What’s Really Happening With IVGID Financials

What’s Really Happening With IVGID Financials                    by Mick Homan



I wanted to respond to recent posts and public comments made by Trustee Schmitz and others, hyperventilating about the magnitude of accounting issues at IVGID.  But first, some background and full disclosure. I tendered my letter of resignation from the IVGID Audit Committee at the special Board meeting August 24.  This is unfortunate.  I joined the Audit Committee out of a deep desire to help IVGID and the Board of Trustees (“Board”) move forward with key priorities, to improve its overall accounting and finance capabilities and its compliance/ethical culture.  I had the good fortune to work as an auditor and technical accounting expert for 2 of the largest public accounting firms in the world for over 10 years and then for a fortune 50 company, rising to the position of Chief Accounting Officer before I retired.  Given my background and experiences, I felt I could add significant value for the Board and District.  However, I came to the unfortunate conclusion that I could no longer serve the present Board when in my opinion its leadership demonstrates a complete disregard for ethical behavior.


So, moving onto the hysteria some are trying to create about the condition of things within the accounting and finance function at IVGID.  To be clear, things are not great.  The acting finance director revealed at the August 24 meeting that 50% of the positions within the accounting staff are currently vacant.  Some of the staff have departed very recently – some dating back almost a year, and some positions have never been filled due to a lack of qualified candidates who, for whatever reason, choose not to seriously consider working for IVGID.  Those that remain are doing hero’s work just trying to process basic day to day duties.  They don’t have the capacity to do more.  On top of that, the district is in the midst of a complete financial systems conversion that is also not proceeding as planned, caused by a combination of systems shortcomings, design outages and staffing issues (both internal staffing issues and less than stellar resources from the system provider). This is leading to delays in providing normal monthly reporting, clerical errors in various budget and other forms, and the realization that it may prove very difficult to complete the year-end close and annual audit process by the required deadlines.


Net – a challenging time for the IVGID staff.    However, the hysteria and fear mongering being perpetuated by community members and even some Trustees that there are near catastrophic accounting issues at this point is unfounded.  Here’s some perspective to support that:


    • In the August 24 Board meeting, both staff and trustees emphasized multiple times that there has been absolutely no evidence to date of any fraud or malfeasance in the accounting space. Neither past staff and Trustees nor current staff and Trustees have encountered, discovered, or seen any evidence of any such occurrences.
    • It is true that some of the basic internal controls that underlying any quality accounting and financial statement preparation process are not being completed (items like bank account and other statement/account reconciliations). Some of this is caused by past failures of staff to carry out assigned responsibilities.  However, more recently, this is due to the severe staffing shortages.  IVGID simply doesn’t have enough qualified accounting staff to perform the internal control processes.  I want to be clear that this situation is not acceptable.  However, I also want to be perfectly clear that a failure to execute underlying internal control processes does not mean the related accounting is wrong.  The acting finance director did provide an update at the August 24 meeting, where he mentioned that with the addition of contract staffing from an outside accounting firm, they are making good progress in reconciling balances and did not mention they had found any significant issues to date.
    • Much is being made about the ledgers being out of balance by somewhere in the range of $3-4 million. To the uninformed, this sounds quite troubling.  However, some context might be helpful.  As mentioned earlier, IVGID is in the midst of a complete accounting systems conversion.  This type of thing happens every 10-15 years or more for an entity.  It is extremely commonplace – dare I say even expected – that there will be issues with the conversion.  Despite the best of planning, not all balances, accounts, or transactions successfully migrate from the old system to the new.  Again – that does not indicate the accounting is wrong or funds are missing.  It generally means that there were glitches in the transfer of information and that the reconciliation between the old and new system hasn’t been completed to correct those glitches.  Unfortunately, the same staffing outage mentioned above means IVGID doesn’t have the staffing to attack this. Again, the acting finance director mentioned that resources are being brought to bear on this and reconciliation has started.
    • One particular member of the community (and former audit committee member) has written dozens of memos to the district claiming millions of dollars of accounting errors. I will give this individual credit for uncovering a few past issues with IVGID’s policies and procedures on capital spending that resulted in write-offs of capital assets a few years back.  When I joined the Audit Committee, I spent considerable time penetrating what led to those issues.  I talked to senior staff and reviewed remedial actions they had taken to correct those outages.  It seemed clear to me that they had turned the corner and were making significant progress on correcting those issues.  In fact, the Board’s prior Audit Committee, which consisted of Cliff Dobler, Sara Schmitz, Matthew Dent and Ray Tulloch agreed to engage the District’s auditor to perform a special engagement in Fiscal 2022 to specifically examine compliance with revised capital spending accounting policies.  That engagement, which covered the entirety of fiscal 2022, found no issues, providing comfort that the past shortcomings had largely been rectified.
    • In addition, I spent hundreds of hours working with staff and another audit committee member trying to close out about 30 of the memos written by the above-mentioned member of the community. We made good progress.  We had closed out our investigation of all but 9 of those memos with no significant corrective actions warranted.  We did agree to some minor policy changes going forward, along with some supplemental disclosures in the annual financial report.  Importantly there were no significant accounting errors noted.  We had open questions on the remaining 9 memos that staff was following up on.  Unfortunately, that work was placed on hold, initially due to other Board priorities and subsequently due to staff departures.  At present, there are no remaining accounting or finance staff that are familiar with our work.  They have all resigned (each indicating or relayed to me in private conversations they were fed up with the Board).   The total amount still up for review in the remaining memos is less than $1 million, all dealing with past capital spending.  It is possible that a portion of that amount will be written off when time and resources are put in place to finish the work.  I’ve had several discussions with the individual that authored the memos, primarily as we worked through his backlog of memos.  What is abundantly clear to me is that he doesn’t fully grasp some of the basic accounting rules in this space and is using misinformed and uneducated rationale to jump to completely incorrect conclusions.
    • Finally, the District is subject to an annual financial audit of its financial statements and related footnotes. The most recent audit for the fiscal year ended June 30, 2022, conducted by the District’s outside independent accounting firm, gave a clean opinion on those financial statements.  As with the special engagement to audit capital spending, this firm was engaged by, and the audit scope established by, the former Audit Committee, consisting of Cliff Dobler, Sara Schmitz, Matthew Dent and Ray Tulloch.


