🔥 When Boards Choose the Wrong Auditor

How a Hancock Center HOA Became a Case Study in Governance Failure

Thank you for your patience during my unexpected two-plus-month pause in publishing. As many of you know, I’ve been in the middle of a cross-country move from Las Vegas, Nevada to the Chicagoland area (again), and the process took far more time, logistics, and energy than planned. Now that I’m finally settled as of late November, regular Substack posts will resume — starting with today’s deep dive. I will complete the budget series next week. And, of course, I’ll soon have a post announcing the winners of the inaugural 🏆 Windy City Awards, which recognize the worst in the community association industry.

If you ever wanted a perfect example of how not to select an auditor for a condominium association, look no further than the internal memo from the president of 175 East Delaware Place Homeowners Association (at the former John Hancock Center) attached below. It’s a masterclass in poor governance, flawed assumptions, and a complete misunderstanding of what an auditor is actually hired to do.

2025 March Hancock Hoa Board Memo

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👀 How This Article Came About

Last month, a client asked me to serve as an election judge for their condominium association’s annual meeting. I politely declined because, as a CPA delivering forensic services, taking on a management role like election judge would immediately impair my independence and legally prevent me from issuing a proper forensic report.

That interaction reminded me of a far more troubling case — the internal memo from the president of 175 East Delaware Place Homeowners Association (at the former John Hancock Center) reproduced above.

It is, without exaggeration, a masterclass in what not to do when selecting an auditor.

Below is a breakdown of where the process went off the rails — and how boards and owners can avoid the same mistakes.

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1️⃣ Misunderstanding the Auditor’s Role as Election Judge

The memo repeatedly treats the CPA firm as though their main function is to “run the election.” Examples include:

• “We identified two qualified firms who can handle both the audit and the election…”

• “Our election process is more difficult…”

• “Cukierski is smaller and would have a more difficult time with the ballot distribution…”

But this misses a critical distinction—and signals a major red flag.

By HOA rules (Section 9.3.3), the CPA firm is specifically engaged as independent Election Judges, not merely as ballot counters or election administrators. Their duties include:

• Sending a Voting Packet to every Voting Member

• Determining quorum at the Annual Meeting

• Tabulating ballots and certifying written voting results

• Maintaining custody of all ballots for one year

These safeguards exist for the same reason external auditors exist: no one should both manage an election and oversee its results.

Management’s role is limited to administrative support: providing the Election Judges with lists of Owners, Voting Members, and percentage ownership interests.

This arrangement exists to protect the integrity and independence of both the election and the audit.

Treating the auditor like a routine ballot counter undermines independence, exposes the election to mismanagement, and confuses the board’s understanding of an audit versus an election engagement. A legitimate CPA firm performing an audit under professional standards should neither take on core management duties nor compromise its objectivity by serving as both auditor and election administrator without safeguards.

HOA counsel previously acknowledged that Picker, while acting as auditor, performed management functions—such as calculating allocation percentages—an inadvisable conflict that further muddy the auditor’s independence. Picker also tallied board votes for a 10-member board Executive Committee membership annually.

When an association conflates the CPA’s role, treating the auditor like a hired ballot counter, it signals one thing:
👉 The board does not understand what an audit actually is, nor the reason for professional separation of duties in HOA governance.

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2️⃣ Signing a Multi-Year Audit Contract Without Understanding It

The March 2025 memo casually reveals:

“We selected a three-year option… $17,000 for each of 2023, 2024, and 2025.”

Picker was awarded this contract after we warned the HOA that he was producing substandard audits and preparing false tax returns.
At the May 15, 2023 meeting, the board approved a three-year engagement anyway.

Associations that lock themselves into multi-year contracts without evaluating performance or confirming staffing stability are setting themselves up for:

• complacent auditing
  

• outdated methods
  

• reduced fraud detection
  

• stale eyes reviewing the books
  

Even worse:

“It is possible that he will still seek payment of $17,000 for 2025.”

If the board doesn’t understand what it signed, how it can be terminated, or what obligations exist, the board is not exercising its fiduciary duties.

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3️⃣ Accepting “Assurances” Instead of Qualifications

The memo admits the audit firm:

“suffered the attrition of several CPAs… including the individual who handled our election for many years.”

Instead of evaluating qualifications, the board relied on:

“Picker assured us he still had the ability to handle our election.”

That is not due diligence.

