officer's access, physical and online, is cut off, not just left to expire.
Exactly what document the bank will accept, and how quickly it processes the change, varies by bank and is not set by any source used for this Course. Ask your bank directly rather than assuming a national standard exists.
What to ask your bank
Before the next election, not after, find out from your bank: what form or resolution they require, whether they need certified minutes or just a signed letter, how long the update takes, and whether online banking access is removed separately from check-signing authority. These answers differ by bank and sometimes by state, and your own bylaws may set additional requirements.
Keeping more than one active signer at all times, a practice worth adopting regardless of what any single source requires, means the association is never one departure away from having nobody who can pay a bill.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
A new treasurer is elected, but nobody updates the bank's signature card for six weeks. What is the practical effect during that gap?
A new board is seated in April. Which step actually removes the outgoing officer's ability to sign checks?
An association keeps only one active signer at all times to save paperwork. What does this practice risk?
Sources
- Segregation of Duties, Personal MBA
- Safeguarding HOA Funds: Best Practices to Prevent Fraud and Theft, McKonly & Asbury LLP
- Danger! Warning Signs of Embezzlement, Mulcahy Law Firm, P.C.
Banking, Cash & Internal Controls
Not sure who should even be a signer in the first place? See Who should be a signer?
What your bank requires to update signers, and whether your bylaws or state law set any deadline for removing an outgoing officer's access, vary by bank and by state. Check your governing documents and ask your bank directly.