Dual approvals

What dual approval actually means

Dual approval means that once a payment crosses a threshold the board sets, one person cannot authorize it alone. A second person, ideally a board member who isn't the one who requested the payment, has to sign the check or approve the transfer too. An HOA embezzlement checklist from a practicing community-association attorney puts the control this way:

"Require two signatures (including at least one board member) on all checks or transfers greater than a pre-designated amount."

Source: Danger! Warning Signs of Embezzlement, Mulcahy Law Firm, P.C.

This isn't a statement about anyone's honesty. It removes the opportunity for one person to write a check and approve it too, which is the same opportunity behind most embezzlement cases boards discover too late.

Where the threshold comes from

No source sets a single required dollar figure or a required number of signers for every association. That threshold lives in your governing documents, any board-adopted financial policy, and your bank's own signature-card rules. Ask your bank what it actually requires before assuming your bylaws are the whole story.

Some states go further and write an approval threshold into statute. California, for example, requires prior written board approval before funds leave a reserve or operating account above a set amount:

"The lesser of ten thousand dollars ($10,000) or 5 percent of estimated income in the annual operating budget."

Source: California Civil Code section 5380, State of California

That figure is California's alone; it does not carry over to any other state. Check your own state's statute and your governing documents rather than assuming a number.

Dual approval stops the fake-urgent-wire scam

The scam usually arrives as an email that looks like it's from the board president or treasurer, sent late in the day, asking someone to wire money or update a vendor's bank details right now. The FBI calls this business email compromise, and it names the fix directly:

"Verify changes in vendor payment location by adding additional two-factor authentication such as having a secondary sign-off by company personnel."

Source: Business E-mail Compromise: The 5 Billion Dollar Scam, FBI Internet Crime Complaint Center

Two more habits make the sign-off real instead of a formality: forward the request to start a new message thread instead of replying to it, and confirm by calling a phone number already on file, never one included in the request itself. A fraudster who can fake an email can just as easily fake a callback number.