OK the water company came yesterday afternoon and checked the meter. They attached a flow meter to the outside faucet, recorded the reading on the meter in the yard and ran 50 gallons through the front faucet. We checked the meter in the yard and it was reading 50 gallons. They repeated the process a second time and we got the same result.
Next we checked the irrigation system, they recorded the number on the meter in the yard and I turned on the sprinklers and let them run for 5 minutes. Holy crap...102 gallons of water in 5 minutes! I think we've found the problem.
When my mother got the notice from the HOA she had parts of the yard sodded (by her grandaughter's husband who does landscaping work) and he set the sprinklers to come on 7 days a week, twice a day for 20 minutes each session. So the bottom line is apparently she did use that much water. The water company employee said that she does this kind of check 2-3 times a week and the culprit is almost always the irrigation system.