Author: Mick Homan, IVGID Trustee
This is an open letter to residents and property owners. It was cross-posted to social media by Trustee Homan.
As a Trustee, Audit Committee member, and Treasurer of the Incline Village General Improvement District (IVGID), I wanted to provide some perspective on the state of our financial reporting for people who genuinely want more context to truly understand the situation.
We recently completed and received our fiscal year (“FY”) 2024 audited financial statements. Along with that opinion, we also received the auditors’ report on our internal controls. Both of these were presented to the Board at the June 11 meeting. This is a substantial win for IVGID, its senior leadership and the finance and accounting staff, and it demonstrates outstanding progress following a year in which we could not complete the audit and received a disclaimer of opinion from our auditors.
In full transparency, our audit opinion did receive a qualification that I’ll touch on below, and the internal controls report did include several material weaknesses and other reportable conditions. While we would have preferred a clean opinion and no controls observations, that was not possible under the circumstances. We could not turn back the clock and fix what happened in the past. But the progress staff did make versus the prior year’s audit disclaimer sets the stage for continued progress in FY 2025 and beyond on both our financial reporting and underlying controls structure.
Unfortunately, there have been several recent public comments by residents at IVGID meetings and on social media that either directly, or by inference, place blame for the issues identified in the FY 2024 audit on current IVGID leadership and staff. At best, that demonstrates an ill-informed, naïve, or uneducated view of the current situation. Further, it has the potential to obstruct, misinform, and create another false narrative.
If you want to understand the true situation, some historical perspective is helpful. Shortly after the FY 2022 audit was released (an audit that received an unqualified opinion), the board exercised their right as elected officials and constructively terminated the General Manager (GM). As a result of that and other factors impacting morale at IVGID, most of the finance and accounting leadership also departed. This was at a critical time when we were in the middle of a troubled systems conversion. So, the controlling IVGID Board members brought in their hand picked choice for GM, who in turn built out his finance and accounting team. What was the result?
- A failed audit for FY 2023 – the IVGID Board and leadership threw up their hands. They failed to complete the audit, and we received a disclaimer from our auditors.
- A FY 2025 budget that was deeply flawed. It contained several unrealistic and arbitrary budget cuts, and it only managed to balance because they made a material error and excluded almost $8 million of depreciation from operating expenses.
- We experienced more departures of key accounting personnel.
- We failed to close the books for FY 2024 or to adequately prepare for the fiscal 2024 audit.
- We not only failed to correct any of our past control outages – we had a proliferation of additional material and other reportable weaknesses in controls.
Subsequently, when Bob Harrison and Jessica O’Connell came in as GM and Director of Finance in January 2025, they were staring at another audit failure. Our auditor had already said another disclaimer was likely for FY 2024. Keep in mind that current leadership assumed their roles a full six months after the end of FY 2024. So, to be perfectly clear, they could not prevent, nor did they have anything to do with the state of the FY 2024 financial systems. Nor did they have anything to do with the control outages included in the FY 2024 audit report. The FY 2024 audit opinion and internal controls reports dealt with conditions that existed during and at the end of FY 2024, under the previous leadership. That’s the way an audit works. It primarily examines conditions that existed during the period under audit. Other than correcting errors identified, they do not and cannot consider how things have evolved since that time.
So, it’s completely inappropriate to try to blame any of the FY 2024 audit findings on current leadership. To anyone with even elementary knowledge of how audits work, such claims or inferences are laughable, and residents making or inferring them have no credibility.
If you do want to judge current leadership for their performance on the FY 2024 audit, then judge them by how they responded to the financial mess they inherited. We had a great response from our new finance leadership. Our new Director of Finance Jessica O’Connell, her new Controller, Deanna Hall, and Cynthia Blair from our accounting staff, all stepped up. They also brought in Baker Tilly to help, and we were very fortunate to have Noemi Barter from Baker Tilly leading the work on that front. And the Davis Farr team did an excellent job collaborating and providing guidance to help us overcome FY 2024 audit obstacles. This collective team had the talent, dedication and drive we needed. Together, they were able to catch up on reconciliations, correct a myriad of errors in the accounting system, close the books, and complete the FY 2024 audit. Unlike their detractors, rather than complaining, obstructing and being part of the problem, this dedicated team chose to be part of the solution.
As mentioned above, we did receive a qualified FY 2024 audit opinion. That qualification related primarily to the failure to conduct quality inventory counts at the end of FY 2024. It was impossible to turn back the clock and fix that, so it was an impossibility to rectify the qualification. Importantly, it was not another disclaimer like the one received for the FY 2023 audit. This is simply an outstanding achievement given the mess that was inherited.
I am personally thankful for what our team accomplished. They’ve done a great service to IVGID and its residents. We all owe them a debt of gratitude – not unwarranted criticism. Even though this reality is different than the narrative we continue to hear from some of the detractors that show up at public meetings and online, it’s my hope that as a community we can come together to congratulate and support the great work being done by staff to fix past problems and move this community forward.