It’s one thing for members of the public who are not informed and are not in a fiduciary position to make disparaging comments about the quality, accuracy, and trustworthiness of the IVGID’s financial reporting and underlying accounting.  It’s quite another for an officer, senior staff or another individual with a fiduciary responsibility to make unsubstantiated claims.  Trustee Schmitz made statements in the August 24 meeting and subsequent social media posts that the magnitude of accounting issues disclosed in the meeting materials was “sobering” and many years in the making.  I sincerely hope she’s referring to the critical staffing issues and control outages, all of which transpired during her term on the Board and Audit Committee.  I hope she is not inferring there are material financial errors.  Further, Audit Committee Chair Nolet stated in his public comments that he wasn’t buying that staff left because of the actions of individual Board members, and inferred that senior staff may have left due to underlying fraud and malfeasance.  As summarized above, there are no material accounting outages known at this point. Nor is there any evidence of fraud or malfeasance in the accounting.   Insinuating anything to the contrary would be not only reckless, but a significant breach of both individuals’ fiduciary duty to the district.  A sitting Board member or Audit Committee Chair simply does not create an unsubstantiated narrative that the District’s financial statements cannot be relied on. That could erode the general public’s and lender’s faith and confidence in the District, causing irreparable harm, leading to both civil and criminal exposure.  It is my hope that they will both step forward and clarify their statements.


Net – we clearly have issues we need to solve.  We need to constructively solve them.  Inflaming the situation by making unsubstantiated claims or inferences, particularly from those in a position of authority, does nothing to help the cause.  They only exacerbate the situation by further demoralizing the staff that remain and chasing off potential candidates that we desperately need to fill the many critical open roles.  The funds approved by the Board to hire temporary contractors is a necessary band-aid fix.  These firms can effectively step into a crisis and help in the short term.  But it’s not sustainable.  We need to attract qualified full-time professionals.  It will be impossible to do that with the current environment and Board dynamic that exists in the District.  So, I would implore the Trustees and outspoken members of the community to take a deep breath, drop their political and personal agendas and the constant blame-game mentality that has brought us to this point.  Constructively work with staff and other experts to develop real solutions.  If not, the fear mongering and hysteria will play out in real life.

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Mick Homan’s Advice to the IVGID Board re: the Dobler Letter

Prior to the 9/27/2023 IVGID Board Meeting, Mick Homan sent an email to the Board of Trustees advising them not to take legal action against the former HR Director for releasing a copy of the letter sent to Mr. Dobler.  This letter suspended Dobler from using the golf courses for three months because of inappropriate interactions with IVGIID Staff.  It is good advice: the Board should listen.

Political Platform Backed by Recall Supporters

This platform was submitted to Invest in Incline by the Committee to Recall Trustees Schmitz and Dent.  The Committee developed this platform when it became apparent that it was likely there would be sufficient signatures collected on the Recall petitions to qualify for a Recall Election.  They wanted to indicate the candidate platform they would support for those seeking to replace Trustees who were successfully recalled in the Special Election.

Former IVGID Director of Finance Paul Navazio Sets the Record Straight

Paul Navazio, former Director of Finance of Incline Village General Improvement District, sets the record straight about financial issues confronting IVGID, and the underlying cause of these and other issues that have precipitated the effort to Recall Trustees Schmitz and Dent

What’s Really Happening With IVGID Financials

The following is a NEW report from Mick Homan on the status of IVGID financials, without all the hype, innuendo, and hysteria.  It is a bit of a read but comes across as genuine and accurate.

Mick Homan’s Audit Committee Resignation Letter

This post reveals Mick Homan’s letter of resignation from the IVGID Audit Committee, and it deserves to be read by every IV/CB resident and property owner.  It is a clear depiction of the ethical issues that confront our community as a result of the actions taken by Trustees Schmitz and Dent and Tulloch over the last several months, and more.

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