How a housing association board should approve large expenses

August is when the autumn's work gets ordered. The roofer who couldn't come in June sends a revised quote, the heating service turns up a valve that should be replaced, and the caretaker wants a new lawnmower. Some of it is routine. Some of it is €18,000 that the board will be asked about at the next annual meeting.

Most boards don't have a fraud problem. They have an ambiguity problem: nobody is sure who was allowed to agree to what, and an invoice arrives for work that was discussed but never actually decided.

Set spending limits in writing

Start with a short delegation decision, minuted at a board meeting, that says who can approve what without asking anyone. A typical version for a 60-flat association: the property manager or caretaker can order work up to €1,000 within the budget, the chair or treasurer can approve up to €5,000, and anything above that, anything outside the budget and any withdrawal from the reserve fund needs a board decision. Pick numbers that fit your size. The point is that there are numbers.

Also write down what counts as one expense. Splitting a €9,000 job into three €3,000 orders to stay under a limit should be explicitly against the rules, not just against their spirit.

The approval process

1. 1Step 1: Request. Whoever wants the work writes a short request: what, why now, the cost, which budget line or reserve fund item it belongs to, and what happens if it waits.
2. 2Step 2: Quotes. Above the board limit, get at least two quotes, three for larger jobs, and make sure they price the same scope. A cheap quote that leaves out scaffolding is not cheap.
3. 3Step 3: Budget check. The treasurer confirms whether it fits this year's budget or the maintenance plan, and what is left on that line afterwards.
4. 4Step 4: Decision. The board decides at a meeting or, if the bylaws allow it, by written procedure between meetings. The record shows the amount, the supplier and who took part.
5. 5Step 5: Order. Only now does anyone sign an order or tell the contractor to start, with a reference to the decision.
6. 6Step 6: Invoice match. When the invoice arrives, compare it with the approved amount. Anything above a small agreed tolerance goes back to whoever approved it.
7. 7Step 7: Report. List decisions above the delegation limits in the next board minutes and in the annual report.

Reserve fund withdrawals get their own step

The reserve fund is money members have set aside for specific work. Spending it on something else, or on a project that isn't in the maintenance plan, should never happen quietly. Require a board decision for every withdrawal, state which planned item it pays for, and note whether the plan changes as a result. If the roof costs €40,000 more than planned, the board should see that the facade project in year 8 now has less money behind it.

Some associations go further and require the general meeting to approve any project above a certain size, or any withdrawal outside the plan. Your bylaws may already say so, so check before the board commits to something it cannot decide alone.

Emergencies

A burst pipe at two in the morning can't wait for a board meeting. Decide in advance who may order emergency work, up to what amount, and how soon the board must be told, for example by the next working day. The board then confirms the decision at its next meeting. Keep the definition of an emergency narrow: water, fire, safety, someone stuck in the lift, no heat in January. A broken lock on the main entrance may be urgent. A cracked tile in the laundry room is not.

Conflicts of interest

The board member whose brother-in-law runs a plumbing firm is a classic. It is not necessarily a problem, as long as it is out in the open. Ask members to declare any connection to a supplier before a decision, record it in the minutes, and have them sit out that decision. Many bylaws and national rules require this anyway, and it protects the board member as much as the association when someone asks questions a year later.

Keep the trail together

Each approved expense should leave a trail anyone on the board can follow a year later: request, quotes, decision, order, invoice, payment. Keep them together, not spread across three inboxes and a folder on the treasurer's laptop. When the auditor asks about the €18,000 roof repair, the answer should take two minutes. When a new board takes over after the annual meeting, it should be able to see what has been committed but not yet invoiced.

In Kelvo Nest, large expenses and reserve fund withdrawals go to the board for approval before they are paid, and the decision stays attached to the expense. The help centre explains how it works.