Much has been made about the supposed critical state of accounting at the Incline Village General Improvement District (IVGID). Rumors and claims have been spread on social media and at IVGID board meetings by members of the public and, of more concern, by IVGID trustees and the chair of the IVGID Audit Committee. I wanted to provide some perspective on those claims.
I had the good fortune to work as an auditor and technical accounting expert for two of the largest public accounting firms in the world and then for a Fortune 50 company, where I retired as the chief accounting officer. I joined the IVGID audit committee in 2022 to help the board improve capabilities in the finance, accounting, and ethics/compliance areas. Unfortunately, in August 2023 I came to the conclusion that I could no longer serve the present board when, in my opinion, its leadership demonstrated a complete disregard for ethical behavior.
This is a challenging time for IVGID staff. IVGID leadership recently revealed that half of the accounting positions are vacant. IVGID is losing staff at an alarming rate and can’t fill open spots. It’s been relayed to me by many of the departing staff that their departure was due to a hostile environment created by certain trustees. Staffing outages have become critical in the last six to 12 months. On top of that, IVGID is in the midst of a complete accounting systems conversion that’s had hiccups, caused by outages in systems, design, and staffing. This has led to delays in monthly and year-end reporting and minor clerical errors in board packages and budget forms. But as of now, the narrative that IVGID has serious accounting issues is unfounded. Here’s some supporting perspective:
Certain required internal control tasks like reconciliations aren’t being completed. This is caused by a combination of lax compliance and staffing shortages. IVGID simply doesn’t have enough qualified accounting staff to perform the tasks. But failing to execute underlying internal controls doesn’t mean the related accounting is wrong.
It’s been noted that IVGID’s ledgers are out of balance by $3 million to $4 million, leading to a claim that money is missing. It is true the ledgers are out of balance. While this may sound troubling, the discrepancies relates to the above-mentioned system conversion. Despite thorough planning, not all balances or transactions successfully migrate from the old system to the new. That doesn’t mean the accounting is wrong or funds are missing. It usually means glitches in the data transfer simply haven’t been reconciled yet. There is an outspoken community member who’s written dozens of memos claiming millions of dollars in accounting errors and fraudulent behavior. He deserves credit for uncovering past issues with capital spending that resulted in write-offs of capital assets. When I joined the audit committee, I talked to senior staff and reviewed remediation actions. Staff made significant progress. A special engagement to audit compliance with new capital accounting policies was recently completed. It found no issues. We also spent significant time researching and resolving the outstanding memos. We closed out two-thirds of the memos. No significant corrective actions were warranted. The total amount left for review is under $1 million.
IVGID undergoes annual financial statement audits. The fiscal 2022 audit received a clean opinion.
Finally, the acting finance director provided an update in a recent board meeting, noting that they’re making good progress in reconciling balances. He and the trustees also acknowledged there has been no evidence of any financial fraud.
Given these factors, the current attacks on the quality of the underlying accounting at IVGID are unfounded. Accordingly, trustees and the audit committee chair should retract comments suggesting we have significant errors or fraud. Such suggestions are unwarranted, reckless, and a breach of their fiduciary duty to IVGID. These leaders should realize that creating an unsubstantiated narrative that IVGID’s financials can’t be relied on could erode the public and lenders’ confidence in the district, causing irreparable harm and leading to civil, financial, and criminal exposure.
~ Mick Homan resides in Incline Village. He relocated from the Midwest in 2020 after retiring as Procter & Gamble‘s chief accounting officer. He moved to the Tahoe Basin to enjoy all things outdoors, including skiing, golfing, mountain biking, hiking, and spending time at/in/on the water.