A competent board demands:

• updated résumés
  

• identity of the engagement partner
  

• peer-review report
  

• staffing matrix
  

• internal-control methodology
  

None of that happened.

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4️⃣ Blaming the Auditor for Problems the Board Itself Created

The memo concludes:

“It is clear this was not correct given the issues that [Picker] had with the 2024 election.”

But the same memo states:

“Our election process is more difficult than other associations because the management company is removed…”

Meaning:

• The board created an unnecessarily complex election system
  

• Then blamed the auditor for failing to execute it
  

• Even though auditors should not run elections in the first place
  

👉 This is not an audit failure.
This is a governance failure.

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⮕ NEW DEVELOPMENTS: The October 2025 Election

Here is where the facts get worse.

1. CondoCPA began counting ballots at least 3 hours before candidates were notified.

Observers have a statutory right to be present before counting begins.
That right was violated.

2. CondoCPA’s report omitted a candidate’s name and votes entirely.

The report had to be corrected.

3. CondoCPA’s “quality that stands out” tagline did not age well.

In the 2025 election:

• The integrity of the vote count was compromised
  

• Observers were deprived of statutory rights
  

• A candidate’s votes were erased from the initial count
  

No independent CPA firm should contribute to election irregularities of this magnitude.

The board blamed Picker for the 2024 election errors — but praised CondoCPA for 2025.

The real problem:

👉 The election system is structurally defective.

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5️⃣ Allowing the Attorney to Choose the Auditor

The memo states:

“Counsel has experience with them and is confident they have the resources…”

Any time a board allows an attorney to select or recommend an auditor, independence concerns skyrocket.

Auditors must be independent from:

• management
  

• governance influencers (like a board president who decides who may serve on a 48-member board)
  

• legal counsel
  

When attorneys funnel work to friendly CPA firms, the pairing becomes mutually protective:

“You don’t question my clients, and I’ll keep sending you engagements.”
Owners lose.

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6️⃣ Selecting the Auditor Based on Who Is ‘Easiest’ for Elections

The memo concludes:

“Based on their capabilities for handling the election, I recommend we hire CondoCPA.”

Not:

• audit methodology
  

• HOA expertise
  

• fraud-detection ability
  

• independence safeguards
  

Instead:

👉 Which firm can manage our ballots more easily?

The cost for this misplaced priority: The new budget for the combined audit and election services is $30,000 annually, a substantial increase over the previous $17,000 audit budget, all while ignoring the most fundamental criteria for selecting a CPA firm.

That is governance malpractice.

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7️⃣ Zero Discussion of Audit Quality

Nowhere does the memo reference:

• GAAS
  

• materiality
  

• fraud-risk assessment
  

• internal controls
  

• sampling
  

• peer review
  

• independence
  

A board that selects an auditor without mentioning any audit-related criteria has no idea what it is approving.

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⮕ NEW: The Board President’s Disclosure of an Investigation

Last summer, the board president disclosed to the board that he is under investigation for signing false federal and state tax returns prepared by Ralph Picker, CPA.

This is:

• the same Picker named in the memo
  

• the same Picker chosen for the audit
  

• the same Picker the board still relies on for financial guidance
  

The board proceeded with the audit engagement anyway.

Owners not in attendance at the board meeting were not informed.

⮕ NEW: Picker Also Helped Sudler Cover Up Its Financial Reporting Controversy

Beyond faulty audits and false tax returns, Picker issued a misleading “comfort letter” on November 6, 2020 that helped Sudler cover up a major financial reporting failure at 175 East Delaware Place HOA.

In April 2020, Sudler issued unreconciled financial statements containing significant accounting errors—including a $515,145 overstatement in the MaxSafe account (24.5% error) and a $243,328 overstatement in the Wintrust Wayne Hummer account (3.0% error), along with a $755,145 understatement in the U.S. Bank Operating account (80% error).”

Picker concluded in his comfort letter that Sudler’s interim financial reports were “complete and accurate”—despite the fact that Sudler failed to reconcile the HOA’s bank accounts before issuing statements, a fundamental internal control that would have detected these errors.

The board never discussed Picker’s letter, which appeared in the November 12, 2020 board packet. This silence allowed Sudler Executive VP Dean Lerner’s false June 2020 claim that the financial reports were correct to stand unchallenged.

This is the opposite of auditor independence.

It is auditor complicity.

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